Spectrum Brands reported a double-digit, year-over-year net sales gain in its fiscal third quarter as it accelerated integration of its Tristar appliance and cookware acquisition into its Home and Personal Care Appliances business and renamed that business Empower Brands.
Spectrum, which through acquisitions and divestitures is focusing its operations on the home, garden and pet care categories, said year-over-year 10% net sales and 4.4% organic net sales gain in the quarter occurred despite customer ordering unpredictability and softening consumer demand.
The company for the quarter posted net income from continuing operations of $3 million with an adjusted EBITDA decline of 19.4% year over year to $80.1 million. Spectrum attributed the decline to lower volume, unfavorable impact of foreign exchange and higher transaction and restructuring costs, adding increased supply chain cost was partially offset by cost reduction moves.
Spectrum’s Home and Personal Care business includes such small appliance brands as Black & Decker, George Foreman, Russell Hobbs, and Remington; and, from its recent Tristar acquisition, PowerXL, Emeril Lagasse and CopperChef. The company said it completed the internal separation of its Home and Personal Care appliance business for a potential spin-off or other transaction.
The company said it moving to close the $4.3 billion sale of its Hardware and Home Improvement business to ASSA ABLOY, supporting Spectrum’s objective to refocus the company on its Global Pet Care and Home and Garden businesses.
The company reported net sales of $290.2 million during the quarter from the combined Home and Garden group, a 12.8% year-over-year decline. Operating income of $36.2 million during the quarter from the group marked a 13.2% drop from the year-earlier period.
“On the operations side, we delivered top-line growth this quarter despite some challenging customer dynamics,” Maura said. “We entered the third quarter with optimism after implementing the necessary pricing actions to restore our margin structure. However, during the quarter our retail partners experienced rapidly changing consumer behavior as well as reduced foot traffic in home center channels while their inventory levels were 30-40 percent higher than a year ago levels. Additionally, we continued to experience challenging weather conditions in our Home & Garden business, which negatively impacted consumer demand and retailer replenishment. The unprecedented negative demand shocks and the unfavorable weather conditions materially reduced our planned sales for the quarter and led to our own inventory levels being higher than expected. This in turn led to higher demurrage, detention and storage costs in the short-term that further pressured our margins in the quarter.”
