(Reuters) - Energizer Holdings Inc (ENR.N) said it would review its operations as it faces a tough environment for sales growth, apparent in the quarterly results it issued on Wednesday, as it lost shelf space for batteries at Walmart stores and faced stepped up competition from Gillette in the razor aisle.
Shares in the maker of Energizer batteries and Schick razors, whose profit and sales fell short of Wall Street’s expectations, were down 9.3 percent at $70.56 after falling as low as $69.88.
Energizer already restructured part of its business and now must do more, Chief Executive Ward Klein said in a statement.
SunTrust analyst Bill Chappell said that Energizer lost share at Walmart stores to Rayovac battery-maker Spectrum Brands Holdings Inc (SPB.N) earlier this year.
Chappell said that he was “somewhat surprised” that Energizer cited the issue at Wal-Mart Stores Inc (WMT.N) as it occurred back in January “and was not expected to have a major impact on the company’s outlook.”
The company said in a statement that net sales fell 8.9 percent from a year ago. Among the reasons it gave for the decline was the negative impact on shipments and market share in the U.S. due to the loss of space and display activities primarily at a key customer.
It did not say name the customer in its statement, but in a conference call Energizer mentioned a “short-term issue with Wal-Mart”. Wal-Mart, the world’s largest retailer, is by far Energizer’s biggest customer, accounting for 20 percent of its total annual sales.
At the same time, Energizer felt pressure in razors from market leader Procter & Gamble Co’s (PG.N) huge Gillette business. P&G is set to report its results on Friday.
Energizer has seen an “extraordinary change” in the razor and blade category, especially during the last four weeks, with its rival issuing more coupons and doing more promotions, primarily in the United States, Klein said during the call.
Energizer plans to focus on products such as its Hydro razor rather than try to battle Gillette with more advertising spending. In fact, Energizer said it plans to reduce advertising and promotional spending during the current quarter.
Along with the recent pressure in its key battery and razor businesses, Energizer continues to face issues such as the decline of the battery category, weak economic conditions in Europe and slowing economic growth in the United States and Asia.
Energizer said it would give an update on its review of its operating model when it reports earnings for the current quarter in November.
The wide review includes operating divisions and corporate functions, as Energizer looks at everything from procurement to manufacturing and selling, general and administrative costs, Klein said.
Energizer stood by its earlier fiscal 2012 forecast of earnings per share of $6.00 to $6.20. Analysts, on average, expected it to earn $6.07 per share, according to Thomson Reuters I/B/E/S.
Fiscal third-quarter net income rose to $70.2 million, or $1.06 per share, from $65.9 million, or 94 cents per share, a year earlier.
Excluding special items, Energizer earned $1.18 per share. Analysts on average forecast $1.32 a share.
Analysts said the results were helped by a much lower tax rate of about 21 percent. For the year, Energizer forecast a tax rate of around 30 percent to 30.5 percent.
Sales fell to $1.12 billion, missing analysts’ average forecast of $1.22 billion. Some retailers stocked up on Energizer batteries in the second fiscal quarter, ahead of a U.S. price increase, putting pressure on third-quarter sales.
Reporting by Jessica Wohl in Chicago; Editing by Maureen Bavdek and Carol Bishopric