Remember Victor Kiam's spots for Remington razors? He was so impressed that he bought the company? Well, he has since moved on -- at one time owning the now playoff-worthy New England Patriots. Remington is Rayovac's (NYSE: ROV) business now. If those same ads would be shot today, you would be getting a more grim pitch.
"We were so impressed with Remington," Rayovac would say, "we're dismantling the company."
Well, okay, maybe Remington isn't actually being dismantled. However, Rayovac will be closing down Remington's service centers and relocating the subsidiary's operations closer to its flagship's digs. Rayovac may call it synergy. Norelco nostalgics would call it "gotcha!"
Third in the battery space, behind Energizer (NYSE: ENR) and Gillette's (NYSE: G) Duracell, it's also worth noting that all three companies have interests in the razor business as well. Rayovac's new to the game, having acquired Remington just four months ago in a $300 million cash deal. Then again, that's probably reason enough for the massive restructuring.
It's not as if Rayovac is smarting financially. Last week, it announced that it would be putting up better than expected fiscal first-quarter results. The timing of the restructure may come off as ironic then, given that Rayovac labeled Remington's sales growth as "favorable." However, the move is not about past performance. It's about the right to consume what's on your plate -- and, well, the expectations that it will save the company between $30 million and $35 million a year in the process.
The problem is that when a company usually throws out a figure of how much a certain cost-cutting move will save the company it rarely lives up to that claim. With just 33 million shares outstanding, Rayovac's target implies that if all things were equal it would be netting roughly a buck more per share in pre-tax profits come next year.
Color me skeptical. And, while we're at it, why is a battery company running an electric razor company anyway? At least Energizer and Gillette are pushing disposable razors that seem to fall into their consumer non-durables strength of shelf-steady items that are replenished perpetually. The only thing that makes literary sense here is what the battery maker will be reporting as a result of this move -- a charge.
Speaking of Kiam's four year ownership stint of the New England Patriots a dozen years ago, how about those four amazing playoff games over the weekend? Do you think the Panthers have a shot against McNabb's Eagles? What about the Colts' mighty offense against the Patriots' gritty defense? Who do you see in the Super Bowl this year? All this and more -- in 77's Foolish House of Pigskin discussion board. Only on Fool.com.
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