Spectrum Brands reports big profit and sales miss, amid ‘negative demand shocks’ and bad weather

Spectrum Brands Holdings Inc. reported Friday fiscal third-quarter profit and sales that were well below expectations, after the home-essentials company, which brands including George Foreman, Tetra, Remington and OmegaOne, amid “rapidly changing consumer behavior” and lower traffic in home center channels. Net income rose to $32.7 million, or 80 cents a share, from $30.7 million, or 72 cents a share, in the year ago period. Excluding nonrecurring items, including discontinued operations, adjusted earnings per share came to 54 cents. The FactSet EPS consensus was $1.40. Sales grew 10.0% to $818.0 million but was below the FactSet consensus of $918.2 million. Cost of goods sold rose more than sales, up 12.6% to $542.0 million as gross margin contracted to 33.7% from 35.3%. “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,” said Chief Executive David Maura. “This in turn led to higher demurrage, detention and storage costs in the short-term that further pressured our margins in the quarter.” The stock, which was still relatively inactive in premarket trading, has dropped 20.3% over the past three months while the S&P 500 has gained 7.1%.

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