Spectrum Brands Holdings Inc (NYSE:SPB) reported a second-quarter (Q2) 2023 sales decline of 10.1% year-on-year to $735.5 million, missing the analyst consensus estimate of $780.97 million.
Net sales declined due to retailer inventory management strategies and slower than expected category POS, offset by positive pricing adjustments.
Net sales from Home & Personal Care decreased 16%, Global Pet Care fell 6.2%, and Home & Garden dropped 6%.
Gross profit decreased 4.5% Y/Y to $263.5 million, and the margin contracted 210 basis points to 35.8%.
The operating expenses rose 63.5% Y/Y to $388.2 million. The operating loss for the quarter was $124.7 million versus an income of $3.7 million last year.
The company held $2.9 billion in cash and equivalents as of July 2.
Adjusted EBITDA increased 23%, and the margin expanded 360 basis points attributable to lower distribution costs, fixed cost reduction initiatives and positive pricing impact, partially offset by the reduction in sales volume.
Adjusted EPS of $0.75 beat the analyst consensus estimate of $0.57.
“While we are disappointed with our top-line performance in the quarter, I am pleased with the fact that our focus on profitability is paying off as we exceeded third quarter EBITDA expectations, excluding investment income,” Spectrum chairman and CEO David Maura said.
Outlook: Spectrum Brands reiterated FY23 sales outlook of mid-single digit decline with foreign exchange expected to have a negative impact based upon current rates.
It expects 2023 adjusted EBITDA to decline by low to mid single-digits.
Price Action: SPB shares closed lower by 0.27% at $75.11 on Thursday.
