Spectrum Brands reported corporate net sales in its fiscal fourth quarter ended September 30, 2022, of $749.5 million, a 1.1% decline from the $757.8 million in revenue reported in the year-earlier period.
Excluding the impact of $41.1 million of unfavorable foreign exchange rates and acquisition sales of $88.1 million from the purchase of Tristar Products’ small appliance and cookware business, Spectrum’s organic net sales decreased 7.3% year over year. Net sales were significantly impacted, according to Spectrum by lower replenishment orders due to higher retail inventory, softer demand, negative foreign currency impact in international markets and unfavorable weather conditions.
The company posted a fourth-quarter net loss from continuing operations of $24.8 Million. Adjusted EBITDA decreased 5.6% year over year to $74.7 million versus 79.1 million in the 2021 period. The company cited reduced sales volumes and unfavorable currency impact.
The company’s Home & Personal Care business, lifted by $88.1 million in sales from acquired Tristar business, registered sales in the quarter of $344.9 million, an 11.5% gain versus the $309.3 million in sales for the year-earlier period. Net of the acquired sales and unfavorable foreign exchange impacts of $24.8 million, organic net sales from the Home & Personal Care group declined year over year by $27.7 million, or 9.0%. Spectrum cited the slowdown in replenishment orders because of higher retailer inventory and continued softer sales for kitchen appliances and personal care. The garment care category grew with a lift from strong category performance and market share gains, according to Spectrum.
Spectrum’s Home & Personal Care group posted operating income of $15.3 million in its fourth quarter compared to $600,000 in the comparable period last year. Thy group’s operating income, adjusted EBITDA and margins increased, according to Spectrum, with improved pricing that largely offsets current inflationary costs; better product mix partially from the acquisition of the Tristar business; and cost reduction initiatives to lower overall operating spend that were initiated earlier in the year.
Spectrum’s Home and Personal Care business includes such small appliance brands as Black & Decker, George Foreman, Russell Hobbs, and Remington; and, from its recent acquisition of Tristar small appliances and cookware, PowerXL, Emeril Lagasse and CopperChef. The company said executed an internal separation of its Home and Personal Care appliance business for a potential spin-off or other transaction.
David Maura, chairman and CEO of Spectrum Brands, said. “Our latest financial results for the fourth quarter complete a challenging year for our business where we faced high input cost inflation, supply chain disruptions, and cost headwinds related to currency changes. We were further challenged by retailers’ focus on reducing high inventory levels, which led to reduced replenishment orders… The cost reduction actions we initiated during the previous quarter are continuing and are partly offsetting the impact of the sales decline. We are also implementing further price increases around the globe to help offset the additional pressure from the strengthening U.S. dollar.”
Maura added, “Although we expect the difficult macro-economic environment to continue in fiscal 2023, we have taken all the right actions to set ourselves up for success. We are targeting low-single-digit net sales growth and low double-digit EBITDA growth for fiscal 2023. I am excited that the company has already turned a corner on improving our working capital performance as we plan to further reduce our inventory by another $200 million plus during this fiscal year, including HHI. We will maintain our focus on reducing working capital, strengthening our balance sheet, generating cash and reducing our leverage as we prepare for a period of low demand growth and higher interest rates.”