Avery Dennison EPS Badly Misses Targets

Avery Dennison(AVY Quote) badly missed Wall Street expectations in the first quarter, hurt by lagging retail sales.

The Pasadena, Calif., company, which makes adhesive labels and other office products, posted earnings of $11.4 million, or 11 cents a share, well below analysts' estimates of 22 cents, as compiled by Thomson Reuters.

The numbers exclude a series of special items, including restructuring charges, asset impairment write-downs and debt-retirement costs. With those items, the company lost $46.2 million, or 46 cents a share, compared with a profit in the year-ago period of $69 million, or 69 cents a share.

Revenue fell 13% to $1.43 billion from $1.65 billion last year.

"Business conditions remain weak, particularly in the retail sector," said Dean A. Scarborough, president and chief executive, in a statement. "However, the decline moderated after a very weak January."

The company said it began a cost-cutting program in the fourth quarter -- including layoffs of 10% of its global workforce -- designed to produce savings of $150 million across 2009. But the company will need to take $130 million in cash restructuring charges related to those measures, "the majority" of which it will incur in 2009.

In addition, the company said that an internal goodwill-impairment test would "likely" lead to a further write-down, which, in turn, could force the company to revise first-quarter results when it files its 10-Q with the Securities and Exchange Commission.

In late afternoon trading Tuesday, Avery Dennison stock was down about 4% to 28.13.