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Scotts Miracle-Gro reports record sales in May as marijuana legalization spreads

Sales of its lawn and garden products surged 28% to US$565mln in May
Potting soil
The company updated its yearly outlook to reflect lower sales guidance

The Scotts Miracle-Gro Company (NYSE:SMG) announced record consumer purchase activity in May, potentially boosted by the rise in legalized recreational and medicinal marijuana use.

Consumers purchases of its lawn and garden products rose 28% in May, totaling US$565mln. The surge in sales helped the company to recover nearly off its decline reported through the first seven months of the fiscal year.

Despite the rise in sales in May, the company updated its financial outlook to reflect its lower sales guidance for the year ahead. The company expects full-year sales to be within a range of flat to 2% higher than the prior year compared with its previous range of 2% to 4% growth.

“While consumer purchases have been tracking positively for weeks, the combination of the slow start to the season and improved inventory planning by our retail partners is causing us to lower sales guidance for our U.S. Consumer segment. Our original guidance assumed there would be a 2-to-3 point gap between POS and our shipments, which is, in fact, what we’re seeing,” said CEO Jim Hagedorn in a press release.

Interest expense is expected to total around US$90mln due to higher borrowing levels associated with the company’s acquisitions.

For the third quarter, Scotts forecast share buybacks to surpass US$300mln. It is expecting a “modest level” of stock repurchases in its fiscal fourth quarter.

Shares of the Ohio-based company were up less than 1% to US$87.25 in Tuesday after-hours trading.

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