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Residential demand for lawn equipment plummets, leading to rare Toro quarterly loss

Weather and economic conditions dampened Toro's third quarter results. The Bloomington-based company announced Lowe's would start carrying equipment, one answer to the results.

September 7, 2023 at 3:17PM
Toro’s lineup of electric mowers, snowblowers and other products will be available at Lowe’s in Spring of 2024 under a retail partnership agreement announced by Toro . ] GLEN STUBBE • glen.stubbe@startribune.com (Glen Stubbe, Star Tribune/The Minnesota Star Tribune)

Sales for Toro's residential and professional outdoor power equipment business took a sharp drop in late spring and early summer, leading to a rare quarterly loss for the Bloomington-based company.

Factors leading to the "underperformance" were varied, said Chief Executive Officer Richard Olson, and included the exceptionally dry June and July, economic uncertainty, higher interest rates and the fact that so many people updated their home equipment during the pandemic.

The company, though, also announced one solution to the issue — a new partnership with Lowe's stores. Next spring, the major home improvement chain will start selling Toro's zero-turn riding mowers, walk mowers, portable power equipment and snow blowers.

"Lowe's leadership position in the zero-turn mower category and strong footprint in key customer markets complements our existing channel strategy," Olson said in a news release.

The drop in residential and professional lawn care equipment sales during Toro's third quarter were offset by stronger performance by the company's other businesses, including underground and specialty construction equipment and products that golf courses and large grounds maintenance customers use.

For the quarter ended Aug. 4, the company recorded a net loss of $15 million, or 14 cents a share, compared to a profit of $125.2 million in the same quarter last year.

Adjusted earnings, which excluded a $151.3 million non-cash impairment charge related to the January 2022 acquisition of the Intimidator Group, were $99.4 million, or 95 cents a share, which were down 20% and missed Wall Street expectations of $1.24 a share.

Sales for quarter were down 7% to $1.1 billion.

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Toro's stock dropped 12.7% Thursday to close at $87.07 as investors reacted to the results.

Residential sales were $175.3 million, down 35.1% from a year ago.

Results from third quarter and the first weeks of the fourth quarter led Toro to reduce its sales and earnings guidance for the remainder of the year.

The company now expects sales for the fiscal year ended Oct. 31 to be flat to slightly up and adjusted EPS in the range of $4.05 to $4.10 a share. Adjusted EPS in the previous fiscal year was $4.20 a share.

Previous guidance was for annual sales increase in mid-single digits.

about the writer

about the writer

Patrick Kennedy

Reporter

Business reporter Patrick Kennedy covers executive compensation and public companies. He has reported on the Minnesota business community for more than 25 years.

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