Hagedorn ‘encouraged’ by consumer behavior

Marysville, Ohio-based Scotts Miracle-Gro Company saw “unexpected challenges in the mass retail channel,” but the company pulled off a 5% gain in U.S. consumer sales in the third quarter.

Overall for the period ending July 1, Scotts reported net sales of $1.08 billion, up 8% from the same quarter last year. Net income, however, declined 29% to $151.9 million.

Income was affected by divestiture of Scotts Lawn Service. Income from continuing operations was $151.9 million, up from $127.0 million in the same quarter last year.

“Our U.S. core business had a solid quarter, making up ground from a late break to the season and some unexpected challenges in the mass retail channel,” chairman and CEO Jim Hagedorn said.

The company’s Hawthorne Gardening Company subsidiary — formed in 2014 to focus on the urban and indoor gardening market — saw sales growth of 21% in the quarter.

Year to date, the company says it had expected more in the U.S.

“While sales in our U.S. consumer business are behind our original expectations, there are several positive stories behind the numbers,” Hagedorn said. “Entering August, consumer purchases of our branded products in home centers and hardware stores — which constitute nearly two-thirds of our sales — were up more than 4% with gains in nearly every major product category.

“Clearly, we’ve seen challenges in the mass retail market this year due to tighter inventory management and changes in merchandising strategies. That said, we remain encouraged by the success of our new product launches this year and by the fact that consumers remained engaged in lawn and garden activities and continued to seek out our brands.”