Newell Brands reported that fourth-quarter net sales were $2.3 billion, a decline of 18.5 percent compared with the prior-year period, including the year-over-year impact from the sale of the Connected Home & Security business at the end of the first quarter 2022. Core revenues declined 9.4 percent compared with the prior-year period. One of seven business units increased core sales compared with the prior-year period.
The Outdoor & Recreation segment, which includes Marmot, Ex Officio, Stearns, Bubba, Coleman, and Contigo, among others, generated net sales of $211 million in Q4 compared with $304 million in the prior-year period, reflecting a core sales decline of 21.0 percent, as well as the impact of exits from certain low margin categories and unfavorable foreign exchange. The reported operating loss was $14 million, or negative 6.6 percent of sales, compared with $1 million, or negative 0.3 percent of sales, in the prior-year period. Normalized operating loss was $4 million, or negative 1.9 percent of sales, versus normalized operating income of $8 million, or 2.6 percent of sales, in the prior-year period.
Reported operating margin was negative 11.9 percent, including the impact of a $326 million non-cash impairment charge, compared with positive 6.1 percent in the prior-year period, which also included the impact of a $60 million non-cash impairment charge. Normalized operating margin was 4.9 percent compared with 10.0 percent in the prior-year period.
Reported diluted loss per share was 60 cents in Q4 compared with diluted earnings per share of 23 cents in the prior-year period. Normalized diluted earnings per share were 16 cents compared with 42 cents per share in the prior-year period.
“Fourth quarter results were in line with our expectations and brought to a close a difficult second half. The business continued to be impacted by a tough operating environment, including slowing consumer demand for general merchandise categories, as well as inventory reductions at retail,” said Ravi Saligram, Newell Brands CEO. “We have been taking decisive actions to effectively navigate the current environment while positioning the organization for long-term success. Several weeks ago we announced Project Phoenix through which we expect to further simplify and strengthen our company by leveraging the scale and power of One Newell to optimize our cost structure and operate more efficiently. We expect the new operating model to unlock additional growth opportunities for the business over time and bring us even closer to our customers and consumers.”
Net sales for the full year ended December 31 were $9.5 billion, a decline of 10.7 percent compared with $10.6 billion in the prior year, reflecting a core sales decline of 3.4 percent, the impact of the sale of the CH&S business at the end of the first quarter 2022, unfavorable foreign exchange, as well as category and retail store exits.
Reported gross margin was 30.0 percent compared with 31.8 percent in the prior year, as the impact of fixed cost deleveraging and significant headwinds from foreign exchange and inflation, particularly related to sourced finished goods, transportation and labor, more than offset the benefits from pricing and FUEL productivity savings. Normalized gross margin was 30.2 percent compared with 32.0 percent in the prior year.
Reported operating income was $312 million, or 3.3 percent of sales, compared with $1.0 billion, or 9.6 percent of sales in the prior year. Non-cash impairment charges of $474 million and $60 million were incurred in the current and prior years, respectively, related to goodwill and intangible assets. Normalized operating income was $956 million, or 10.1 percent of sales, compared with $1.2 billion, or 11.7 percent of sales, in the prior year.
Reported net income was $197 million compared with $622 million in the prior year. Reported diluted earnings per share were $0.47 compared with $1.45 in the prior year. Normalized net income was $654 million, or $1.57 normalized diluted earnings per share compared with $828 million, or $1.93 normalized diluted earnings per share, in the prior year.
Chris Peterson, president, said, “During 2022, we meaningfully reduced complexity, realized strong productivity savings and drove significant progress in our supply chain transformation journey through Project Ovid. We expect many of the headwinds the company experienced in the second half of 2022 to persist in 2023, as we plan for a recessionary environment. We are focused on improving Newell’s financial performance by strengthening its cash flow and balance sheet, driving gross margin improvement and overhead savings while positioning the organization for future growth through capability investments that enhance operational excellence and create value for our stakeholders.”
During the fourth quarter 2022, the company elected to change its method of accounting for certain inventory in the U.S. from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. This confirms the company’s entire inventory to a single method of accounting.
Looking ahead, Newell Brands is forecasting an 8 percent to 6 percent decline in Core Sales for the full year 2023 and an 18 percent to 16 percent decline in first-quarter Core Sales revenues.
Photo courtesy Newell Brands/Marmot
