Spectrum Brands Holdings, the home-essentials company, has announced a decrease in sales for the fiscal third quarter, with short-term demand headwinds expected to continue in the current quarter. Here are the key details:
Sales
Sales for the three months ended July 2 totaled $735.5 million, down from $818 million in the same period last year. This figure fell short of analysts’ expectations of $785.4 million.
Adjusted Earnings
The Middleton, Wis.-based company reported adjusted earnings of 75 cents per share, an improvement from 54 cents per share in the previous year. Analysts had predicted adjusted earnings of 48 cents per share.
Net Income
Spectrum Brands recorded net income of $1.86 billion, a significant increase from $32.9 million in the prior-year period. This exceeded analysts’ expectations of $18.4 million.
Sales Decline and Inventory Concerns
Spectrum Brands attributed the 10% decrease in sales to retailers focusing on reducing their inventory, resulting in lower replenishment orders and slower category point-of-sale (POS). However, positive pricing adjustments partially offset this decline. CEO David Maura highlighted that excess inventory remains in both the retail channel and the company’s balance sheet, particularly in the kitchen appliances segment.
Outlook
Maura expects the short-term demand headwinds to persist in the fourth quarter. As a result, Spectrum Brands is likely to be toward the lower end of its earnings framework (excluding investment income from the HHI proceeds). The sale of its Hardware and Home Improvement segment to Swedish lockmaker Assa Abloy was completed in June.