January 25, 2018 / 2:25 PM / 7 months ago

Newell to explore options for several businesses, shares skid

(Reuters) - Sharpie pens maker Newell Brands (NWL.N) said on Thursday it would explore options for some of its assets in a move that could shrink its number of factories and warehouses as well as its customer base by half, sending its shares down more than 20 percent.

The sweeping transformation plan comes as the company struggles to boost sales, with some of the biggest U.S. retailers, including Wal-Mart Stores Inc (WMT.N), drastically cutting down on inventories amid falling store traffic.

Newell said it would consider options for its industrial and commercial products, including Waddington, Rubbermaid Commercial Products and Mapa, as well as some of its smaller consumer businesses, including Rawlings, Goody and Rubbermaid Outdoor.

With the transformation, Newell will focus on nine core businesses with about $11 billion in sales and $2 billion in EBITDA. The company reported sales of $13.26 billion in 2016.

The company also lowered its full-year 2017 core sales forecast, saying it would rise 0.8 percent compared with its previous forecast of a 1.5 percent to 2.0 percent rise.

The company blamed “retailer inventory rebalancing” in the United States and the bankruptcy of a leading baby retailer for the slower growth.

In November, the company reported dismal quarterly results due to a weak back-to-school season and the bankruptcy of its customer, Toys “R” Us, sending its shares down 25 percent.

Newell also said it expects its normalized earnings per share to be between $2.72 and $2.76 in 2017, down from its previous outlook of between $2.80 and $2.85.

Analysts’ on average expect the company to post a profit of $2.81, according to Thomson Reuters I/B/E/S.

Newell said it intends to start considering options for the businesses immediately and expects any resulting transactions to be completed by the end of 2019.

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” Newell Brands Chief Executive Michael Polk said.

These actions would significantly reduce global factory and warehouse footprint and customers and consolidate 80 percent of its global sales on two enterprise resource planning platforms by end 2019, the company said.

The company's shares ended 20.6 percent lower at $24.81 after falling to $23.86, the lowest in over four years. The stock was also the biggest loser on the S&P 500 index .SPX.

Reporting by Vibhuti Sharma and Sangameswaran S in Bengaluru; Editing by Arun Koyyur and Saumyadeb Chakrabarty

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