07.31.23
Net sales for Newell Brands in Q2 2023 saw a 13.0% decrease to $2.2 billion compared with the prior year period.
Core sales declined 11.9% compared with the prior year period. Year-to-date operating cash flow was $277 million compared with outflow of $450 million in the prior year period.
Restructuring Initiative
In January 2023, Newell announced a restructuring and savings initiative, Project Phoenix, that aims to strengthen the company by leveraging its scale to further reduce complexity, streamlining its operating model and driving operational efficiencies.
Project Phoenix is expected to be substantially implemented by the end of 2023. It incorporates a variety of initiatives designed to simplify the organizational structure, streamline the company’s real estate, centralize its supply chain functions, which include manufacturing, distribution, transportation and customer service, transition to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs. The company implemented the new operating model in the first quarter, consolidating its prior five operating segments into three operating segments: Home & Commercial Solutions, Learning & Development and Outdoor & Recreation.
In Q2 2023, The Home & Commercial Solutions segment generated net sales of $1.1 billion compared with $1.2 billion in the prior year period, reflecting a core sales decline of 13.1%, the impact of unfavorable foreign exchange, as well as certain category exits. Core sales declined in all three businesses: Kitchen, Home Fragrance and Commercial. Reported operating loss was $21 million, or negative 2.0% of sales, compared with operating income of $74 million, or 6.0% of sales, in the prior year period. Normalized operating income was $23 million, or 2.2% of sales, versus $87 million, or 7.0% of sales, in the prior year period.
In Q2 2023, The Home & Commercial Solutions segment generated net sales of $1.1 billion compared with $1.2 billion in the prior year period, reflecting a core sales decline of 13.1%, the impact of unfavorable foreign exchange, as well as certain category exits. Core sales declined in all three businesses: Kitchen, Home Fragrance and Commercial. Reported operating loss was $21 million, or negative 2.0% of sales, compared with operating income of $74 million, or 6.0% of sales, in the prior year period. Normalized operating income was $23 million, or 2.2% of sales, versus $87 million, or 7.0% of sales, in the prior year period.
Newell Brands appointed a new president and CEO, Chris Peterson, two months ago. Since then, the company created and deployed a new corporate strategy based on a comprehensive, company-wide capability assessment focused on significantly strengthening the company’s consumer-facing capabilities while prioritizing the top 10 countries and top 25 brands, which represent about 90% of sales.
Consistent with the new strategy, Newell Brands is investing in consumer and customer understanding, brand building, brand communication, innovation and retail execution as part of the “One Newell” approach to unlock what Peterson called the “full power” of its leading consumer brands to create and leverage scale and drive operational excellence.
“While we have lots of work to do, we are off to a great start, which is why I remain confident in our ability to accelerate the company's financial performance over the long term, while we continue to navigate through a challenging macro-economic backdrop in the near term,” said Peterson
In May 2023, the company updated its capital allocation framework and dividend policy, aligning them with the new corporate strategy, which was rolled out in June 2023. At that time, the company announced the Network Optimization Project, which aims to simplify and streamline its North American distribution network.
The company updated its full year 2023 outlook for net sales and normalized earnings per share to $8.2 billion to $8.34 billion and $0.80 to $0.90, respectively. The company's outlook for operating cash flow remains unchanged.