Aerogrow International, Inc. (AERO) SEC Filing 10-K Annual report for the fiscal year ending Thursday, March 31, 2011

Aerogrow International, Inc.

CIK: 1316644 Ticker: AERO
Exhibit 99.1

AeroGrow Reports Results for Quarter and Fiscal Year Ended March 31, 2011
Annual revenue of $11.3 million
Operating loss reduced more than 40% year over year, to $3.7 million
Strategic shift to direct-to-consumer channel gaining traction
Boulder, COAugust 15, 2011 - AeroGrow International, Inc. (OTCBB:AERO - News) ("AeroGrow" or the "Company"), makers of the AeroGarden® line of indoor gardening products, announced results for the quarter and fiscal year ended March 31, 2011.
For the fiscal year ended March 31, 2011, AeroGrow reported revenue of $11.3 million, down 34% from the year ended March 31, 2010.  The decline in sales was largely due to a deliberate shift in the Company’s business strategy to focus on building its higher-margin direct-to-consumer business and reduce its exposure to the retail sales channel because of the relatively low profit margins and high capital and operational requirements in that channel.  This resulted in wholesale sales to retailers declining by almost 70% year-over-year, accounting for more than 80% of the Company’s total decrease in sales.
Despite the lower level of sales, the shift to a higher mix of direct-to-consumer sales, combined with a focus on margin improvement efforts, increases in marketing efficiencies, and an almost 40% year-over-year reduction in selling and administrative expenses, led to a significant improvement in the Company’s operating loss.  AeroGrow reported an operating loss for the year of $3.7 million, a reduction of more than 40% from the operating loss of $6.2 million for the year ended March 31, 2010.
"While we’re certainly not satisfied with the operating loss for the year, I’m quite pleased with the progress we made and the acceleration in our performance as the year unfolded,” said Mike Wolfe, AeroGrow’s President & CEO.  “We delivered improvements in many key metrics as we learned to successfully operate a leaner, more focused business, primarily leveraging the direct response sales channels.”
Included among the Company’s year-over-year improvements were a 35% increase in marketing effectiveness, an increase in the mix of high margin seed kit and accessory sales to 44.0% from 33.6%, and a $3.8 million, or 41%, reduction in overhead expense.  Despite these improvements, the Company continued to face significant liquidity issues which constrained its ability to spend sufficient media dollars to drive increased sales and efficiencies, and limited its ability to translate the improvements into annual profits.
“We shifted our focus to our direct response business during the year,” said Mr. Wolfe, “and although our DR sales were down year-over-year, due largely to our inability to spend adequate media dollars, our financial performance was dramatically improved, and those improvements were accelerating in the second half of our fiscal year.  For the quarter ended in December, direct response sales resulted in our first quarterly EBITDA profit in over two years, and for the quarter ended in March, our direct response sales were up almost 18% year-over-year.

The following information was filed by Aerogrow International, Inc. (AERO) on Monday, August 15, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Ticker: AERO
CIK: 1316644
Form Type: 10-K Annual Report
Accession Number: 0001185185-11-001341
Submitted to the SEC: Mon Aug 15 2011 4:40:52 PM EST
Accepted by the SEC: Mon Aug 15 2011
Period: Thursday, March 31, 2011
Industry: Retail Building Materials Hardware Garden Supply

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