Spectrum Net Loss Reaches 50.2 Million in Q2
MADISON, Wis.--Spectrum Brands, parent of the Russell Hobbs housewares brand and the Remington personal-care brand, posted a second-quarter net loss of $50.2 million, compared with a net loss of $19 million in last year's second quarter.
Rising costs negated a 30.3 percent increase in net sales to $693.9 million for the quarter, which ended on April 3. A 36 percent increase in costs of good sold narrowed Spectrum's gross margin by 255 basis points to 36.8 percent. Selling, general and administrative expenses rose 26 percent in dollars, although they declined 87 basis points as a percentage of sales, and interest expense climbed 49.6 percent.
Much of the sales gain came from the addition of the Russell Hobbs (formerly Salton) product lines. This transaction, which closed on June 16 of last year, and a double-digit increase in Remington sales boosted sales in Spectrum's Global Batteries & Appliances unit by 49 percent. These product lines have been within this unit since a Spectrum restructuring was announced last October.
Dave Lumley, Spectrum's CEO, said the company expects the Russell Hobbs merger and the restructuring to produce "significant" cost savings eventually. "With our market-share gains, new retailer placements and the pipeline of new products and line extensions we have in place, we expect a stronger fiscal 2011 second half versus the first half in net sales, adjusted EBITDA and free cash flow," Lumley said.