OUST - Spectrum Brands falls after reporting sharp decline in organic sales

2023-05-12 07:06:31 ET

Spectrum Brands ( NYSE: SPB ) reported that sales decreased 9.7% in FQ2 , driven lower by a decrease in organic sales of 10.1% excluding the impact of $19.4M of unfavorable foreign exchange rates and acquisition sales of $22.1M. The company noted sales declined due to retailer inventory management strategies and slower category POS, offset by positive pricing adjustments

Sales were up 0.5% in the global pet care segment to $296.7M. However, sales compared to Q1, which was pressured by customers' focus on inventory management leading to lower replenishment orders. The increase in net sales compared to last year was due to strong growth in companion animals, driven by chews in North America and Dog and Cat food in EMEA, partially offset by declines in other hard goods and aquatic environments as compared to prior year elevated levels.

Sales dropped 11.7% in the home & personal care segment to $279.2M. The decrease in sales was primarily due to category decline from lower consumer demand, particularly in kitchen appliances, and continued retailer inventory management in North America. Sales in EMEA were also impacted by lower consumer demand.

Sales were down 22.0% in the home & garden segment to $153.3M. The sales drop primarily driven by reduction in retailer inventory compared to a strong prior year inventory build ahead of the season. Adverse weather conditions late in the quarter also negatively impacted the pest controls category POS and resulted in lower replenishment orders. Cleaning products sales decreased as a slow start to the spring cleaning season contributed to a POS decline in the relevant categories.

Gross profit and gross profit margin declined a year ago due to a reduction in sales volume, unfavorable mix, and sales of higher cost inventory accumulated in the prior year. Those factor were offset to a degree by positive pricing.

Adjusted EBITDA from continuing operations was $51.0M vs. $79.0M a year ago.

Shares of Spectrum Brands ( SPB ) fell 4.80% in premarket trading to $67.90 vs. the 52-week trading range of $38.93 to $91.26.

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