Newell Brands Outdoor & Recreation Segment continued its strong recent momentum in the first quarter as core sales increased 22.9 percent on top of a 7 percent gain in the year-ago period. The gains were boosted by retailers ordering inventory earlier this year to prepare for the spring/summer season.
The performance marked the segment’s fifth consecutive quarter of growth.
“As we shared last quarter, given the ongoing supply chain challenges that have beset the industry, retailers accelerated orders of seasonal products into the first quarter, particularly in the Outdoor & Recreation and Writing Businesses,” said Ravi Saligram, Newell’s president and CEO, on a call with analysts.
Key brands in the Outdoor & Recreation segment include Campingaz, Coleman, Contigo, ExOfficio and Marmot. Smaller brands include Aerobed, Bubba and Stearns.
Overall sales in the segment reached $388 million in the quarter ended March 31 compared with $336 million, a gain of 15.5 percent year over year. The lower net versus core gain reflects exits from low-margin categories and unfavorable foreign exchange.
Reported operating income was $45 million, or 11.6 percent of sales, compared with $15 million, or 4.5 percent of sales, in the prior-year period. Normalized operating income was $49 million, or 12.6 percent of sales, compared with $20 million, or 6.0 percent of sales, in the prior-year period.
By region, net sales in North America reached $210 million, up 18.0 percent from $178 million a year ago. International sales in the Outdoor & Recreation segment were $177 million against $159 million a year ago, up 11.3 percent.
Saligram said about the Outdoor & Recreation Segment, “The strong performance was broad-based across all regions and major businesses are driven by retailer optimism regarding the upcoming season with outdoor participation expected to remain robust. Our customers place some of their orders for outdoor equipment earlier than usual due to the unpredictable supply chain environment and the seasonal nature of the category. Strong topline and share momentum in the beverage business persisted in Q1 as our innovation and brand-building efforts behind Contigo and Bubba continue to gain traction with the category further benefiting from increasing consumer mobility.”
Companywide, Newell reported a robust first quarter and reiterated its full-year outlook.
Adjusted 36 cents a share came in easily ahead of the 27-cent per-share consensus estimate. Its first-quarter revenue climbed nearly 5 percent year-over-year to $2.39 billion, comfortably above the $2.29 billion analysts expected.
Sales at every one of the company’s five segments were better than anticipated, and all home appliances also delivered above-consensus margins.
Newell Brands also include Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, Spontex, Oster, Sunbeam, and Mr. Coffee. The Outdoor & Recreation segment makes up about 14 percent of sales. Its four other segments are Commercial Solutions, Home Appliances, Home Solutions, Learning and Development.
Saligram said the external environment has remained “quite difficult” in the first quarter as prevailing headwinds surrounding the supply chain and inflation were further exacerbated by the war in Ukraine.
He said despite the significant impact from inflation, Newell’s normalized operating margin improved about 50 basis points versus last year, ahead of expectations, largely reflecting incremental pricing actions and stronger management of overhead costs.
Newell said its outlook for the balance of the year reflects a shift in customer order patterns due to the ongoing supply chain constraints that will benefit the first half of the year at the expense of the back half. Given the recent move in inputs, Newell’s inflation assumption for the year has gotten slightly worse and is now expected to account for about 9 percent of cost of goods sold in 2022.
“We are proceeding swiftly with mitigating actions, giving us the confidence to reiterate our outlook for the year, in spite of about $80 million of incremental inflation,” said Saligram. “We still expect 2022 to be a year of margins even though inflation has continued to move against us. Our outlook calls for top and bottom-line growth despite a challenging and uncertain macro backdrop.”
For 2022, Saligram said key priorities include improving gross margins as it double downs on efforts to offset the significant inflationary pressures and supply chain challenges while improving customer service levels.
“The strength of our brands has allowed us to take the appropriate pricing actions on all of our businesses while ensuring they remain a good value for consumers,” said Saligram. In addition, Newell plans to continue to optimize commercial spend, price innovation to be gross margin accretive, direct advertising & promotion spend toward higher gross margin categories and drive productivity.
Other priorities include accelerating international growth, transforming its supply chain through its Project Albian automation program and working towards its recently-announced goal to be carbon neutral by 2040 for all Scope one and Scope two emissions.
“Strong results in Q1 are building on our track record of following through with our commitments, and we are confident in our outlook for 2022,” said Saligram. “I am thankful to our employees for always rising to the occasion and helping us to successfully navigate through the ever-changing operating environment. I continue to believe that Newell’s best days are ahead of us, and we have a significant opportunity to drive shareholder value, onwards and upwards.”
Photo courtesy Newell Brands/Coleman
