Right after finding out that Hines Nurseries profits dropped 12% for the second quarter we find, according to Nursery retailer Magazine, Scotts Miracle-gro Company â€œposted a record 51 percent hike in profits for the third quarter, crediting the jump to strong sales in North America and in its lawn service division. Net income increased to $133.3 million from $88.5 million a year earlier. North American consumer purchases at its largest retail accounts improved 10 percent from last year, led by a 28 percent increase in lawn fertilizer purchases and a 24 percent increase in garden soil sales. The plant food increase was driven by the launch of Miracle-Gro LiquaFeed, with year-to-date sales of more than $35 million. The company says it is the most successful new product launch in its 138-year history.â€
How is it that Hines and Scotts, two of Americaâ€™s largest garden companies could have two such different results during the same period?
I donâ€™t have a definitive answer, but an educated guess. I know that at The Home Depot wholesale nurseries are not paid until The Depot sells the plants at retail. Hines drops huge numbers of plants at The Depot for spring. Here in California it rained until May, causing spring sales to drop. If the plants donâ€™t sell then Hines has to pick up the plants and ship new ones once the season finally getâ€™s going.
Scottâ€™s products are packaged and not subject to the same problems that plants have in a box store environment. I donâ€™t know if Scottâ€™s has to guarantee sales to The Depot like the wholesale nurseries do. Shelf life for Scottâ€™s products is a lot longer than plants, too.
Scottâ€™s is also much more diversified than Hines. Hines sells plants; Scottâ€™s owns Miracle-gro, Osmacote, Ortho, Round-up, Smith and Hawken, and Scottâ€™s lawn services. When you are this diversified itâ€™s easier to smooth out the ups and downs.
In the long run companies like Scottâ€™s actually reduce the choices to consumers. While they will tell you they are coming out with new products to increase your choices, I canâ€™t imagine that Smith and Hawken is the same store that Paul Hawken built and then sold. You can look the same on the outside but once corporate gets a hold of it the culture changes.
How will Hines deal with the downturn? Cut costs? Sell out to Scott's? How will that affect plant choice and quality? Weâ€™ll see. While stores like Wall Mart and Home Depot will say they are keeping prices down for the consumer they may be actually be reducing your choices in the mean time. Imagine, "Scott's Miracle-gro Hines nursery division"
Itâ€™s the Homogenization of Gardening