Scotts Miracle-Gro’s Hawthorne unit took another big hit in the company’s fiscal quarter ended July 2 because of continued oversupply in the softening marijuana industry.
The Ohio-based lawn and gardening giant reported that Hawthorne sales fell 63% to $154.5 million, compared with $421.9 million during the same period last year.
Company sales overall decreased by 26%, driven by the decline in Hawthorne Gardening Co., which provides cannabis cultivation supplies.
As a result, Scotts Miracle-Gro announced “Project Springboard,” an endeavor to strengthen its balance sheet and improve cash flow.
“The lower-than-expected sales in our U.S. consumer segment, combined with continued pressure on Hawthorne sales due to oversupply issues in the cannabis industry, leave us unsatisfied with our financial results and with higher leverage than we want to maintain,” Scotts Chair and CEO Jim Hagedorn said in a news release.
“That is why we have launched the business transformation effort we are calling Project Springboard, which includes a series of aggressive steps to return the business to an appropriate level of performance.”
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In early May, Scotts expressed confidence that Hawthorne’s sales were beginning to firm, but the subsidiary then experienced another sharp decline because of a cannabis industry slowdown, oversupply and increased costs.
Despite the poor sales performance, Hawthorne has been on a buying binge that includes a $215 million acquisition of Los Angeles-based Luxx Lighting cannabis grow systems as well as a research and development facility in Canada.