Newell Rubbermaid Inc. announced plans to sell its hardware and teaching aids businesses, as the maker of Sharpie pens and Rubbermaid storage containers tries to narrow its focus and become more profitable.
The company also reported a 31.7 percent drop in first-quarter net income, mainly on restructuring costs, as it joins other consumer products makers in taking steps to improve productivity to offset soft sales.
Earnings excluding special items topped Wall Street expectations despite softer-than-anticipated sales.
The businesses that Newell plans to sell include the Bulldog, Shurline, Ashland, Amerock and Mimio brands as well as its drapery hardware unit. Together, they had sales of slightly more than $300 million last year.
"They do not fit with our strategy," Newell Chief Executive Officer Mike Polk said.
Since he took the helm in July 2011, the company has cut jobs, consolidated manufacturing and distribution facilities and reduced the number of business units to trim costs.
At Thursday's close, Newell shares were up 18.5 percent this year, outpacing a 12 percent rise in the Standard & Poor's 500 Index.
Net income fell to $54.2 million, or 19 cents a share, in the first quarter from $79.3 million, or 27 cents a share, a year earlier.
Excluding restructuring costs, charges for discontinued operations and Venezuela's currency devaluation, and a tax benefit, Newell earned 35 cents a share. Analysts on average expected 32 cents, according to Thomson Reuters I/B/E/S.
Newell, which also makes Graco strollers, Calphalon cookware and Paper Mate pens, said net sales fell 0.8 percent to $1.24 billion, missing the analysts' average forecast of $1.32 billion.
Other companies that exceeded analysts' profit forecasts despite weaker-than-anticipated sales in the latest quarter include Procter & Gamble Co and Clorox Co.
Newell said its core sales, which strip out the effects of currency fluctuations, rose 0.2 percent.
Net sales fell 9.3 percent in the writing products business, in part because of weakness in U.S. office superstores and a planned change to a distributor model for China, the company said. Results also suffered from comparisons with the year-earlier period, when it introduced Paper Mate InkJoy pens.
Same-store sales have declined for six consecutive years in the office supply industry. Earlier this week, Office Depot Inc. posted a lower-than-expected quarterly profit, while in March, market leader Staples Inc. forecast weak earnings for the year.
Newell also stood by its full-year earnings outlook of $1.78 to $1.84 a share, excluding items. The analysts' average forecast is $1.82.
The company said it still expected a sales increase of 2 percent to 4 percent for the year, excluding foreign currency fluctuations.
© 2013 Thomson/Reuters. All rights reserved.