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Newell Brands Stock Sinks on Q4 Sales Miss and Dismal Outlook

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Feb. 15 2019, Published 3:20 p.m. ET

Fourth-quarter sales disappoint

Newell Brands (NWL) stock was down 19.9% as of 2:41 PM EST on February 15 after the company reported lower-than-expected sales for the fourth quarter and issued a weak outlook for 2019. Newell Brands, which owns brands such as Paper Mate, Sharpie, and Parker, expects its sales and its adjusted EPS to fall in 2019, reflecting the impact of challenging business conditions and its reorganization efforts.

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Sales of Newell Brands fell 6.0% YoY (year-over-year) to $2.34 billion in the fourth quarter. The company’s top line growth was adversely affected by currency headwinds, the adoption of a new revenue recognition standard, and lower core sales. Analysts had been expecting sales of $2.43 billion for the company.

Newell’s fourth-quarter core sales, which excluded the impact of acquisitions, divestitures, and currency fluctuations, fell 1.2% in the fourth quarter.

The company’s Learning and Development segment was the only segment that reported a rise in its core sales YoY in the quarter. Core sales in the Learning and Development segment rose 1.7% in the fourth quarter, while core sales in the Food and Appliances segment and the Home and Outdoor Living segment fell 1.7% and 3.0%, respectively. The core sales growth in the Learning and Development segment was driven by higher sales in the writing category.

Newell Brands’ fourth-quarter adjusted EPS of $0.71 exceeded analysts’ expectation of $0.67 and rose 4.4% YoY. Overall, Newell Brands’ sales fell 9.6% to $8.6 billion in 2018, while its adjusted EPS fell 2.6% to $2.68.

Weak outlook

Newell Brands expects its 2019 net sales to be in the range of $8.2 billion–$8.4 billion compared to $8.6 billion in 2018. The company expects its 2019 core sales to fall in the low single digits. The consumer products company expects its 2019 adjusted EPS to be in the range of $1.50–$1.65.

Newell Brands’ 2019 guidance lagged analysts’ estimate of adjusted EPS of $2.14 on sales of $8.8 billion. The company’s performance in 2019 is expected to be affected by the bankruptcies of certain retailers, adverse currency movements, tariff concerns, and cost inflation.

The company’s reported net sales in 2019 will likely be affected by its divestiture of its Pure Fishing and Jostens brands. Newell Brands completed the sale of these two brands for $2.5 billion in 2018.

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