While the efforts of Target, Walmart and countless other store brands to whittle down their bloated inventories have been widely reported and the focus of investor attention for months, this evolving saga has now spread beyond consumers and retailers to impact suppliers and manufacturers too.
This, as the 100+ year-old multi-labeled stalwart Newell Brands has told investors that its sales this quarter will be down 8 to 12 percent, which is far weaker than an earlier forecast of a 1 to 5 percent decline.
“We have experienced a significantly greater than expected pullback in retailer orders and continued inflationary pressures on the consumer,” Newell Brands CEO Ravi Saligram said in an updated earnings outlook for the current quarter and full year.
While acknowledging his enthusiasm for the back-to-school shopping season as well as continued growth in its commercial business, he said the rest of the household and personal products conglomerate’s global business was facing continued and unexpectedly sharp weakness.
“We are taking decisive actions to mitigate the impact of these challenges,” Saligram said, noting that further belt tightening, cost management and supply adjustments would allow Newell to “effectively navigate through the softer macroeconomic environment and address the near-term hurdles.”
From Coffee to Candles
To be sure, Newell has faced its own set of challenges prior to its latest announcement as evidenced by a 35% decline in its stock in the past 16 months as well as a 65% slump over the past five years.
That said, the retail industry insights of this comparatively modest-sized, $7 billion multinational company carry outsized impacts given the breadth of Newell’s brands and the five distinct categories in which it operates, as well as the fact that it has long-standing relationships and supplies products to nearly every major retail brand in the world.
Specifically, Newell’s business is divided into five categories, each of which has several major brand names, including First Alert and Rubbermaid in commercial solutions; Mr. Coffee, Oster and Sunbeam in home appliances; Ball Jars, Calphalon pans and Yankee Candles in its home solutions unit; Graco baby gear, Paper Mate and Sharpie pens in learning and development; and lastly Coleman camping and Marmot apparel in its outdoor and recreation business.
While there are numerous other brands in Newell’s stable, few companies offer a wider purview and broader portfolio of retail customers, a reality that makes its reduced outlook all the more serious, doubly so as the industry gets set to kick off the holiday seasonal rush.
As it stands, retailers have made it abundantly clear that, given the state of their inventory levels, as well as the economic uncertainty and continued stress on consumers, 2022 will likely go down as the season of deals.
If there were any doubt left that promotions and sales would set the tone for retailers for the rest of the year, Newell’s outlook has now removed it.
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.