Newell Rubbermaid saw its sales slip in the first quarter as it faces inflationary pressures, but the company said it is growing internationally.
Inflation in energy, raw materials, packaging and imported products are the "biggest challenge in front of us," Newell Rubbermaid president and CEO Mark Ketchum said on Friday. He said the Sandy Springs-based company will be raising prices in response to "extraordinary" year-over-year inflation that is twice what it was three months ago.
Ketchum said the company would normally cover inflation costs through production changes, but this extent requires a price increase, the second of the year for some of the company's businesses.
Competitors and private labels are expected to implement similar single-digit percent increases, he said, and so little push-back is anticipated. Jason Gere, managing director at RBC Capital Markets, said the infrequency of purchases like pots and strollers will likely mean consumers don't notice small increases in the same way they would for more frequent purchases.
Newell Rubbermaid's international growth is strong, particularly in emerging markets, and the company made $75.7 million in the first quarter, a 30 percent increase from its profits of $58.4 million in the first quarter of 2010. Earnings per share were 26 cents for the quarter, up from 21 cents in the same quarter a year ago.
"All in all, it's a relatively good start to 2011," Ketchum said.
Sales were down .3 percent as the company reaffirmed its intention to increase sales between 4 and 5 percent for the year. Ketchum said sales lagged in baby products and the Rubbermaid line.
Baby products were hurt by a low birth rate and consumers who are trading down. The company is rolling out a new lower-cost line. Rubbermaid has had a change in senior leadership and is planning more promotional activity to put the brand top-of-mind.
About the Author
