Scotts Miracle-Gro has cut hundreds of jobs amid a slump in sales and an overinvestment in the company’s Hawthorne division that caters to the cannabis business.
The Marysville-based lawn-and-garden company did not say Wednesday how many jobs were cut, where they are located or what kinds of jobs were affected.
“While we have been forced to make dozens of tough decisions in a compressed time frame, including a head count reduction of hundreds of people, we’re also protecting our competitive advantages and securing our leadership pipeline we need in the future,” the company’s CEO and chairman, James Hagedorn, told analysts on a conference call Wednesday to discuss the company’s results for the three months that ended July 2.
A message seeking additional information from the company was not returned by the deadline.
Scotts’ sales fell 26% in the quarter from a year ago to $1.2 billion. Sales of the company’s lawn and garden products had surged when the pandemic started as people stuck at home spent money to beautify their yards.
The company’s results were so strong that it gave each employee a $3,000 bonus two years ago.
For the most recent quarter, Scotts posted a loss of $8.01 per share that included restructuring and other charges of $724 million. Discounting the one-time charges, the company earned $110.4 million, or $1.98 per share, less than half what it earned a year ago.
The results sent Scott’s shares tumbling more than 5% in mid-day trading Wednesday to about $82, about a third of where they were in April 2021.
The company has been investing in its Hawthorne business that provides nutrients, lighting and other materials used to grow cannabis.
Hawthorne sales fell 63% to $154.5 million during the most recent quarter from the same period in 2021, and the company recorded a $632.4 million charge to write down the value of the Hawthorne business, Scotts reported.
In February, the company cut 200 jobs in the segment.
Scotts also recorded a $40.7 million charge during the quarter related to termination benefits for workers, said Cory Miller, the company’s chief financial officer and executive vice president.
“There’s no doubt that this has been a difficult year. It would be easy to lament the factors that impacted us. Instead we’re squarely focused on the things we can control in forging a path forward,” he told analysts.
Hagedorn acknowledged the overinvestment in the Hawthorne business, saying, “We misread the market.” Some states have licensed far more cannabis production than could be consumed, he said.
He also said retailers have shifted how they manage inventory of Scotts products to focus on such things as grills and outdoor furniture.
“Those categories just weren’t selling. What was moving? Our stuff,” he said.
Scotts joins several major central Ohio companies to lay off workers this year, including Olive, Root Insurance, OhioHealth and Victoria’s Secret.