Scotts Miracle-Gro Reports $149.1 Million Net Income, Faces Sales Decline

The Scotts Miracle-Gro Company reported a net income of $149.1 million, or $2.54 per diluted share, for the three months ended June 28, 2025, reflecting a 12.6% increase from $132.1 million, or $2.28 per diluted share, in the same period last year. For the nine months ended June 28, 2025, net income rose to $297.1 million, or $5.07 per diluted share, compared to $209.1 million, or $3.64 per diluted share, for the corresponding period in 2024. The company's total net sales for the third quarter were $1,188.0 million, a slight decline of 1.2% from $1,202.2 million in the prior year, while year-to-date sales decreased by 3.6% to $3,025.8 million from $3,138.0 million.

The decrease in sales was attributed to a combination of factors, including a decline in volume and mix, particularly in the U.S. Consumer segment, which experienced nonrecurring sales of bulk raw materials and AeroGarden® products in the previous fiscal year. The Hawthorne segment also faced challenges, with a significant drop in sales volume due to the discontinuation of sales of other companies' products and a general oversupply in the cannabis market, which has pressured pricing. Despite these challenges, the company reported an increase in gross margin rates, which improved to 31.8% for the quarter and 33.7% for the nine months, up from 29.5% and 28.0%, respectively, in the prior year.

Strategically, Scotts Miracle-Gro has made significant organizational changes, including the sale of its subsidiary, The Hawthorne Collective, Inc., to Bad Dog Holdings LLC for a promissory note valued at $39.0 million. This move is part of a broader strategy to focus on its core business segments. The company also continues to optimize its operations within the Hawthorne segment, which has seen a shift towards its portfolio of Signature brands, although this has resulted in lower sales volumes compared to historical periods.

Operationally, the company reported a decrease in cash and cash equivalents, which fell to $51.1 million from $279.9 million a year earlier. Cash provided by operating activities also decreased significantly to $197.2 million from $549.0 million, primarily due to higher inventory production and the timing of accounts receivable sales. The company’s total debt as of June 28, 2025, was $2,202.6 million, with a leverage ratio of 4.15, indicating compliance with its financial covenants. Looking ahead, Scotts Miracle-Gro anticipates continued challenges in the Hawthorne segment due to market conditions but remains focused on improving operational efficiencies and managing costs effectively.