Spectrum Brands Q2: 10% Topline Decline, Earnings Miss, Lower Demand & More

Spectrum Brands Holdings Inc SPB reported a second-quarter FY23 sales decline of 9.7% year-on-year to $729.2 million, missing the consensus of $759.29 million.
Revenue decline was due to retailer inventory management strategies and slower category POS, offset by positive pricing adjustments.
Net sales from Home & Personal Care decreased 11.7%, Global Pet Care grew 0.5%, and Home & Garden fell 22%.
Gross profit decreased 16% Y/Y to $214.5 million, and the margin contracted 220 basis points to 29.4%.
The operating expenses rose 10.5% Y/Y to $291.5 million. The operating loss for the quarter expanded to $(77) million from $(8.1) million last year.
The company held $327.8 million in cash and equivalents as of April 2, 2023.
Adjusted EBITDA decreased 35.4%, and the margin compressed 280 basis points attributable to the decrease in volume and the unfavorable impact of foreign exchange.
Adjusted EPS of $(0.14) missed the consensus of $(0.04).
Also Read: Spectrum Brands Likely To Report Q2 Loss; Here's A Look At Recent Price Target Changes By The Most Accurate Analysts
"We are facing some additional short-term headwinds as our key retail partners for the Home and Garden categories have continued to reduce inventory in the quarter compared to a typical seasonal build," said Chairman and CEO David Maura.
"Based upon the lower first half demand and this further inventory reduction by our retailers, we are lowering our expectations for the year. We now expect our sales in the year to be below consumer demand, which should normalize once we get past the current fiscal year."
Spectrum Brands declared a quarterly dividend of $0.42 per share, payable on June 8, 2023, to shareholders of record as of May 23, 2023.
Outlook: Spectrum Brands expects FY23 net sales to decline by mid-single-digits, down from the previous guidance of flat revenue. The company expects FY23 adjusted EBITDA to decline by low to mid-single-digits (prior view increase by low double-digits).
Price Action: SPB shares traded lower by 1.04% at $70.60 on the last check Friday.
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