Weber ( NYSE: WEBR ) broke higher after the grill maker introduced a comprehensive cash flow and cost management plan
The core components of the new plan include the suspension of Weber's ( WEBR ) quarterly cash dividend, a focused reduction of COGS and SG&A expenses, a reduction in force that removes management layers in the organization, and the tightening of global inventory levels and working capital positions. Weber ( WEBR ) management believes the actions will result in at least $110M of cash benefit, net of restructuring costs in FY23. Run-rate benefits beyond that are also anticipated.
The new plan was announced alongside weak earnings for Q2. Sales decreased 21% to $528M due largely to slower retail traffic, both in-store and online in all key markets. Rising inflation, supply chain constraints, geopolitical uncertainty and fuel prices, as well as foreign currency devaluations all factored into the sales drop. Gross profit fell to 29.1% of sales from 44.7% a year ago. The year-over-year decrease in gross profit was primarily due to substantial freight and commodity cost increases as compared to last year, promotional activity to enhance retail sell through in a macro environment that has slowed foot traffic, negative country and product mix shift, and significant currency devaluations within the quarter. All those margin drags were only partially offset by pricing actions in all regions.
Shares of Weber ( WEBR ) rose 10.85% to $7.67 to recapture the ground lost last week in front of the earnings report.
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Weber rallies despite weak results after management lays out cost reduction plan