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Sales at Hawthorne Gardening Co., the marijuana grow subsidiary of Scotts Miracle-Gro, were further diminished for the quarter ending July 1.
Sales dropped by 6% to $1.12 billion at Ohio-based Scotts overall, driven by a 40% sales decline at Hawthorne, according to a news release.
Proceeds from Hawthorne’s sales of cannabis hydroponics, horticulture and lighting supplies have steadily declined through the period over the past two years.
Hawthorne sales totaled $93.4 million for the most recent quarter compared with $154.5 million during the same period last year.
That’s compared with $421.9 million for the same period two years ago.
For the first nine months of fiscal year 2023, Hawthorne’s sales have plummeted by 42% to $317.6 million.
“We are carrying significant debt load without the earnings we expected from our investments in Hawthorne, the cannabis space and expansion of our operational capacity to capture pandemic level demand,” Scotts Chair and CEO Jim Hagedorn said on the company’s earnings call.
“Project Springboard,” an initiative launched last year to improve cash flow and the balance sheet, generated more than $100 million in savings this quarter, according to the release.
The company has saved $300 million through the program.
Scotts also amended its credit agreement with JPMorgan Chase Bank in July, reducing its revolving loan commitment by $250 million.
“We are on target for $1 billion in cash flow by the end of fiscal ’24,” Hagedorn said in a statement.
“Looking ahead, our amended credit facility provides room to meaningfully reduce debt while directing investments into the core business.
“In Hawthorne, we have line of sight to profitability and opportunities to leverage our leading positions in the multi-billion dollar cannabis space.”
Scotts Miracle-Gro trades as SMG on the New York Stock Exchange.