SMG Lowers FY11 EPS Guidance

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Last Update: 15-Jun-11 09:22 ET

Scotts Miracle-Gro (SMG $52.34) updated its financial outlook for fiscal 2011 to reflect the continued challenges of unfavorable weather in most of the United States.

The company said it is now anticipates reporting sales in line with its performance in fiscal year 2010, which equates to $3.14 billion versus the $3.04 billion Capital IQ Consensus estimates and lowers fiscal year 2011 EPS guidance to $3.10 to $3.20 per share versus $3.67 consensus, down from $3.60 to $3.70 prior guidance.

On a YTD basis, consumer purchases of the co's products at its major U.S. retail partners are down 4 percent from a year ago. On May 3, the co announced that consumer purchases had declined during the critical March and April timeframe due to significant weather issues in much of the U.S. At the time, SMG said it could achieve its original sales and earnings outlook given a double-digit rebound of consumer activity for the balance of the year. The company believed a robust rebound was achievable assuming weather was favorable to lawn and garden activity. Consumer purchases have increased only 3% since that announcement.

SMG said, "We needed to see a double-digit increase in consumer purchases in May and June but through mid-June we are still below last year's levels in nearly every major market in the northern and western United States. Weather has been the primary driver for the shortfall all the way through May. We also were impacted by a more promotional retail landscape and changes in certain retailer strategies within the mass merchandise channel."