Shares of Toro, a leading turf maintenance equipment manufacturer, plunged 14% to $86.08 per share on Thursday following lower demand for its lawn care products in both the residential and professional segments. This decline marks the company's largest one-day percentage decrease since March 16, 2020.
The Bloomington, Minn.-based company attributed the softness in homeowner demand during the third quarter to macroeconomic factors, including higher interest rates and changing consumer spending patterns. Additionally, dry conditions in key regions persisted from June through July, further delaying replacement needs and slowing mid-season channel replenishment orders.
In terms of financials, Toro's sales for the three-month period ending on August 4 dropped to $1.08 billion compared to $1.16 billion in the same period last year. Additionally, the company incurred a loss of $15 million, or 14 cents per share, in Q3, in stark contrast to earnings of $125.2 million, or $1.19 per share, during the same period last year.
However, despite these challenges, Chief Executive Richard Olson expressed satisfaction with the performance of Toro's other businesses.
Looking ahead, Toro has provided guidance for fiscal year 2023, expecting sales to be similar to slightly higher than the previous fiscal year. The company anticipates adjusted earnings per share to fall within the range of $4.05 and $4.10. Previously, Toro had forecasted sales growth of 7% to 8% and adjusted earnings per share between $4.70 and $4.80.
In a notable move, Toro announced a partnership with Lowe's, a well-known home improvement retailer. This collaboration will see Lowe's offering Toro products, including portable power equipment and snow blowers. Customers will be able to purchase select Toro products both in Lowe's stores and online starting from next spring.