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Scotts Miracle-Gro posts a bigger loss than expected

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While overall revenue fell, the company's LawnService business grew 12 percent.

Bloomberg | January 31, 2011

MARYSVILLE, Ohio Lawn care products maker Scotts Miracle-Gro Co. posted a bigger-than-expected loss as revenue declined in the seasonally slow fiscal first quarter.

The company, based in Marysville, Ohio, sells lawn care products to North American and European consumers. In the U.S., it runs Scotts LawnService, a residential lawn care business. The company generally posts a loss in the first quarter due to the seasonal nature of the lawn and garden market.

Scotts lost $67.9 million, or $1.02 per share, during the period ended Jan. 1. That compares with a year-earlier loss of $57.7 million, or 88 cents per share. Excluding one-time costs related to product registration and recalls as well as results from the performance of its global professional business, which it is selling to fertilizer maker Israeli Chemicals Ltd., Scotts would have earned 99 cents per share during the first quarter.

Revenue fell 9 percent to $230.2 million from $252.4 million. Scotts said U.S. sales of grass seed nearly doubled and there was a nearly 50 percent uptick in lawn fertilizer sales and a 30 percent boost in lawn soil sales. The company's LawnService business also grew 12 percent, as it signed more customers. However, global consumer sales fell 12 percent as many retailers delayed purchases into the second quarter.

Analysts polled by FactSet were expecting a smaller loss of 93 cents per share, excluding items, and $290.3 million in revenue.

"The strong consumer demand in the fall, coupled with an anticipated slowdown of shipments in December, means that current retail inventory levels leave us well-positioned for strong sell-in as we approach the launch of the new lawn and garden season," said Chairman and CEO Jim Hagedorn.

For the company's fiscal year ending in September, Scotts expects sales growth from continuing operations of 4 to 6 percent. It also expects double-digit growth in adjusted earnings per share. The company will provide a more detailed full-year outlook at its annual event for analysts on Feb. 23.


 

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