Why Shares in ScottsMiracle-Gro Slumped Today
Shares of ScottsMiracle-Gro (NYSE: SMG) slumped by more than 7.5% as of midday today. The decline follows from a weak set of third-quarter results. Sales in the U.S. consumer segment were lower than expected (down 14%), and management cut its full-year guidance.
It gets worse. Its cannabis-related subsidiary, The Hawthorne Gardening Company, continues to suffer from overcapacity in the industry, and its sales declined a whopping 63%.
In fact, the overall company's sales were so weak that it left the company with "higher leverage than we want to maintain," according to CEO Jim Hagedorn on the earnings release. As a reminder, the financial world typical gauges debt levels on the basis of earnings, so as its earnings outlook gets worse, so will Scotts come under pressure to reduce debt.
Source Fool.com
