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Why Shares in ScottsMiracle-Gro Slumped Today

·2-min read

Its cannabis-related subsidiary, The Hawthorne Gardening Company, continues to suffer from overcapacity in the industry, and its sales declined a whopping 63%. In fact, the overall company's sales were so weak that it left the company with "higher leverage than we want to maintain," according to CEO Jim Hagedorn on the earnings release. As a reminder, the financial world typical gauges debt levels on the basis of earnings, so as its earnings outlook gets worse, so will Scotts come under pressure to reduce debt.