* Plans to sell hardware and teaching aids businesses
* Profit of 35 cents per share tops analysts' 32-cent
* Sales of $1.24 billion miss analysts' $1.32 billion target
* CEO sees Office Depot-OfficeMax deal affecting Newell
* Shares up 2 percent
By Dhanya Skariachan
NEW YORK, May 3 Newell Rubbermaid Inc
announced plans to sell its hardware and teaching aids units so
it could focus more on products for contractors and on emerging
Friday's news coincided with a better-than-expected
quarterly profit from the consumer products maker as its efforts
to boost productivity offset lackluster sales.
Net income fell to $54.2 million, or 19 cents a share, in
the first quarter from $79.3 million, or 27 cents a share, a
The maker of Sharpie pens and Rubbermaid storage containers
has been banking on fast-growing Latin America to offset
challenges in crisis-ridden Europe and a slowdown in Asia.
The businesses that Newell plans to sell include the
Bulldog, Shurline, Ashland, Amerock and Mimio brands as well as
its drapery hardware unit. Together, they had sales of slightly
more than $300 million last year.
"They do not fit with our strategy," Newell Chief Executive
Officer Mike Polk said, adding the company planned to focus on
its commercial products, tools and writing businesses instead.
He said the company wants to focus on worldwide
For example, the Shurline brand that Newell is planning to
sell focuses on do-it-yourself customers and not on contractors,
while the windows hardware unit it is selling is highly
U.S-centric, Polk said.
Since he took the helm in July 2011, the company has cut
jobs, consolidated manufacturing and distribution facilities and
reduced the number of business units to trim costs.
Excluding restructuring costs, charges for discontinued
operations and Venezuela's currency devaluation, and a tax
benefit, Newell earned 35 cents a share. Analysts on average
expected 32 cents, according to Thomson Reuters I/B/E/S.
Net sales fell 0.8 percent to $1.24 billion, missing the
analysts' forecast of $1.32 billion. While sales fell in its
writing products and tools businesses, those at its home and
commercial products segments rose.
Sales excluding currency fluctuations, or core sales, rose
Other companies that exceeded analysts' profit forecasts
despite weaker-than-anticipated sales in the latest quarter
include Procter & Gamble Co and Clorox Co.
OFFICE SUPPLY INDUSTRY WOES HURT
Newell, which counts Office Depot Inc and OfficeMax
Inc as its customers, said net sales fell 9.3 percent in
its writing products business, in part because of weakness in
U.S. office superstores.
Same-store sales have declined for six consecutive years in
the office supply industry. Earlier this week, Office Depot Inc
posted a lower-than-expected quarterly profit, while in
March, market leader Staples Inc forecast weak earnings
for the year.
Polk said he expected the pending merger of Office Depot and
OfficeMax to affect Newell, with "a pretty significant
liquidation" of retailer inventory occurring shortly after the
"I think it's going to be a tough year for the U.S.
superstore channel," Polk said on a call with investors. "With
respect to what happens post the closure of the deal, we can
only speculate, obviously."
Newell, which began raising prices of some goods late in the
first quarter, stood by its full-year profit outlook of $1.78 to
$1.84 a share, before items. The analysts' forecast is $1.82.