Gardeners Not Planting, Scotts Not Fertilizing (SMG, HD, TGT, WMT)

Lawn and garden products maker The Scotts Miracle-Gro Co. (NYSE: SMG) lowered its fiscal year guidance after markets closed last night, and the stock is taking a hit on very heavy trading today. The company expects to fall short of its previous guidance of revenue growth of 6%-8%, but did not provide a precise estimate. Previous EPS guidance of $2.65-$2.85 will also not be met, but again no precise figure was offered. The consensus EPS estimate for fiscal 2012 had been $2.80, with a current quarter EPS estimate of $2.26.

Scotts said that sales are up 3% to date year-over-year, but the company had posted growth of 8% at the beginning of May. Three of the company’s biggest customers are The Home Depot Inc. (NYSE: HD), Target Corp. (NYSE: TGT), and Wal-Mart Stores Inc. (NYSE: WMT), which together account for just over 60% of sales. The company attributed the decline to an earlier start to the gardening season, which pulled sales forward from the traditional peak period in May:

Consumer purchases of Miracle-Gro branded soils and plant food are essentially in line with 2011 and appear to have been negatively impacted by an industry-wide slowdown in the sale of flower and vegetable plants. In addition, the Company said poor weather and challenging economic conditions will also cause its European business to fall short of expectations.

The company also expects gross margins to be lower, but did not offer any specifics on that either.

Scotts Miracle-Gro stock is down -7.5% at $39.82 after posting a new 52-week low of $35.50 earlier today. The previous range was $39.99-$55.95. Volume is nearly 10x the average daily volume of 589,000 shares traded.

Paul Ausick