Yahoo Finance Newell (NWL) Q4 Earnings & Sales Beat Estimates, Down Y/Y
Newell Brands Inc. NWL has reported fourth-quarter 2022 results, wherein the bottom and the top lines surpassed the Zacks Consensus Estimate. Both metrics declined year over year. Results have been affected by a tough environment, reduced inventory and reduced demand for general merchandise categories. Management expects the headwinds to persist in 2023.
However, the company recently announced Project Phoenix to simplify and strengthen the company, optimize cost and increase efficiency. The new project is likely to be implemented by the end of 2023. Post implementation, the company is likely to realize annualized pre-tax savings of $220-$250 million with $140-$160 million to be generated in 2023. In 2022, Project Ovid generated robust productivity savings and drove supply-chain transformation.
Shares of NWL fell more than 6% before the trading session on Feb 10, following the first-quarter expected loss. In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 3.4% but came below the industry’s 5.2% growth.
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Q4 Details
The company’s fourth-quarter normalized earnings per share of 16 cents outpaced the Zacks Consensus Estimate of 12 cents. However, the metric fell from 42 cents earned a year ago.
Net sales declined 18.5% year over year to $2,285 million but beat the Zacks Consensus Estimate of $2,238 million. This includes the adverse impacts of the sale of the Connected Home & Security (CH&S) business. Also, core sales fell 9.4%, as one of the seven business units witnessed core sales growth.
The normalized gross margin contracted 360 bps year over year to 26.6%. The normalized operating margin contracted 510 bps year over year to 4.9% in the reported quarter.
Segment Details
Net sales in the Commercial Solutions segment were $355 million in the fourth quarter, down 29% from the prior-year period’s number. The metric missed the consensus mark of $424 million. Core sales declined 6.3% year over year. On the flip side, the adverse impact of the sale of the CH&S business and unfavorable foreign currency impacts acted as deterrents.
The Home Appliances segment recorded net sales of $399 million in the fourth quarter, down 26.2% from the prior-year quarter. The metric exceeded the Zacks Consensus Estimate of $292.1 million. Core sales declined 17.3% due to foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Net sales at the Home Solutions segment (Food, Outdoor products, Home Fragrance, and Connected Home & Security) totaled $636 million, down 16.2% from the prior-year period. The segment’s top line was mainly fueled by a core sales decline of 12.8% due to the closure of 43 underperforming Yankee Candle stores in 2022 and unfavorable currency impacts. Also, the metric exceeded the consensus mark of $468.3 million.
The Learning and Development segment recorded net sales of $684 million, which declined 2% from the prior-year quarter’s reading. The metric exceeded the consensus mark of $626.4 million. The downtrend is led by a 2.6% increase in core sales, resulting from strength in the Writing business. Adverse currency rates also affected the segment’s sales in the quarter.
The Outdoor and Recreation segment’s net sales of $211 million declined 30.6% from the prior-year quarter. Also, the metric lagged the consensus mark of $342 million. However, a core sales decline of 21% was offset by foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Other Financial Details
Newell Brands ended the quarter with cash and cash equivalents of $287 million, long-term debt of $4,756 million, net debt outstanding of $5.1 billion and shareholders’ equity of $3,519 million. In 2022, the company repurchased $325 million of its common shares. NWL also used $272 million for operating activities in the said period.
Newell Brands Inc. Price, Consensus and EPS Surprise
Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote
Outlook
Management issued its guidance for 2023 and first-quarter fiscal 2023. The company anticipates net sales of $8.4-$8.6 billion. Core sales are expected to decline 8-6%. The normalized operating margin is expected to be 9.6-10.1%. Normalized earnings per share are forecast to be 95 cents to $1.08. For 2023, the company envisions generating an operating cash flow of $700-$900 million.
For first-quarter 2023, net sales are envisioned to be $1.79-$1.84 billion, with a core sales decline of 18-16%. For the quarter, the company expects a normalized operating margin of 3-3.5% and a normalized loss of 6-3 cents per share.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, Urban Outfitters URBN and Arhaus ARHS.
Abercrombie & Fitch, which operates as a specialty retailer, sports a Zacks Rank #1 (Strong Buy) at present. ANF delivered an earnings surprise of 107.7% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year revenues suggests a decline of about 1% from the year-ago reported figures.
Urban Outfitters, a leading lifestyle product and services company, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year revenues suggests growth of 5% from the year-ago reported figure.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank of 2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Arhaus, Inc. (ARHS) : Free Stock Analysis Report
