Newell Brands reported its Home & Outdoor Living segment generated net sales of $627 million compared with $670 million in the prior year period, a decline of 6.4 percent.
The decline is primarily attributable to the impact of unfavorable foreign exchange, the exit of approximately 60 underperforming Yankee Candle retail stores and a core sales decline of 2.9 percent, largely driven by lost distribution for Coleman at a key U.S. retailer and declines in the remaining home fragrance retail stores. The segment reported an operating loss of $1.5 million compared with operating income of $7.8 million in the prior year period. Reported operating margin was a negative 0.2 percent compared with 1.2 percent in the prior year period. Normalized operating income was $12.3 million compared with $20.9 million in the prior year period. Normalized operating margin was 2.0 percent compared with 3.1 percent in the prior year.
The segment includes Chesapeake Bay Candle, Coleman, Contigo, ExOfficio, First Alert, Marmot, WoodWick and Yankee Candle.
Companywide, net sales from continuing operations were $1.71 billion, a decline of 5.5 percent compared with $1.8 billion in the prior year period, primarily reflecting the impact of unfavorable foreign exchange and a decline in core sales.
Core sales from continuing operations declined 2.4 percent from the prior year period. Sales came in above Wall Street’s consensus expectation of $1.69 billion.
Reported operating margin was 0.9 percent compared with negative 1.5 percent in the prior year period. Normalized operating margin was 4.3 percent compared to 2.5 percent in the prior year period.
Reported diluted loss per share for the total company was 36 cents per share compared with reported diluted earnings per share of 11 cents in the prior year period.
Normalized diluted earnings per share for the total company were 14 cents, compared with 28 cents in the prior year period. Wall Street’s consensus estimate had been 6 cents a share.
Operating cash flow was a use of $200 million, an improvement of $202 million versus a year ago.
The company announced divestitures of two businesses, Process Solutions and Rexair, for combined after-tax proceeds of approximately $735 million, both of which were completed on May 1, 2019.
“We have had a good start to the year and are encouraged by the improvement in results in the first quarter,” said Michael Polk, Newell Brands President and Chief Executive Officer. “Sales were at the higher-end of our expectations, operating margins increased as a result of disciplined cost management, normalized EPS was well ahead of our expectations, and operating cash flow was significantly improved versus last year. We have taken decisive action to strengthen performance and those actions are beginning to yield results. As expected, U.S. retailer headwinds associated with the Toys ‘R’ Us bankruptcy and the Writing industry retailer landscape have begun to moderate as we exit the first quarter, setting up what we believe will be a more constructive environment for the balance of 2019.”
Outlook for Full Year and Second Quarter 2019
The company reaffirmed its full year outlook and initiated its second quarter outlook as follows:
Full Year 2019 Outlook
- Net Sales $8.2 to $8.4 billion
- Core Sales Low single digit decline
- Normalized Operating Margin 20 to 60 bps improvement
- Total Company Normalized EPS $1.50 to $1.65
- Total Company Operating Cash Flow $300 to $500 million
Q2 2019 Outlook
- Net Sales $2.1 to $2.15 billion
- Core Sales flat to down 2%
- Normalized Operating Margin flat to down 60 bps
- Total Company Normalized EPS $0.34 to $0.38