Q2 2024 Earnings Summary
Reported on Jul 26, 2024 (Before Market Open)
Pre-Earnings Price$6.34Last close (Jul 25, 2024)
Post-Earnings Price$7.23Open (Jul 26, 2024)
Price Change
$0.89(+14.04%)
- Newell Brands has restaffed the leadership team in its Outdoor & Recreation segment and expanded the focus of the Coleman brand to include a broader range of outdoor activities beyond camping, tripling the total addressable market. The company has also strengthened its innovation pipeline in this segment, expecting sequential improvement starting in Q3 and acceleration in 2025 and 2026.
- The company expects increased contribution from new product innovations, stronger traction from its new business development group leading to distribution gains, and improved international performance to drive better core sales in the second half of the year. These factors are expected to result in market share gains, particularly during the back-to-school season.
- Newell Brands has significantly reduced its dependency on China sourcing from 35-40% during the previous tariff increase to 15% currently, with plans to reduce it to less than 10% by the end of next year. This proactive shift reduces tariff risks and supply chain vulnerabilities, potentially improving margins and mitigating risk.
- The Outdoor & Recreation (O&R) segment has significantly underperformed, with around eight consecutive quarters of double-digit declines, and its turnaround is expected to take multiple years. This segment requires substantial restructuring, including restaffing leadership and shifting brand strategies, which may face execution risks. ,
- Pricing benefits are expected to decline in the second half, increasing reliance on volume growth amid a challenging macroeconomic environment. The company acknowledged that "the pricing benefit in the back half of this year will be lower than in the front half," necessitating a focus on volume in categories expected to remain down low single digits.
- Increased promotional pressure and excess inventory in certain categories, particularly in Outdoor & Recreation, could impact margins. Retailers are requesting more promotions, especially in segments where competitors are liquidating excess inventory, leading to higher promotional activity and potential margin pressure.
Research analysts covering NEWELL BRANDS.