Lawn and garden products giant Scotts Miracle-Gro reported a 44% year-over-year quarterly sales decline in its cannabis-focused Hawthorne Gardening Co. division, as well as Hawthorne’s acquisition of Australian hydroponic nutrient brand Cyco for $34 million.
Ohio-based Scotts had warned of Hawthorne’s first-quarter sales slowdown in March.
Hawthorne’s $202.6 million in sales comprised roughly 12% of Scotts’ total sales for the quarter ended April 2, according to a Tuesday quarterly earnings announcement.
Hawthorne’s year-earlier quarterly sales totaled $363.8 million.
In a news release, Scotts Chairman and CEO Jim Hagedorn said the company was “taking steps to proactively reduce costs within the Hawthorne operation with a focus on returning the business to at least its previous level of profitability as quickly as possible.”
Hagedorn added that “while organic sales in the second quarter were in line with what we expected, recent trends also lead us to conclude the low end of our sales guidance range is a best-case outcome for this business.”
Scotts separately announced Hawthorne’s acquisition of Australia-based Cyco, described as “a leading brand of premium nutrients, additives and growing media products that are used by growers of all sizes in the hydroponic market.”
Hawthorne already handled Cyco’s U.S. distribution, the company said.
The Cyco acquisition is worth $34 million, plus up to $10 million in contingent payouts.
Scotts sees the Cyco deal as a strategic move to expand Hawthorne’s nutrients and growing media line as well as the availability of the Cyco brand in North America.
The acquisition was Hawthorne’s fifth in the past year, according to Scotts.
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The company recently acquired Luxx for $215 million and True Liberty Bags for $10 million.
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