Scotts Miracle-Gro (SMG 86.03, +2.17) has jumped 2.6% in early action despite lowering its guidance for the fiscal year.
Following the downward adjustment, the world's largest marketer of branded consumer lawn and garden products expects that earnings for the full year will be between $4.00 per share and $4.20 per share, down from previous guidance for earnings between $4.10 per share and $4.30 per share. The company expects that revenue will be up between 3.0% and 4.0% after previous guidance called for top-line growth between 6.0% and 7.0%. The new guidance reflects expectations for revenue between $2.92 billion and $2.95 billion.
The guidance adjustment was prompted by a disappointing mass retail performance, resulting from changes in merchandising strategies and tighter inventory management. However, the company noted that consumer purchases at home centers, hardware stores, and gardening stores saw a slight increase despite a rainy spring in the Midwest and the Northeast.
Sales at Scotts' Hawthorne Gardening business were up 17.0% year-over-year going into June.
Hoping to offset the impact of lowered guidance, Scotts announced an increase to its buyback program, which is now expected to result in share repurchases between $250 million and $275 million on a full-year basis. Also of note, the company revealed that recent completions of two small acquisitions should add between $0.05 and $0.07 to earnings per share on an annualized basis. The acquisitions are expected to be immediately accretive to the company's bottom line.