Aerogrow International, Inc. (AERO) SEC Filing 10-K Annual report for the fiscal year ending Sunday, March 31, 2019

Exhibit 99.1

AeroGrow Reports 3^rd Quarter Results

Boulder, CO - (February 11, 2019) - AeroGrow International, Inc. (OTCQB: AERO) (“AeroGrow" or “the Company"), the manufacturer and distributor of AeroGardens - the world’s leading family of In-Home Garden Systems™ – announced results for its third quarter ended December 31, 2018.

For the quarter ended December 31, 2018 the Company recorded net revenue of $12.9 million, a decline from $17.4 million in the same period in the prior year.  Loss from Operations was $535K, vs. income of $406K in the prior year period.  For the nine months ended December 31, 2018, net revenue stands at $25.3 million vs. $25.6 million for the same period last year. The Company posted a loss from Operations for the nine month period of $517K, vs. a loss of $452K the prior year.

“Our 3^rd Quarter sales results proved to be disappointing overall, with gains in our on-line business being more than offset by weak in-store sales – particularly during the 4 week period from right after Cyber Monday through Christmas,” said AeroGrow President & CEO J. Michael Wolfe. “These results were further complicated by timing issues associated with sell-in and drop ship support for our retail customers.

“We implemented a number of tactical changes in our December quarter. I think some of these changes were effective, but some proved problematic. However, a careful look at our fundamental metrics (including gross margin improvement for the nine month period and overall seed kit sales) continues to suggest a strong underlying business with good customer engagement that is capable of driving continued top-line growth.

“Since early January, our sales have picked right back up to pre-December levels of positive year-over-year comps. This suggests to me that the challenges we faced were associated narrowly with the holiday-selling season – which is the exact time that we were counting on an array of new marketing and media programs to create broad awareness of our product and to drive in-store retail traffic. This strategy of using general media to drive in-store retail traffic has been effective for us in the past, but our new approach clearly fell short this year.

“I’ll briefly address the major initiatives that we implemented during the December quarter and provide a comment on each, starting with an update to the AeroGarden Harvest, our flagship product. We feel as though the new Harvest is our best-designed, best-looking and most reliable AeroGarden ever – and consumer acceptance has been quite positive. It’s also noteworthy that we began implementing a change to our seed kit manufacturing process during the quarter that will provide even higher rates of germination, which is a key element in our ability to ensure strong customer engagement. Based on our history of success with new products, we have several new and highly innovative products in our development pipeline for launch later in 2019.

“Our distribution strategy was largely unchanged this year vs. the last several years. The cornerstone of our strategy continues to be driving on-line sales through our retail partners (led by Amazon), and our direct-to-consumer website. Overall, this portion of our business continued to show steady growth. We also partnered once again with several top-tier retailers to sell in their stores nationwide. Our in-store sell-thru results were mixed – ranging from significant growth on one end to a decline vs. last year on the other. Overall, we have to acknowledge that our in-store sell-thru did not meet our past performance nor our expectations.

“The most significant change we made this year was to our broad marketing and media strategy. We implemented numerous changes to our media mix, messaging and flighting tactics, which in combination proved less effective in driving our in-store sales. We have undertaken a full review of these tactics and I am confident that we will learn from our mistakes and get them corrected as we move forward.

“I mentioned earlier that timing of orders and drop shipping on behalf of our customers also affected our Q3 revenue. This year, we shipped some orders for our retail customers on a different cadence than we have in the past (with some shipping in Q2 and others now planned for Q4, rather than shipping in Q3). Some of our customers also relied less heavily on drop shipping in November and December and instead filled their .com orders using products that we had shipped them in Q2.