A 44 percent year-on-year drop in cannabis-related sales was announced by Scotts Miracle-Gro, the so-called lawn and garden industry giant. Hawthorne and Scotts may be giants in the lawn and garden industry, however, they are most certainly not giants – or experts – in the cannabis industry. This is evident in their sales decrease – it seems you can’t buy your way into success in this industry… who knew?
The Details Of The Report
Scotts Miracle-Gro revealed a 44 percent year-on-year quarterly reduction in sales in their cannabis-centred Hawthorne Gardening Co. division, as well as Hawthorne’s acquisition of Australian hydroponic nutrient brand Cyco for $34 million.
Scotts warned in February that a downturn in the cannabis market, as well as supply chain issues, would lead Hawthorne’s first-quarter sales to drop by nearly 40%. It appears that they weren’t far off.
According to the quarterly results report, Hawthorne’s $202.6 million in sales accounted for nearly 12% of Scotts’ overall sales for the quarter ended April 2 while the previous quarter’s revenues for Hawthorne were $363.8 million.
Announcements, Background, And Perceptions
The Chairman and CEO of Scotts, Jim Hagedorn, stated in a news release that the company was proactively reducing expenses within the Hawthorne operation with a goal of returning the business to at least its previous level of profitability as rapidly as feasible.
Hagedorn added to that the fact that even though organic sales were in line with their expectations in the second quarter, recent patterns had led them to believe that this low point in their sales estimate was actually a best-case situation for the company.
Scotts also announced Hawthorne’s acquisition of Cyco, a “leading brand of premium nutrients, additives, and growing media supplies utilized by growers of all sizes in the hydroponic sector.” Cyco’s U.S. distribution was already handled by Hawthorne, according to the Miracle-Gro.
This purchase by the company is valued at $44 million, including contingent payouts – $34 million without. The Cyco acquisition, according to Scotts, is a strategic move to increase Hawthorne’s nutrients and growing media line, as well as the Cyco brand’s availability in North America, and it is Hawthorne’s fifth acquisition in the last year alone.
Luxx and True Liberty Bags were also recently purchased for $215 million and $10 million, respectively, and RIV Capital – which is funded by Scotts – has agreed to buy New York marijuana business Etain Health.
It’s evident that the brand has a knack for buying things, however, success in the cannabis industry cannot be bought. Cannabis professionals take this market seriously and take the time to become knowledgeable in it – because that is what’s necessary as well as what’s right for a substance such as the hemp flower.
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