Scotts Miracle-Gro Co. (SMG), a maker of lawn and garden care products, Tuesday said it expects to fall short of its guidance for the full year 2012, hurt mainly by lower-than-expected sales and unfavorable product mix. Following the news, shares of Scotts Miracle-Gro plunged 13 percent in extended hours.
The company now expects to fall short of its full-year 2012 guidance of 6 to 8 percent sales growth as well as adjusted earnings of $2.65 to $2.85 per share.
Analysts polled by Thomson Reuters currently estimate earnings of $2.80 per share on revenues of $3.07 billion for the full year 2012. Analysts' estimates typically exclude one-time items.
The Marysville, Ohio-based 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.
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.
Additionally, Scotts Miracle-Gro indicated poor weather and challenging economic conditions will also cause its European business to fall short of expectations.
Gross margins are also expected to fall short of expectations 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.
SMG closed Tuesday's trading on the NYSE at $43.05, up 1.41%, on a volume of 0.6 million shares. However, the stock lost $5.85 or 13.59%.
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