Newell Reports Earnings

Today, Newell Brands (NWL) reported results that reflected the current difficult retail environment as consumers have lost purchasing power due to inflation. EPS were $0.53 vs. $0.54 in the prior year, which was better than company’s guidance for EPS of $0.46 to $0.51. Revenues of $2.3 billion were in line with the company’s guidance for $2.21 billion to $2.32 billion and represented a decline of 10.8%, excluding divestitures.

The stock declined today as the company narrowed its range for full-year EPS, as the company now expects EPS of $1.56 to $1.61, down from previous guidance for $1.56 to $1.70. There is a lot of excess inventories at retailers and on the company’s balance sheet, and the price for reducing the inventory will come out of fourth-quarter earnings. NWL also indicated it is planning for 2023 cautiously, sensing there could be a wide range of outcomes due to economic factors.

Newell has been a disappointment, but the company continues to do the things it can control well. It also remains focused on profitability and cash flow. In time, this strategy will pay off. Given the difficult macro environment, I am lowering my target price to $22 and my buy under price to $16.