Toro Co (NYSE:TTC) stock fell 3.11% (As on September 8, 11:37:29 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the third quarter of FY 23. During the third quarter, the company experienced a sharp and accelerated reduction in homeowner demand for residential and professional segment lawn care products. The softness in homeowner demand was driven by a combination of macro factors, including economic uncertainty, higher interest rates, and consumer spending preferences following a period of exceptional demand during the pandemic, along with unusually unfavorable weather patterns. These factors led to significantly lower than expected shipments of lawn care solutions in both our residential and professional segments. Macro factors drove reduced demand from homeowners, including purchase deferrals and tradedowns, as well as a reduction in orders by our dealer channel and an acceleration of destocking by the mass channel. Dry conditions in key regions persisted throughout June and into July, which delayed replacement needs and slowed mid-season channel replenishment orders.

Moreover, Professional segment net sales for the third quarter were $896.3 million, up 1.1% from $886.2 million in the same period last year. The increase was primarily driven by higher shipments of underground and specialty construction, and golf and grounds products, and net price realization, partially offset by lower shipments of lawn care equipment. Residential segment net sales for the third quarter were $175.3 million, down 35.1% from $270.0 million in the same period last year. The decrease was primarily driven by lower shipments of products broadly across the segment. Adjusted operating earnings as a percentage of net sales for the third quarter were 12.2%, compared with 14.1% in the same prior-year period.

TTC in the third quarter of FY 23 has reported the adjusted earnings per share of 95 cents, missing the analysts’ estimates for the adjusted earnings per share of $1.23, according to Zacks Investment Research. The company had reported the adjusted revenue of $1.08 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $1.22 billion. Gross margin and adjusted gross margin for the third quarter were both 34.4%, down slightly from 34.5% for both in the same prior-year period. The decrease was primarily driven by higher material costs, mostly offset by lower freight expense.

For the fiscal year ending October 31, 2023, the company now expects net sales similar to slightly higher than the prior fiscal year, and adjusted diluted EPS in the range of $4.05 to $4.10.