Newell Brands (NWL 27.97%) got some much needed, and I'd argue much deserved, good press this month when, on Oct. 5, The Wall Street Journal profiled the company's exceptional efforts to re-shore manufacturing of Sharpie markers to America. Through $2 billion in manufacturing efficiency investments, Newell succeeded in removing Sharpie production from China, to the extent that today nearly all the Sharpies it makes, "in all 97 colors," are made right here in the U.S., specifically, in Tennessee.
Unfortunately for Newell, good press wasn't enough to save its third quarter.
This morning Newell reported a tiny earnings miss, $0.17 per share (adjusted) when Wall Street wanted to see $0.18, and a revenue miss as well -- $1.8 billion instead of $1.9 billion. And now Newell stock is crashing, down 30% through 10:05 a.m. ET.
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Newell Brands Q3 earnings
CEO Chris Peterson blamed "reduced retail inventory levels" and "softness in international markets -- particularly in Brazil" for the sales miss, alongside "moderated demand following tariff driven pricing actions." Re-shoring Sharpie production probably helped with that latter problem, but not enough.
Sales declined 7% year over year, and gross profit margin shrank by 80 basis points, although operating profit margin improved. On the bottom line, Newell earned just $0.05 per share -- and so it turns out the $0.17 profit was only a non-GAAP (adjusted) number.
NASDAQ: NWL
Key Data Points
Why might Newell Brands stock be a sell?
The good news is that Peterson thinks things will improve both domestically and internationally. Sales declines in Q4 could be a less dramatic 1% to 4%, and non-GAAP earnings will range from $0.16 to $0.20.
That's still worse than the $0.27 Wall Street wants to see, however, and that's why Newell stock is going down today.
