While its overall net sales decreased, the home and personal care category was a bright spot during Spectrum Brands’ third quarter.
Net sales decreased 3.7% to $984.3 million in the third quarter ended June 28 from $1.02 billion in the previous third quarter. Excluding the impact of $11 million of unfavorable foreign exchange rates and acquisition sales of $2.9 million, organic net sales decreased 2.9%, with growth in global pet care, home and personal care and home and garden, offset by a decline in hardware and home improvement due to supply challenges. In total, the company estimates that the negative COVID-19 impact from supply disruptions to revenue in the quarter was more than $100 million.
Net income was $137.6 million compared with a loss of $24.7 million in the previous third quarter. Diluted earnings per share increase $1.36 from $1.35 in the last third quarter.
In the home and personal care category, net sales of $250.6 million compared to $243.4 million last year were driven by strong growth in small appliances, partially offset by a moderate decline in personal care related to inventory constraints attributable to COVID-19 disruptions despite growth in customer demand. E-commerce sales also continued to drive top-line results globally. Strong net sales growth in the U.S. for small appliances was driven by mass, online and discount channels. Excluding unfavorable foreign exchange impacts of $8.6 million, organic net sales grew 6.5%.
“Our results reflect strong demand that accelerated through the course of the quarter. Simply put, we have embraced our position as a home essentials company and instead of pulling back in the face of COVID-19 challenges, we are continuing our drive to add talent, create new innovative products and improve our operating model. In addition, in the last 60 days and ramping up in the current quarter, we have committed to significant increases in our advertising investments to meaningfully increase our long-term organic growth. The actions of our Spectrum Brands family reflect resilience and operational excellence in this ever-evolving environment. This included adopting safety protocols in this new COVID-19 environment, navigating temporary government mandated factory closures impacting Hardware and Home Improvement, and balancing strong underlying demand including large mix shifts. The temporary COVID-19 related supply disruptions from HHI negatively impacted results, but we believe the situation is largely resolved and supply is expected to be caught up by our fiscal first quarter,” said David Maura, chairman and CEO of Spectrum Brands.
He added, “Three of our four business units generated healthy sales growth rates and despite COVID-19 related challenges, our global team generated financial performance consistent with the prior year. Importantly, e-commerce continued to generate exceptional growth across all businesses, with sales up 44% compared to the prior year. Total demand remains strong with July net sales up across all business units. In addition to our operating accomplishments, on June 30 we completed a strategic refinancing of our balance sheet by entering into a new $600 million 5-year revolving credit facility. We also issued a new 10-year, $300 million senior unsecured bond, putting the company in an improved, longer term capital structure with the next maturity coming in 2024. Our future is bright as a home essentials company and we believe we remain well-positioned financially and operationally to drive long-term, sustainable organic growth.”