Published July 31, 2013
Energizer Holdings Inc said on Wednesday that two U.S. retailers planned to stop selling its batteries, adding pressure to its sagging sales, while faster savings from its restructuring allowed it to maintain its profit forecast.
While Energizer is best known for its namesake batteries, the company derives a larger percentage of sales and profits from its personal care products, such as Schick razors and Banana Boat sunscreen. Its shares fell nearly 5 percent in morning trading.
Energizer also reported a much higher-than-expected profit despite a slight drop in sales, and it announced plans to raise its quarterly dividend by 25 percent to 50 cents per share.
The company said it expected sales in its household products division, which makes batteries and flashlights, to fall by more than 10 percent in the current fiscal fourth quarter. The biggest reason for the decline is that two unnamed U.S. retailers will no longer sell those products, Energizer said.
A company spokeswoman declined to say which retailers were dropping products from the battery and flashlight unit.
Wal-Mart Stores Inc is Energizer's biggest customer, accounting for about 20 percent of the company's fiscal 2012 sales. Wal-Mart, the world's largest retailer, was not immediately available for comment.
Early last year, Energizer lost shelf space for batteries at the Walmart chain, which it said was a short-term issue.
Energizer said it had earned $87.2 million, or $1.38 per share, in the third quarter ended June 30, up from $70.2 million, or $1.06 per share, a year earlier.
Adjusted earnings, which exclude the impact of items such as restructuring costs, rose to $1.57 per share from $1.18 and came in well ahead of the analysts' average forecast of $1.32, according to Thomson Reuters I/B/E/S.
The results benefited from better-than-expected restructuring savings, a decline in advertising and promotion expenses and a lower-than-expected tax rate, said BMO Capital Markets analyst Connie Maneaty, who has a "market perform" rating on the shares.
Sales slipped to $1.11 billion from $1.12 billion, missing the analysts' average forecast of $1.14 billion.
The maker of Banana Boat and Hawaiian Tropic products said competitors' promotions and a wet summer had hurt sales of products like suntan lotion. Sales of personal care products, including suntan lotion, fell 3.6 percent to $649.5 million.
Energizer said it still expected fiscal-year adjusted earnings of $6.75 to $7.00 per share, helped by additional savings from its restructuring.
The St. Louis-based company laid out plans to cut more than 10 percent of its workforce late last year. It now expects to save more than $80 million this year, up from a May target of saving $50 million to $60 million during fiscal 2013.
After posting double-digit percentage increases in adjusted earnings per share for two years, Energizer said it expected to report mid-single-digit growth in fiscal 2014.
Shares of Energizer were down 4.6 percent at $100.07 on the New York Stock Exchange.
(Reporting by Phil Wahba in New York and Jessica Wohl in Chicago; Editing by Gerald E. McCormick and Lisa Von Ahn)