Sales at four of Newell Rubbermaid’s five operating divisions declined during the company’s first quarter, but overall profitability suffered as a result of baby products recall and expenses related to a transformation strategy.
Sales of leading writing instrument brands such as Sharpie, Paper Mate, Parker and Waterman grew 6.1% to $361.3 million. Operating margin at the company’s largest division also expanded to 21.3% from 18.6%. Growth in the writing segment wasn’t enough to offset declines elsewhere and Newell Rubbermaid’s total sales declined 0.7% to $1.23 billion. The company’s second largest division, home solutions, saw sales decline 5.2% to $321.2 million. Sales in the tool division declined 0.4% to $187.8 and sales of commercial products fell 0.3% to $182.6. The company’s smallest division, baby and parenting, had the biggest impact on results. Sales fell 5.4% to $179 million, but a car seat product recall hurt profitability and prompted the company to take an $11 million, or two cent a share, charge against earnings.
The company also took a $19.7 million, or five cent a share, charge related to implementation of a strategy called Project Renewal. As a result, net income was down slightly to $52.9 million, compared with $54.2 million in the prior year or a reported basis.
"We delivered solid first quarter results in the context of two previously communicated events,” said Newell Rubbermaid CEO Michael Polk. “Our team did a good job overcoming the adverse impacts of the harness buckle recall on select car seats in our U.S. Baby business and the weather-related slow down on our U.S.-centric Home Solutions business. Strong core sales growth in Writing offset declines in Home Solutions and Baby, yielding normalized earnings per share of $0.35, flat with last year's results.”
Polk said the company is confident in its full year financial guidance and expect the company's core sales and earnings per share growth to accelerate through the balance of the year as it significantly increase advertising and promotion investment levels in support of brands and innovation.