Newell Brands reported it continues to drive its turnaround initiatives, making some headway in its third quarter despite disruptions, including changing tariff rates.
Net income was $21 million, or five cents per diluted share, compared with a net loss of $198 million, or 48 cents per diluted share, in the year-previous quarter, the company reported. Adjusted for one-time events, net income was $70 million, or 17 cents per diluted share, versus $69 million, or 16 per diluted share, in the year-before period.
An analyst consensus estimate published by Zacks Investment research pegged adjusted diluted earnings per share at 18 cents and revenues at $1.89 billion.
Net sales were $1.81 billion, a decline of 7.2% compared with the prior-year quarter. Core business sales declined 7.4% in the period year over year. Operating income was $119 million versus an operating loss of $121 million in the year-earlier quarter while adjusted operating income was $162 million versus $185 million.
Newell noted key results by business segment:
- Home and Commercial Solutions generated net sales of $942 million, down from $1 billion in the quarter year over year. Operating income was $40 million versus an operating loss of $94 million in the year-past period, while adjusted operating income was $64 million compared with $122 million.
- Learning and Development generated net sales of $681 million, down from $717 million in the quarter year over year. Operating income was $124 million versus $75 million in the year-past period, while adjusted operating income was $130 million compared with $154 million.
- Outdoor and Recreation generated net sales of $183 million in the current and year-past quarter. Operating loss was $8 million versus an operating loss of $23 million in the year-past period, while adjusted operating loss was $1 million compared with an operating loss of $15 million.
In its outlook, Newell estimated accruing an incremental cash tariff cost of approximately $180 million in 2025 compared to 2024. Of this, the company estimates the gross profit impact, prior to mitigating actions in 2025, to be approximately $115 million, or 23 cents per share after tax, compared to 2024. In updating its guidance, Newell says it now anticipates a net sales decline of 5% to 4.5% from a sales decline of 3% to 2% as forecast previously and an adjusted EPS of 56 cents to 60 cents down from 66 cents to 70 cents.
In announcing the financial results, Chris Peterson, Newell Brands president and CEO, said, “Our turnaround continues to advance, even as Newell and the broader industry navigated significant trade disruptions in the third quarter. Our team responded swiftly with strategic measures including sourcing changes, pricing actions and productivity initiatives to mitigate the impact. Sales were affected by reduced retail inventory levels, softness in international markets, particularly in Brazil, and moderated demand following tariff driven pricing actions. We believe the retailer inventory adjustment was a one-time event, as tariff-related inventory values were absorbed and retailer delivery preferences shifted away from direct import. Looking ahead, we expect our international business to return to growth in the fourth quarter. Competitive pricing actions are gaining traction, especially in key categories like writing, where our strong domestic manufacturing base gives us a distinct advantage. We are confident that our decisive actions are paving the way for the company to return to sustainable top-line growth in the future.”
Mark Erceg, the company’s CFO, added, “Newell Brands’ third quarter results included a number of positives despite a challenging top line. First, gross margin would have expanded by 55 basis points in the third quarter if not for the temporary impact of one-time China tariffs. Second, we continued to invest behind innovation and brand building with advertising and promotion at the highest rate, as a percentage of sales, in nearly 10 years. Third, normalized overheads as a percentage of sales declined for the first time in three years, dropping by approximately 120 basis points and, looking forward, we expect this trend to continue as we continue to focus on improving the efficiency of our operating model and deploy leading edge AI tools across the organization.”
