Scotts LawnService grew for the sixth consecutive quarter, benefiting from increased market share and improved customer retention.
The Scotts Miracle-Gro Co. (NYSE: SMG) announced its financial results for the third quarter as well as a 20 percent increase in its quarterly dividend.
The company said that net sales in the quarter ending July 2 declined by 10 percent. The decline was driven primarily by poor weather across most of the U.S. throughout the duration of the lawn and garden season as well as a more competitive promotional landscape and changes in certain retailer strategies within the mass merchandise channel.
"Through mid-March, consumer purchases of our products in the U.S. were up 13 percent, but then the situation changed dramatically," said Jim Hagedorn, chairman and CEO. "The challenges we saw from weather this year are unparalleled during my life-long tenure in this industry. The fact that consumer purchases have been impacted more than we expected is also negatively affecting both sales and gross margin rate. As a result, we now expect our adjusted earnings for the year to be in a range of $2.95 to $3.05 per share.
"While I am disappointed with the results we are announcing today, I remain confident in our category, our brands, our strategy and our team. That continued confidence in our long-term strategy is reflected in the decision by our board of directors to increase our dividend by 20 percent. We remain committed to a strategy of using our financial flexibility to drive long-term growth, while also returning cash to shareholders."
The quarterly dividend of $0.30 per share is payable Sept. 9, 2011 to shareholders of record on Aug. 26, 2011.
Company-wide sales for the quarter were $1.06 billion, a decrease of 10 percent from the same period a year ago. Excluding the impact of foreign exchange, sales declined 11 percent.
Global Consumer sales decreased 12 percent to $951.6 million, with the primary declines occurring in lawn fertilizer and weed control products.
Scotts LawnService reported a 1 percent increase in revenue to $82.4 million, marking the sixth consecutive quarter of growth. Scotts LawnService continues to benefit from increased market share and improved customer retention metrics.
"We are extremely pleased with the progress of Scotts LawnService, and we continue to see it as an important element of our future success," Hagedorn said. "With the improvements to the business model, we believe SLS can continue to drive growth on both the top and bottom lines."
Company-wide sales through the first nine months were $2.42 billion, down 2 percent from a year ago. Excluding the impact of foreign exchange, sales declined 3 percent.