What happened

Shares of Scotts Miracle-Gro (SMG -1.36%) were taking a dive today after the maker of lawn care products posted disappointing results in its fiscal third-quarter earnings report and slashed its guidance for the year, showing that its turnaround strategy still isn't delivering the desired impact.

As of 11:12 a.m. ET, the stock was down 20.2% on the news.

So what

Scotts Miracle-Gro said revenue fell 6% to $1.12 billion, missing analysts' consensus estimate of $1.16 billion.

Revenue from its cannabis-focused Hawthorne segment plunged 40% to $93.4 million, while the core U.S. consumer business was up 1% to $916.4 million.

Gross margin declined from 19.9% to 18.4% due to higher commodity costs and one-time inventory write-offs. However, the company did make progress with its Project Springboard cost savings program, which it said added another $100 million in savings to bring total reductions to more than $300 million.

Overall, adjusted earnings per share fell from $1.98 to $1.17, which was well below analysts' consensus estimate of $1.45.

Scotts blamed "regional weather extremes, inflationary pressures, and price elasticity" for the weak performance, but it said that sales at the retail level were up, showing customer demand is improving and it's gaining market share.

CFO Matt Garth said, "In the face of dynamic retail and macro conditions, we executed on what we could control, including strong engagement with our retail partners, targeted marketing efforts and aggressive actions through Project Springboard."

Now what

Looking ahead, Scotts said it now sees a total revenue decline of 10%-11% for the full year, including a 2%-4% drop in the U.S. consumer segment and a 30%-35% slump in Hawthorne. It also reduced its targets for operating income and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), indicating that profits will be worse than expected.

Scotts was a big winner during the depths of the pandemic, but the stock has collapsed since then as interest in gardening has faded. After the latest update, it's still unclear what the business will look like now that demand has normalized, but the continued sales declines are obviously a concern.