Newell Brands said sales in the company’s outdoor & recreation division, which includes Coleman and Marmot, were impacted by the late spring.
Newell’s outdoor brands are now included in the company’s new Home and Outdoor Living segment, which is comprised of the outdoor & recreation, home fragrance and connected home and security divisions.
The segment produced net sales in the period of $742 million, down 6.7 percent year-over-year.
On a conference call with analysts, Ralph Nicoletti, Newell’s CFO, noted that the outdoor and recreation segment “lost distribution on certain camping items in the U.S” and also faced “weakness on tents and coolers related to the late spring.”
Officials highlighted Coleman among the underperformers due to the late spring and lost distribution.
In the Q&A session, Michael Polk, president and CEO, said the company has a “great Coleman business in Japan” and the Campingaz camping brand is doing well in Europe. However, Polk said the Coleman brand continues to be impacted in the U.S. by eroding shelf space at “one particular retailer” he declined to specify. Coleman’s air mattress business in particular was impacted during the quarter by reducing listings at the retailer. On the positive side, Polk said he believes Coleman is establishing a “healthier position” with the unidentified retailer, and a focus on innovation is supporting a premium positioning for Coleman across the marketplace.
Said Polk, “I feel better about that particular interface and relationship than I had for a long while. We’ve made great progress at a couple of other big players, one in club and one in mass. And we clearly have made terrific progress on our own D2C businesses on Marmot, and I think there is an opportunity on Coleman going forward.”
Newell Brands’ outdoor segment includes Coleman, Contigo, Marmot and Ex Officio. Newell also owns Pure Fishing although, the company has been put on the selling block and is listed as a discontinued operation. The fishing brands include Berkley, Shakespeare, Abu Garcia, Penn, Ugly Stik and Stearns.
Companywide, Newell Brands reported on a decline in both sales and profit in the second quarter. The company also adjusted forecast for the year as a result of the divestitures of the company’s Waddington and Rawlings businesses, and given current expectations regarding the tariff impact.
Polk said that as the tariffs currently stand, the annualized impact on results could be as much as $100 million.
“While we’ve announced incremental pricing [increases], we’re simultaneously appealing the application, the bulk of these tariffs to the U.S. trade representative office and are considering … possible alternative sourcing options,” Polk said. “Virtually, every business has been impacted with the greatest exposure on baby, appliances and food.”
In the second quarter, companywide sales slumped 12.0 percent to $2.2 billion, largely attributable to the new revenue recognition standard, lost sales from divestitures completed in 2017, volume declines in the company’s Baby segment related to the Toys ‘R’ Us liquidation and declines in Writing related to significant inventory de-stocking in office superstore channels.
Total company core sales declined 6.2 percent, driven largely by a 14.5 percent decline in the Learning & Development Segment (Writing and Baby) as well as the softness in the coolers, tents and fresh preserving businesses in the Home & Outdoor Living segment. For the second quarter 2018, total company core sales include the Waddington and Rawlings businesses prior to divestiture.
Including discontinued operations, actual sales were $3.73 billion against $4.1 billion.
Net income dropped 40.9 percent to $131.7 million, or 27 cents a share, from $223.0 million, or 46 cents.
Excluding special items, normalized EPS came to 82 cents, down from 87 cents a year ago but ahead of Wall Street’s consensus estimate of 78 cents. Cost savings and synergies were offset by core sales volume declines, unfavorable mix related to lower Writing sales volume and inflation.
The company now expects sales to be between $8.7 billion and $9 billion in 2018, down from the company’s previous guidance of between $14.4 billion and $14.8 billion. The company expects adjusted earnings of between $2.45 and $2.65 a share, down 20 cents from previous forecasts. Most of that reduction is from the sale of brands and discontinued operations.
On the call, Polk said that Newell faces “an intense period of change” as shoppers move online and major retailers close stores, and that the overhauled company “will be simpler, faster and stronger.”
He said sales in the company’s core units should improve toward the end of the year.
In late June, Newell said the company had closed the sales of both the company’s Rawlings and Waddington. Newell had said in early June the company was selling Rawlings for $395 million to investment firm Seidler Equity Partners and Major League Baseball. Newell said that 20 cents worth of the company’s adjustment to earnings guidance was because of both deals.
In early May, along with the company’s first-quarter earnings results, Newell said the company also would consider brands such as Pure Fishing and the company’s Jostens yearbook business. The company aims to divest multiple other businesses that in total made up about 35 percent of its net sales. Polk on Monday said the company remains on track to raise about $10 billion from those sales.
Said Polk, “Marketing processes for the remaining held-for-sale businesses are in full flight. We continue to expect to generate around $10 billion in after tax proceeds from the divestiture program.”
Newell has repeatedly missed sales goals and lost billions of dollars of market value since the company closed a $15 billion deal to buy Jarden Corp. in 2016. Many of the businesses the company is looking to sell were acquired as part of that deal.
Besides Rawlings, Newell has sold the K2, Marker, Line, Volkl and Ride Winter Sports division, as well as the Zoot and Squadra among sports and outdoor brands. All those brands were acquired in the Jarden acquisition.
Photo courtesy Coleman
