Amid a struggling cannabis industry, Vancouver’s hydroponics and indoor gardening supplier Hawthorne Gardening Co. has reported a 31 percent loss in net sales. The company, which is owned by Ohio-based ScottsMiracle-Gro, is headquartered at 3204 N.W. 38th Circle in Vancouver. “While Hawthorne continues to manage through a challenging market, we are committed to returning the business to profitability by the end of this fiscal year,” ScottsMiracle-Gro chairman and CEO Jim Hagedorn said in the company’s February quarterly report. In that latest financial report, ScottsMiracle-Gro reported the company’s U.S. consumer net sales increased 8 percent in its first quarter compared with the same time last year. However, seasonality means the first quarter usually represents only 15 percent of full-year sales, according to the report. Total company sales declined 7 percent in the quarter to $527 million. The company has embraced what it calls Project Springboard, an effort to save money. It now expects to save $185 million in 2023 and more in the following fiscal year. The savings reflect “the high level of financial discipline companywide and partially mitigating higher interest expense and volume loss at Hawthorne this year.”

“The work of the team and our latest results have inspired my confidence in our ability to maintain compliance with our covenants while investing in our strategic initiatives, which should deliver profitable growth in 2024 and beyond,” said Matt Garth, who joined ScottsMiracle-Gro as chief financial officer in the first quarter. Hawthorne went through two layoffs at its Vancouver facility in 2022 — one announced in January and one announced in May. After the most recent layoff, there were about 150 employees still working in greater Vancouver and Washington in areas including warehousing, sales and marketing. At the time the layoff was announced, a representative for the company said the downsizing gave the company more flexibility in the hydroponics market. Hawthorne reported a 36 percent loss in volume and mix in this first quarter, along with a 3 percent loss in foreign exchange and the aforementioned 31 percent loss in net sales.

Looking ahead to the rest of the year, the financial report said the company expects a 20 percent to 30 percent decline in Hawthorne’s net sales. Hawthorne is a prominent supplier in the cannabis-growing industry. Many states, including Washington, have an oversupply of the flowering herb, meaning the price it fetches in dispensaries has declined. Combined with increasing costs for materials and services and a 37 percent state excise tax on it, some growers are simply closing up shop. In a February call with investors, Hagedorn said policies around cannabis haven’t moved quite the way the company expected, but ScottsMiracle-Gro is staying in the industry. “We are fully invested in the space. We are committed to seeing it through, and we think it will give us a growth rate that’s in excess of what the consumer business can grow,” said the chief executive, referring to the other products sold by ScottsMiracle-Gro.