Scotts Miracle-Gro (SMG) Expects to Fall Short of FY12 EPS Outlook; Cites Lagging U.S. Retail Sales
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The Scotts Miracle-Gro Company (NYSE: SMG), provided a financial update for fiscal 2012 to reflect the pressures driven by lower-than-expected sales and unfavorable product mix.
The Company said consumer purchases of its products at its largest retail partners in the U.S. are up 3 percent on a year-to-date basis, compared with 8 percent entering May. As a result, it expects to fall short of its previous guidance of 6 to 8 percent sales growth as well as adjusted earnings of $2.65 to $2.85 per share.
The Street sees EPS of $2.80.
An updated outlook will be provided when ScottsMiracle-Gro issues its third quarter financial results in early August.
The Company said challenges this year are primarily an outcome of slowing consumer demand following a strong and early start to the lawn care season in the second quarter. However, the gardening season, which traditionally peaks in mid- to late-May, has not met expectations. Consumer purchases of Miracle-Gro branded soils and plant food are essentially in line with 2011 and appear to have been negatively impacted by an industry-wide slowdown in the sale of flower and vegetable plants. In addition, the Company said poor weather and challenging economic conditions will also cause its European business to fall short of expectations.
Gross margin rates are also likely to fall short of plan due primarily to unfavorable product mix, unplanned distribution costs associated with the strong performance of the controls and mulch businesses and reduced leverage of fixed costs.
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The Company said consumer purchases of its products at its largest retail partners in the U.S. are up 3 percent on a year-to-date basis, compared with 8 percent entering May. As a result, it expects to fall short of its previous guidance of 6 to 8 percent sales growth as well as adjusted earnings of $2.65 to $2.85 per share.
The Street sees EPS of $2.80.
An updated outlook will be provided when ScottsMiracle-Gro issues its third quarter financial results in early August.
The Company said challenges this year are primarily an outcome of slowing consumer demand following a strong and early start to the lawn care season in the second quarter. However, the gardening season, which traditionally peaks in mid- to late-May, has not met expectations. Consumer purchases of Miracle-Gro branded soils and plant food are essentially in line with 2011 and appear to have been negatively impacted by an industry-wide slowdown in the sale of flower and vegetable plants. In addition, the Company said poor weather and challenging economic conditions will also cause its European business to fall short of expectations.
Gross margin rates are also likely to fall short of plan due primarily to unfavorable product mix, unplanned distribution costs associated with the strong performance of the controls and mulch businesses and reduced leverage of fixed costs.
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