Scotts Miracle-Gro Not Growing As Expected
On Wednesday morning, Scotts Miracle-Gro (NYSE: SMG) reaffirmed its outlook for 2012, however, now expects its first quarter to be materially below the same period from fiscal 2011.
This is not the first time the commercial fertilizer company expected to miss estimated numbers. In October, Scotts Miracle-Gro said it expected to report a 2% decline in sales for fiscal 2011. Shares of the company and analyst estimates both fell upon the news. However, the company still reported a wider-than-expected loss in the fourth quarter after decreasing guidance.
Scotts Miracle-Gro cited the upcoming miss will be from lower sales volume, an unfavorable product mix, and higher commodity costs. These factors will result in a quarterly gross margin rate to fall approximately 10 percentage points from the same period in 2011.
Commenting on the reaffirmed 2012 outlook and first quarter expected miss, CEO of Scotts Miracle-Gro, Jim Hagedorn, said "The current commodity environment and the acceleration of our hedging strategy gives us increased confidence in the visibility we have in our cost structure for 2012," Hagedorn said. "While we continue to expect commodity inflation of about $80 million , the likelihood of unexpected cost pressures has diminished."
The company expects a first quarter loss of about $1.20-$1.25 per share versus analysts' estimates of a loss of $1.13. Shares of Scotts Miracle-Gro are trading over 3.5% lower in pre-market trading at $42.83.
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