The Scotts Miracle-Gro Company (SMG): BCG Matrix [Dec-2025 Updated]

You're looking at The Scotts Miracle-Gro Company's (SMG) business map as of late 2025, and honestly, the picture shows a company successfully doubling down on what works while cleaning house elsewhere. The core U.S. Consumer segment is a rock-solid Cash Cow, bringing in $2.99 billion in sales and growing profit by 15.0%, but the real excitement is in the Stars, where E-commerce exploded with 51% POS unit growth and structural gross margins hit 31.2%. We've clearly cut the Dogs-like those divested international assets-but the Hawthorne Gardening Company remains a volatile Question Mark, showing a slight profit turnaround to $2.8 million in a tough market. See below for the full breakdown on where SMG is investing for future growth.

Background of The Scotts Miracle-Gro Company (SMG)

You're looking at The Scotts Miracle-Gro Company (SMG), which stands as the largest marketer of branded do-it-yourself lawn and garden products across North America. Honestly, when you think of lawn care in the US, you're thinking of their iconic brands like Scotts, Miracle-Gro, and Ortho. The business is primarily structured around three reporting divisions: the core U.S. Consumer segment, the Hawthorne segment focusing on indoor and hydroponic growing, and an Other segment that mainly handles Canadian operations.

For the fiscal year 2025, which wrapped up on September 30, 2025, The Scotts Miracle-Gro Company posted total net sales of approximately $3.41 billion. That figure represented a slight dip, coming in at a 3.93% decrease compared to the prior year's sales. What really stood out, though, was the operational improvement; the company managed to boost its non-GAAP adjusted gross margin rate to 31.2%, which was an increase of 490 basis points year-over-year. This focus on efficiency helped drive adjusted EBITDA up by $71 million to reach $581 million for the full year.

Drilling down into the segments, the U.S. Consumer division, which carries the bulk of the revenue, showed resilience, reporting net sales of $2.99 billion, marking a small 1% increase. This core business is where their leading lawncare products live. Conversely, the Hawthorne segment, which serves the indoor and hydroponic growing market, continued to face headwinds, showing a decline in net sales for the period. To streamline operations, The Scotts Miracle-Gro Company also completed the divestiture of its Hawthorne professional horticulture business located in the Netherlands during fiscal 2025. The company finished the year on a strong note for cash generation, achieving free cash flow of $274 million, which actually beat management's internal targets.

The Scotts Miracle-Gro Company (SMG) - BCG Matrix: Stars

You're looking at the business units that are clearly leading their markets and experiencing significant expansion, which is exactly what defines a Star in the Boston Consulting Group framework. These areas require heavy investment to maintain that lead, but the payoff is future Cash Cow status if the market growth sustains or slows favorably.

For The Scotts Miracle-Gro Company in fiscal year 2025, the digital transformation and structural margin recovery stand out as the primary Stars. These segments show high growth rates coupled with an already established, dominant market position, demanding continued capital allocation for promotion and placement.

The E-commerce Channel is a prime example of a high-growth area capturing increasing share. This channel is not just growing; it's accelerating faster than the overall business. Honestly, the numbers here speak for themselves regarding consumer adoption of digital purchasing paths.

Consider the performance metrics that position these areas as Stars:

• E-commerce POS unit growth hit 51% in FY2025.
• E-commerce POS dollar growth reached 23% for the same period.
• This digital channel now accounts for 10% of total Point-of-Sale (POS) dollars.
• Premium Lawn & Garden Innovation is supporting the core business with an 8.5% increase in POS units.

The underlying profitability of the core business is also behaving like a Star due to structural improvements, which is a powerful combination. When margin expands this significantly while growth is present, you have a very strong position.

The overall U.S. Consumer segment, which houses these growth engines, posted net sales of $2.99 billion in fiscal 2025, underpinning the success of these initiatives. Furthermore, the resulting profitability is clear in the bottom line, with Non-GAAP Adjusted Earnings Per Share growing to $3.74 for the full year.

The Digital Expansion is critical because it represents a high-growth channel for the dominant segment, meaning The Scotts Miracle-Gro Company is successfully capturing future market share today. If this market share is kept, these Stars are definitely on the path to becoming Cash Cows as the overall market growth rate eventually moderates.

The Scotts Miracle-Gro Company (SMG) - BCG Matrix: Cash Cows

You're looking at the engine room of The Scotts Miracle-Gro Company (SMG), the U.S. Consumer (USC) segment. This is where market leadership translates directly into reliable financial support for the entire enterprise. Cash Cows, by definition, operate in mature markets but hold dominant positions, meaning they don't require massive spending to defend share, so they generate significant surplus cash.

The core business, the U.S. Consumer segment, delivered $2.99 billion in net sales in fiscal year 2025. This segment is the bedrock, consistently providing the necessary capital. The company's iconic brands-Scotts, Miracle-Gro, and Ortho-are the reason for this stability, maintaining the number one market share across the mature, low single-digit growth lawn and garden market. That kind of dominance means marketing spend is highly efficient.

The profitability from this stable base was substantial. The USC Segment Profit increased 15.0% to $572.6 million in FY2025. This high margin performance is exactly what you want from a Cash Cow; it consumes less to maintain its position while pouring cash into the corporate structure. Also, the segment's stability enabled $274 million in consolidated free cash flow, which was specifically directed toward debt reduction.

Here's a quick look at how the USC segment's performance stacks up against key consolidated metrics for fiscal 2025:

Because growth is low, the strategy here isn't aggressive expansion; it's about efficiency and milking the gains passively. Investments focus on supporting infrastructure, like implementing AI and robotic automation, to further improve operational efficiency and boost that cash flow number. You want to maintain the current level of productivity without overspending on promotion.

The strength of these Cash Cows directly funds other parts of the portfolio. You use this cash to:

• Maintain the leading market position of Scotts, Miracle-Gro, and Ortho.
• Cover general administrative costs for The Scotts Miracle-Gro Company.
• Fund research and development in other areas.
• Service corporate debt, as evidenced by the $274 million allocation.

The focus for you, as an analyst, should be monitoring the stability of that $2.99 billion revenue base and ensuring the margin expansion continues, which directly impacts the cash available for debt paydown and shareholder returns. Finance: draft 13-week cash view by Friday.

The Scotts Miracle-Gro Company (SMG) - BCG Matrix: Dogs

Dogs, are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Dogs are in low growth markets and have low market share. Dogs should be avoided and minimized. Expensive turn-around plans usually do not help.

The Scotts Miracle-Gro Company has actively worked to divest or de-emphasize certain areas that fit the Dog profile, prioritizing higher-margin branded products to improve overall profitability. This strategic pruning is evident across several business units and product categories as of the fiscal year 2025 reporting.

Divested International Assets

The strategic move involved separating the cannabis-adjacent subsidiaries to focus on the core lawn and garden business. The Hawthorne Collective transaction, announced in Q2 2025, was the initial step to move cannabis-adjacent subsidiaries into a separate, independent company. The plan was to sell the Hawthorne Gardening Company to a dedicated cannabis company by fiscal year-end 2025. This action reduces the impact of the cannabis sector's volatility on The Scotts Miracle-Gro Company's stock. The Hawthorne segment experienced a full-year net sales decline of 44% as the company prioritized profitability and considered divestiture options. For the first quarter of fiscal 2025, Hawthorne segment sales decreased 35% to $52.1 million, compared to $80.1 million in the prior year, due to the strategic exit from third-party distribution. The Hawthorne segment delivered two consecutive EBITDA positive quarters prior to the planned separation, with expected EBITDA around $20 million for the year of the planned spin-off.

Non-Strategic Product Lines

The company is phasing out non-repeating sales and winding down specific product lines that did not meet margin expectations. The fiscal second quarter of 2025 total company sales decline of 7% from the prior year was partly attributed to non-repeating fiscal 2024 net sales of bulk raw materials and AeroGarden products. The wind-down of AeroGarden resulted in $29 million of incremental charges in fiscal 2024. Manufacturing of new AeroGarden units is set to cease, though support for existing products will continue. The company is shifting focus away from these lower-priced, low-margin commodity products.

Low-Margin Commodity Products

A key component of The Scotts Miracle-Gro Company's margin reinvention strategy is the intentional strategic mix shift away from low-margin commodities like mulch toward higher-margin branded fertilizers. The fiscal year 2025 non-GAAP adjusted gross margin rate finished at 31.2%, a significant improvement of 490 basis points over the prior year. The company is targeting a gross margin approaching 33% internally for fiscal 2026, signaling the continued deprioritization of barely profitable commodity sales. This strategic shift aims to improve overall profitability by concentrating on branded products.

Underperforming Retailer Inventory

The focus on improving product mix inherently addresses underperforming SKUs and channels that require deep promotional support, which is a low-return area. While specific inventory write-down figures for 2025 are not detailed, the negative pricing environment in the prior year highlights the pressure in certain areas. In fiscal 2024, gross margin improvement was partially offset by negative pricing. The company is now focusing on driving volume growth through branded innovation and strategic pricing on core products, rather than relying on deep promotions for low-return inventory.

Here's a quick look at the financial context surrounding these areas:

The company is simplifying lawn care by promoting multiple seasonal feedings at a psychologically accessible price point of $100 for a full season, targeting younger demographics through social media, which is a clear move to drive volume in core, higher-margin areas.

• Divestiture of cannabis-adjacent subsidiaries to reduce volatility.
• Hawthorne Gardening Co. EBITDA expected around $20 million in the year of the planned spin-off.
• FY2024 gross margin improvement was partially offset by negative pricing.
• E-commerce penetration reached 10% of sales in fiscal 2025, growing 51% in units.

The Scotts Miracle-Gro Company (SMG) - BCG Matrix: Question Marks

You're looking at The Scotts Miracle-Gro Company (SMG)'s Hawthorne Gardening Company (HGC) as a classic Question Mark. This unit operates squarely in the high-potential, but volatile, indoor and hydroponic gardening market. Honestly, it's a segment with massive growth prospects if the regulatory environment cooperates, but right now, its market share isn't translating into reliable returns.

The financial reality for HGC in fiscal year 2025 reflects this uncertainty. Net sales for the entire Scotts Miracle-Gro Company decreased by 3.9% to \$3,413.1 million, a drop primarily driven by decreased sales volume within the Hawthorne segment itself. To give you a sense of the volatility, Hawthorne net sales in the second quarter of fiscal 2025 specifically declined 51% year-over-year, reflecting continued hydroponic market softness and the impact of exiting third-party distribution last year. Still, the company is actively restructuring this area.

Here's the quick math on the profitability turnaround you asked about. For the full fiscal year 2025, the Hawthorne Segment Profit landed at \$2.8 million. That's a significant swing from the fiscal 2024 Segment Loss of \$(14.2 million). This improvement was driven by a higher gross margin rate and lower Selling, General, and Administrative (SG&A) expenses, even though net sales were lower. What this estimate hides, though, is that this small profit required sustained investment and restructuring efforts, including incurring a non-tax-deductible loss of \$17.7 million related to the divestiture of its Hawthorne professional horticulture business in the Netherlands.

The core issue remains its cannabis-adjacent exposure. This unit was intended to capitalize on the legal cannabis sector, but as of 2025, the ability to achieve sustained growth has been challenged by years of regulatory inaction at the federal level. This makes it a high-risk, high-reward play dependent on unpredictable cycles. You need to watch regulatory news closely here.

Here is a snapshot of the financial context for the segment:

The strategic path forward for this Question Mark involves clear choices, which is typical for this BCG quadrant. You must decide where to place your chips:

• Invest heavily to quickly build market share before the growth market matures or stalls.
• Divest the unit if the potential for quick market share gain is deemed too low or the regulatory risk is too high.
• Continue restructuring to improve margins while waiting for regulatory clarity.

The company's actions, like divesting the Netherlands business, suggest a move toward shedding complexity while the core hydroponics business tries to claw its way back to consistent profitability. Finance: draft the cash flow impact analysis for a potential full Hawthorne separation by next Tuesday.