Higher gross margins and lower costs drove year-over-year operating profit gains by Hamilton Beach Brands Holding Company in its third quarter despite a revenue decline.
In reporting a year-over-year quarterly revenue decrease of 3.8% reflecting lower consumer sales overall partially offset by higher commercial sales, Hamilton Beach noted demand for small kitchen appliances continues to be significantly higher than pre-pandemic levels and modestly softer than 2021
Total revenue in the third quarter was $150.8 million compared to $156.7 million in the year-earlier period. The company cited continued inventory rebalancing by many retailers, timing of holiday build orders and slightly softer point-of-sale results.
E-commerce sales increased by 7.8% and accounted for 34.5% of total revenue compared to 30.8% in the third quarter of 2021.
Hamilton Beach Brands operating profit in the quarter was $9.4 million compared to $7.4 million a year earlier. Net income was $5.9 million, or $0.43 per diluted share, compared to net income of $5.7 million, or $0.41 per diluted share.
The company noted strong placements for the holiday selling season and purchase order adjustments are expected to enable the Company to significantly reduce current inventory levels by the end of the year.
The Company expects continued progress with its strategic initiatives in 2022:
- Expand in Home Health and Wellness: The company noted solid consumer acceptance of the first products in a new line of premium air purifiers under the Clorox brand name as part of an exclusive multiyear trademark licensing agreement with The Clorox Company. The company also entered into an exclusive multiyear trademark licensing agreement with Brita and plans to launch a new line of countertop water appliances in early 2023.
- Gain Share in the Premium Market: New products and digital marketing are expected to drive the growth of the company’s premium brand products. In 2022, the Company launched Generation 2 of the Bartesian premium cocktail machine, the Bartesian Duet, a smaller 2-bottle model, and a commercial model. The Chi garment care brand continues to grow as consumers return to offices and engage in more out-of-home activities, according to Hamilton Beach Brands.
- Lead in the Global Commercial Market: The company expects to generate additional growth in the global commercial market through product development, digital marketing and increasing customer relationships with regional and global chains.
- Drive Core Growth: The company reported it plans to drive the growth of its flagship Hamilton Beach and Proctor Silex brands through innovative new product development, including an emphasis on higher-priced products, and digital marketing.
- Accelerate Digital Transformation: The company plans to continue to invest in robust digital marketing for all of its brands and markets.
- Leverage Partnerships and Acquisitions: The company is actively engaged in the pursuit of additional trademark licensing agreements, strategic alliances and acquisitions that would drive growth in all of its markets.
