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Spectrum Brands' (SPB) Strategic Endeavors Progress Well
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Spectrum Brands Holdings Inc. (SPB - Free Report) stock appears well-poised for growth, thanks to its robust business strategies, including the Global Productivity Improvement Plan. The company has also been gaining from increased pricing, cost improvements and a favorable mix, which have been aiding margins for a while now. Driven by such tailwinds, shares of this Zacks Rank #3 (Hold) company have gained 50% in the past year compared with the industry's 1.4% rise.
Let’s Delve Deeper
Spectrum Brands is on track with its four core pillars to drive growth. In this regard, the company is streamlining its organizational structure and re-energizing its employee base. It remains committed to improving operational efficiencies throughout and limiting risks. Management is protecting and deleveraging its balance sheet while solidifying liquidity. It is focused on transforming the company into a pure-play global Pet and Home & Garden business.
Additionally, the company is progressing well with its Global Productivity Improvement Plan, which aims at improving its operating efficiency and effectiveness, while focusing on consumer insights and growth-enabling functions, including technology, marketing, and research and development. This plan will enable the company to deliver value creation and sustainable growth in the long term.
The company is being proactive in its cost-takeout actions, including fixed cost reduction by eliminating permanently salaried headcounts, and reducing advertising and promotional spending. Driven by improved pricing and cost improvements, the gross margin expanded 710 basis points during first-quarter fiscal 2024, while gross profit improved 21.3% year over year.
Image Source: Zacks Investment Research
Further, selling, general and administrative expenses edged down 1% year over year in the same quarter, resulting in an operating income of $25 million against an operating loss of $20.2 million in the year-ago quarter. Operating income was mainly aided by lower spending on restructuring, optimization and strategic transaction activities, fixed-cost containment efforts and reduced factoring charges.
While the aforementioned factors bode well, the company has been witnessing soft demand in the North American small kitchen appliances category and volume declines in certain pet channels. Spectrum Brands' Home & Personal Care segment is struggling with category declines from lower demand, particularly in small kitchen appliances, continued retailer inventory management in North America, and the exit of certain small Kitchen Appliance SKUs. Sales for the segment declined 5.8% year over year, with organic sales down 7.6% in first quarter of fiscal 2024.
Nevertheless, analysts remain optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) is currently pegged at $3.79, reflecting a significant year-over-year growth from $1.53 in the year-ago quarter. The consensus estimate for fiscal 2025 sales and EPS is pegged at $2.9 billion and $4.59, respectively, showing increases of 2.2% and 21.1%.
Ralph Lauren has a trailing four-quarter earnings surprise of 18.7%, on average. The Zacks Consensus Estimate for RL’s fiscal 2024 EPS indicates an increase of 22.7% from the year-ago period’s reported level.
Royal Caribbean currently flaunts a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 28.3%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 14.5% and 47.9%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 13.7% and 15%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
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Spectrum Brands' (SPB) Strategic Endeavors Progress Well
Spectrum Brands Holdings Inc. (SPB - Free Report) stock appears well-poised for growth, thanks to its robust business strategies, including the Global Productivity Improvement Plan. The company has also been gaining from increased pricing, cost improvements and a favorable mix, which have been aiding margins for a while now. Driven by such tailwinds, shares of this Zacks Rank #3 (Hold) company have gained 50% in the past year compared with the industry's 1.4% rise.
Let’s Delve Deeper
Spectrum Brands is on track with its four core pillars to drive growth. In this regard, the company is streamlining its organizational structure and re-energizing its employee base. It remains committed to improving operational efficiencies throughout and limiting risks. Management is protecting and deleveraging its balance sheet while solidifying liquidity. It is focused on transforming the company into a pure-play global Pet and Home & Garden business.
Additionally, the company is progressing well with its Global Productivity Improvement Plan, which aims at improving its operating efficiency and effectiveness, while focusing on consumer insights and growth-enabling functions, including technology, marketing, and research and development. This plan will enable the company to deliver value creation and sustainable growth in the long term.
The company is being proactive in its cost-takeout actions, including fixed cost reduction by eliminating permanently salaried headcounts, and reducing advertising and promotional spending. Driven by improved pricing and cost improvements, the gross margin expanded 710 basis points during first-quarter fiscal 2024, while gross profit improved 21.3% year over year.
Image Source: Zacks Investment Research
Further, selling, general and administrative expenses edged down 1% year over year in the same quarter, resulting in an operating income of $25 million against an operating loss of $20.2 million in the year-ago quarter. Operating income was mainly aided by lower spending on restructuring, optimization and strategic transaction activities, fixed-cost containment efforts and reduced factoring charges.
While the aforementioned factors bode well, the company has been witnessing soft demand in the North American small kitchen appliances category and volume declines in certain pet channels. Spectrum Brands' Home & Personal Care segment is struggling with category declines from lower demand, particularly in small kitchen appliances, continued retailer inventory management in North America, and the exit of certain small Kitchen Appliance SKUs. Sales for the segment declined 5.8% year over year, with organic sales down 7.6% in first quarter of fiscal 2024.
Nevertheless, analysts remain optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) is currently pegged at $3.79, reflecting a significant year-over-year growth from $1.53 in the year-ago quarter. The consensus estimate for fiscal 2025 sales and EPS is pegged at $2.9 billion and $4.59, respectively, showing increases of 2.2% and 21.1%.
Key Consumer Discretionary Picks
Some better-ranked companies are Ralph Lauren (RL - Free Report) , Royal Caribbean (RCL - Free Report) and lululemon athletica (LULU - Free Report) .
Ralph Lauren sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ralph Lauren has a trailing four-quarter earnings surprise of 18.7%, on average. The Zacks Consensus Estimate for RL’s fiscal 2024 EPS indicates an increase of 22.7% from the year-ago period’s reported level.
Royal Caribbean currently flaunts a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 28.3%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 14.5% and 47.9%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 13.7% and 15%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.