It's not a good thing as expected. The stock rose about 19% yesterday and is down almost 40% today to $0.24 a share. They try to make it sound as good as possible but don't know how much longer they can stay afloat. If you do so, please pray for them.....

AeroGrow Announces Fiscal 2009 Third Quarter Results

   * Quarterly revenue declined in deteriorating retail environment

   * Fiscal year-to-date revenue up 16% over previous year
Boulder, CO - February 12, 2009 - AeroGrow International, Inc. (NASDAQ:AERO [links to finance.yahoo.com/q?s=aero] - News [links to finance.yahoo.com/q/h?s=aero]) ("AeroGrow" or the "Company"), makers of the AeroGarden? line of indoor gardening products, announced results for the quarter ended December 31, 2008.

AeroGrow reported quarterly revenue of $11.0 million, a decrease of 25% over the $14.6 million reported for the prior year's quarter ended December 31, 2007. For the nine months ended December 31, 2008, AeroGrow reported an increase of 16% over the nine months ended December 31, 2007, with revenue of $31.6 million in 2008, compared to $27.2 million in 2007.

"Consumer demand for the AeroGarden line stayed strong in the quarter," said Jerry Perkins, CEO of AeroGrow. "Consumers bought 63% more gardens and 91% more seed kits than in the prior year's quarter through broader distribution at our top tracked retail accounts. However it was largely accomplished by selling through inventory already on shelves as of the end of September. Disappointing sales for most consumer products continued through the holidays, forcing retailers to focus on managing inventories and cash, resulting in significantly lower wholesale reorder rates than we had forecast.

"In our retail business, reported net revenue was down 39% from last year on declining wholesale shipments of 19%, compounded by the impact of sales allowances offered to our retail customers. In our direct business, revenue increased almost 50% in web marketing and 70% in catalog, as sales to new and existing customers remained strong. These gains were offset by a significant decrease in our direct TV revenue in the quarter as we dialed back media spending in light of the rapidly deteriorating economic conditions. For the quarter, our direct business revenue was down 5% from the same period last year."

AeroGrow reported a $4.4 million loss for the quarter ended December 31, 2008, up from a loss of $1.7 million in the quarter ended December 31, 2007 and down from a profit of $418,000 in the previous quarter ended September 30, 2008. The net loss for the nine months ended December 31, 2008, totaled $6.8 million as compared to a loss of $6.0 million reported for the same period in 2007.

"Lower-than-forecast revenue in conjunction with unusual expenses directly attributable to the economic downturn drove the loss for the quarter," continued Mr. Perkins. "Almost $2 million of the loss reflects pricing actions taken to remain competitive in a highly discounted retail environment. $800,000 of this was due to our share of price markdowns taken at retail in the December quarter and $1 million more was booked in recognition that these economic conditions will persist and additional actions will likely be required. In addition, more than $600,000 of the loss is due to a combination of cash and non-cash expenses including severance costs recognized in the quarter from December's headcount reductions and other cost-cutting measures.

"Our primary goal at present is to preserve the long-term value of the company and brand by resizing our business structure and overhead to the new and dramatically altered retail and consumer landscapes. The steps we have taken and have planned, which include the engagement of an investment banker to assist with raising capital or potential strategic alternatives, should leave us well-positioned for renewed growth when the economy stabilizes. We still have a unique position in the marketplace, with products that consumers love, broad distribution through multiple channels, no established competition, and a recurring revenue model that continues to prove itself through the lifetime value of our customers."

I think Cliff and Lorraine would be among the last to exit the building when/if they lock the doors, I hope so anyway, I've never had people I consider friends at a company but feel I have a few at AG. Stock closed at $0.21 on about 15x normal volume. Bummer, this will almost surely move them to the pink sheets.