Newell Rubbermaid Shares Shed 10%

The company lowers its outlook to below consensus estimates.
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Newell Rubbermaid

(NWL) - Get Report

posted an increase in second-quarter earnings, excluding items, and matched analysts' consensus, helped by strength in its Sharpie pen segment.

But shares of the company were down 10.2% in midmorning trading after it reduced its full-year earnings outlook to below analysts' current consensus.

The company earned $73.8 million, or 27 cents a share, down from last year's $88.6 million, or 33 cents a share. Excluding certain charges, Newell earned $114.5 million, or 42 cents a share, compared with $104 million, or 39 cents a share, last year. Analysts were expecting the company to earn 42 cents a share.

"This was a challenging quarter for Newell Rubbermaid because of our planned exit from business with high-risk customers and from certain low-margin product lines, in addition to the added pressure from retailer inventory reductions." said Joseph Galli, chief executive.

The company said it had sales of $1.98 billion, up 4.3%, thanks in part to the acquisition of Lenox hand tool and power tool accessories.

Looking ahead, Newell said retailer inventory reductions and pricing pressure have caused the company to look at future earnings more conservatively. In the third quarter, Newell expects EPS of 40 cents to 44 cents, excluding restructuring charges. Analysts are calling for 52 cents a share.

For the full year, the company sees earnings of $1.60 to $1.68 a share, revised from its original estimate of $1.77 to $1.87 a share, excluding charges. Analysts estimate $1.79 a share currently. The company cited softer-than-expected sales outlook in its picture-frame business and retailer inventory reductions.

Newell earned 46 cents a share in the third quarter last year and $1.58 a share in full-year 2002. Shares were recently at $25.50, down $2.92, in trading.