Q4 Net Sales Decline 18.5% for Newell Brands

Net sales in Q4 for Newell Brands were $2.3 billion, a decline of 18.5% compared with the prior year period, including the year-over-year impact from the sale of the Connected Home & Security (CH&S) business at the end of the first quarter 2022, the company announced. 

 

Core sales declined 9.4% compared with the prior-year period. One of seven business units increased core sales compared with the prior-year period.

 

Despite the decline, CEO Ravi Saligram says the results were in-line with the brand’s expectations, bringing to a close what officials called a “difficult second half.”

 

“The business continued to be impacted by a tough operating environment, including slowing consumer demand for general merchandise categories, as well as inventory reductions at retail,” said Ravi Saligram, Newell Brands CEO. “We have been taking decisive actions to effectively navigate the current environment, while positioning the organization for long-term success. Several weeks ago, we announced Project Phoenix through which we expect to further simplify and strengthen our company by leveraging the scale and power of One Newell to optimize our cost structure and operate more efficiently. We expect the new operating model to unlock additional growth opportunities for the business over time and bring us even closer to our customers and consumers.”

 

During the fourth quarter 2022, the company elected to change its method of accounting for certain inventory in the US from the last-in, first-out (LIFO) method to the first-in, first out (FIFO) method. This conforms the company's entire inventory to a single method of accounting. Amounts in this press release reflect the impact of the accounting change to FIFO.

Reported operating margin was negative 11.9%, including the impact of a $326 million non-cash impairment charge, compared with positive 6.1% in the prior year period, which also included the impact of a $60 million non-cash impairment charge. Normalized operating margin was 4.9% compared with 10.0 percent in the prior year period.

 

Reported diluted loss per share was $0.60 compared with diluted earnings per share of $0.23 in the prior year period. Normalized diluted earnings per share were $0.16 compared with $0.42 per share in the prior year period.

 

Full year 2022 operating cash outflow was $272 million compared with an operating cash flow of $884 million in the prior year period. In October 2022, the company redeemed its remaining 3.85% senior notes due April 2023 for a total consideration of approximately $1.1 billion. In January 2023, the company announced a restructuring and savings initiative, Project Phoenix, which is expected to result in restructuring and related charges in the range of $100 million to $130 million and annualized pre-tax savings in the range of $220 million to $250 million when fully implemented.
 

Chris Peterson, president, Newell Brands, said, “During 2022, we meaningfully reduced complexity, realized strong productivity savings and drove significant progress in our supply chain transformation journey through Project Ovid. We expect many of the headwinds the company experienced in the second half of 2022 to persist in 2023, as we plan for a recessionary environment. We are focused on improving Newell's financial performance by strengthening its cash flow and balance sheet, driving gross margin improvement and overhead savings, while positioning the organization for future growth through capability investments that enhance operational excellence and create value for our stakeholders.”