For its second quarter in 2014, while Newell Rubbermaid posted an overall net sales growth of 3.1%, net sales in its Home Solutions segment had a slight decline of 2.6%. Reported net income for the company also rose in the second quarter, at $150.6 million, compared with $109.8 million in the prior year. Increased sales, lower restructuring costs, a lower tax rate and the positive impact from a lower share count drove the improvement.
“We have delivered very strong second quarter results across all key metrics,” said Michael Polk, Newell Rubbermaid’s president and CEO. “Outstanding top line performance in writing, tools and commercial products drove core sales growth of 4.6%. These strong results give us increased confidence that our strategy of accelerating advertising and promotion in support of our brands is working. In fact, we now believe we are tracking toward the high end of our normalized EPS guidance range of $1.94 to $2.00 for the full year.”
This year, Polk continued, the company has significantly increased advertising investment to build brands and support new innovation. In addition, Newell Rubbermaid recently agreed to acquire Ignite Holdings, LLC, a designer and marketer of on-the-go beverage containers under the Contigo and Avex brands.
“Beyond an excellent set of results, we are very pleased with the recently announced agreement to acquire Ignite Holdings and its Contigo and Avex brands,” Polk said. “Ignite has a proven design and innovation capability in the fast growing on-the-go beverage container market and has built a strong track record of growth. I am excited by the prospects of leveraging both our own investments in our new state-of-the-art design center and Ignite’s capabilities to strengthen Newell Rubbermaid into a brand- and innovation-led company that is famous for design and product performance.”
While overall results were positive, Newell Rubbermaid’s Home Solutions net sales were $388.9 million, a 2.6% decline compared to prior year. Core sales declined 1.8%, as share growth on Calphalon and Rubbermaid Food and Beverage was more than offset by declines on certain lower margin product lines. Operating income was $48.3 million, or 12.4% of sales, compared with $53.7 million, or 13.5% of sales, in the prior year. The decrease in operating margin was driven by input cost inflation and the deleveraging effect on margins from lower sales volumes, partially offset by productivity and overhead cost management.