Morgan Stanley Comments On Low Quality Q1 For Newell Rubbermaid

According to Morgan Stanley, Newell Rubbermaid NWL Q1 quality was weak, with a 200 bp topline miss. Morgan Stanley said that it reiterated FY topline/GM/EPS guidance should be a relief given market concerns over commodity cost pressure. “EPS of $0.30 was ahead of the $0.28 consensus, but a tax rate added two cents to EPS, and Newell did miss consensus profit by 2% due to 2% topline downside on -1.7% organic sales growth (+2.6% adjusted for timing), However, gross margins were strong at up 160 bps y-o-y, 120 bps above consensus. 1% gross profit upside vs. consensus was offset by higher SG&A spending, driving 2% profit downside. By segment, the topline miss in Q1 was driven by consumer trade down/less promo activity in baby care and Rubbermaid consumer. Inventory did build in the quarter, with a 16% y-o-y increase, likely due to weaker topline, pre-buying, and a buildup pre product launches.” Newell Rubbermaid closed yesterday at $19.73.