Spectrum Brands looking to get back on track after flat performance

The Wisconsin-based pet product supplier posted a slight drop of 0.2% in its Global Pet Care (GPC) segment’s net sales in the Q1 of fiscal year (FY) 2024 ending 31 December 2023.

Net sales dropped to $276.9 million (€256.7M) from the $277.5 million (€257.3M) in net sales during the same period in FY 2023. 

The company attributed this decrease to “continued softness” in the global aquatics category and the impact of its decision to exit a number of non-strategic categories and stock-keeping units (SKUs), the effect of which was mainly felt in its North American sales. 

More sales in EMEA

However, a company spokesperson states this was offset by growth in the companion animal category, which saw sales increase in the Europe, Middle East and Africa (EMEA) region driven by strong dog and cat food sales. 

The sector’s organic net sales decreased by 2%, excluding favorable foreign currency impacts of $5 million (€4.6M).

Spectrum Brands saw its GPC segment’s operating income, adjusted EBITDA and margins increase in the same period, owing to lower cost inventory compared to the prior year, favorable product and channel mix and savings from the previous year’s cost reduction initiatives. 

Constant performance

The latest quarter’s results align with the company’s previous quarterly results. In a similar trend, the pet care company posted 6.2% fewer sales in the quarter ending 2 July 2023, which can be attributed to the poor performance of its aquatic portfolio. 

Commenting on the results, David Maura, Chairman and CEO of Spectrum Brands, says, “Our margins and EBITDA are growing again in both our Global Pet Care and Home & Garden businesses. 

Maura adds, “With our operational house now in order, our primary focus is to return to revenue growth. Our aim is consistent operating performance and a material uplift in the valuation of our shares.”

The global picture

The company’s global net sales during Q1 FY 2024 decreased 3% from $713.3 million (€661.3M) to $692.2 million (€641.8M).

Its gross profit increased 21.3% to $244.9 million (€227M), up from $201.9 million (€187.2M) in the quarter ending 1 January 2023. 

The company intends to target a “low single-digit” net sales decline while remaining cautious of “new geopolitical and macroeconomic headwinds driving pressure in FY 2024 despite an encouraging Q1”.