By Nivedita Bhattacharjee
BANGALORE (Reuters) - Newell Rubbermaid Inc <NWL.N> cut its outlook for the year blaming a weak economy and a rise in costs, leaving investors jittery as the company gets ready to replace its CEO of five years.
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The maker of Sharpie pens and Rubbermaid storage containers also said its second-quarter results would fall short of current market estimates, sending its shares down 12 percent.
"Lowered expectations (from retail customers) are impacting customer ordering patterns and, as a result, we think it prudent to reflect those assumptions for lower growth in our own sales projections for the year," Chief Executive Mark Ketchum said in a statement.
Ketchum, who took charge at Newell in 2005 and was responsible for turning the company around, will retire later this year, and the consumer products maker is looking for a replacement.
Friday's announcement could serve to lower the earnings hurdle for the incoming CEO, whose appointment is expected imminently, BMO Capital analyst Connie Maneaty said in a note.
Newell's profit warning comes at a time when makers of everything from soap to clothes are struggling with rising costs of raw materials and are passing them on to shoppers.
Procter & Gamble <PG.N> has forecast a sharp rise in costs, and clothes retailer Gap Inc <GPS.N> slashed its full-year profit outlook, saying higher price tags would not be enough to offset rising cotton costs.
Newell, which raised prices of some products to offset rising oil and resin costs, said it now expects 2011 core sales growth in the range of 3-4 percent, down from its earlier expectation of 4-5 percent.
It also expects 5-10 percent growth in earnings, down from the 10-12 percent it had forecast earlier.
It said second quarter earnings per share could be as much as fifteen percent lower than analysts' current expectations.
Shares of the company were trading at $15.13 Friday before the bell. They closed at $16.97 on the New York Stock Exchange on Thursday.
(Reporting by Nivedita Bhattacharjee; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)