Scotts Miracle Gro's fiscal fourth-quarter results reflected lower volumes in what is typically a seasonally weak quarter as Scotts' retail partners slowed their gardening products purchasing.
US household formation growth will drive demand for gardening products. As the market leader in consumer gardening products, Scotts will benefit from the secular housing trend.
Bears
While the recreational gardening industry is growing, consumers will increasingly prefer cheaper private-label and generic products, reducing Scotts' market share over time.
Scotts Miracle-Gro is the largest purveyor of home lawn and gardening products in the US. The company sells a broad range of lawncare products, including grass seed, fertilizer, and lawn-related weed, animal, and disease control. US consumer typically generates the vast majority of companywide revenue and profits. Its lawncare and gardening products are well-recognized brands in the US, including Scotts, Miracle-Gro, Roundup, Ortho, and Tomcat. Over half of revenue typically comes from Home Depot and Lowe's, as Scotts' products are featured at both home improvement retailers.