Scotts Miracle-Gro (SMG -7.2%) shares plunge to their lowest in nearly two years after cutting full-year sales guidance for its Hawthorne segment and saying the reduction likely will lead to lower than expected FY 2022 adjusted earnings.
CFO Cory Miller said the company now expects Hawthorne sales will decline 15%-25%, including the benefit of acquisitions, after several months of an oversupply of cannabis, which is leading to a slowdown in both indoor and outdoor cultivation.
Scotts said the revised Hawthorne sales outlook means the company is unlikely to reach the low end of guidance for adjusted EPS, which it now expects will reach "at least" $8.00 for the year, below previous guidance of $8.50-$8.90.
The company also said it no longer expects to make a significant acquisition in FY 2022, after actively pursuing such an opportunity over the past year.
Scotts Miracle-Gro has fallen out of favor with investors, but management is restructuring the business and the stock may be a good buy for bargain hunters, Gen Alpha writes in a bullish analysis published on Seeking Alpha.