In a corporate announcement that sparked a sharp decline in the company's share value, Atlanta-based Newell Rubbermaid said it is seeing weak consumer spending trends in the United States.
CEO Mark Ketchum pointed to "persistent softness in the U.S. economy and increased inflationary pressure" as a reason to revise downward the company's expectations. Newell Rubbermaid now anticipates 2011 core sales growth in the range of 3% to 4%, down from a previous guidance of 4% to 5%.
The company's stock was trading Monday morning at $14.95, down from about $17 before the Friday morning announcement.
The company, whose brands include Irwin Tools, Lenox, Benzomatic and Shur-Line, as well as Paper-Mate and Sharpie, lowered its earnings expectations to gains of 5% to 10%, down from previous guidance of 10% to 12%. Ketchum added that the Baby & Parenting business were particularly hard hit by the economy. Across most of the company, a 4% to 5% gain is still expected.
"We still expect solid core sales growth versus our 2010 results; however, our revised expectations are lower than they were just a short while ago,” said Ketchum. “Several of our large retail customers are revising downward their U.S. growth expectations for the year, pointing to weak consumer confidence levels and lower-than-expected spending trends, particularly in the semi-discretionary categories in which we compete. These lowered expectations are impacting customer ordering patterns and, as a result, we think it prudent to reflect those assumptions for lower growth in our own sales projections for the year.
“Our growth drivers, which were always skewed toward the back half of the year, include the launch of innovative new products, distribution gains at a number of key retailers, aggressive pricing actions to offset cost inflation and a greater focus on expansion in faster growing emerging markets," he said.