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Hawthorne Sales Slump Due to Challenges in the Hydroponic Industry

Segment sales fell 54% to $93 million.

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Hawthorne, the cannabis cultivation equipment division of Scotts Miracle-Gro, reported a significant dropoff in sales during the company’s fiscal second quarter.

The company this week said its Hawthorne segment sales fell 54% to $93 million, down from $203 million during the same period a year ago. It said the decline reflected continued challenges in the hydroponic industry.

“The Hawthorne team has shown resilience through sustained industry challenges, and I commend them for overdelivering on our original Project Springboard targets and remaining focused on strategic execution,” said Matt Garth, executive vice president and chief financial officer. “While we still expect daily sales rates to improve in the back half of the year, continued industry challenges make it difficult to provide topline guidance today. Instead, our full focus remains on cost control and getting back to run rate profitability by fiscal year-end. In recognition of the prevailing headwinds, we now expect a mid-single-digits percentage decline in total Company operating income and a low single-digits percentage decline in adjusted EBITDA for the full year.”

During the quarter, Scotts said it further optimized its Hawthorne distribution network by initiating the closure of four distribution centers and selling the Hurricane branded fans. The company said it recorded pre-tax restructuring charges of $141 million associated with these activities.

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