Newell Rubbermaid Inc., the maker of Rubbermaid containers, sank the most since 2008 after cutting its full-year profit forecast on slumping consumer spending.
Per-share profit, excluding costs for restructuring and other items, will be at least $1.60, down from a projection of at least $1.67, the Atlanta-based company said today in a statement. Analysts on average anticipated $1.69, according to a Bloomberg survey.
Some of Newell’s larger retail customers have lowered expectations for U.S. growth as consumer confidence weakens, said Chief Executive Officer Mark Ketchum. More than two-thirds of Newell’s sales come from the U.S., where persistent joblessness and surging prices for food and gas have forced shoppers to watch their wallets.
“High unemployment and rising gas prices are putting a damper on the consumer and that’s flowing through to sales of these products,” Giri Cherukuri, who helps manage $2.8 billion, including Newell shares, for Oakbrook Investments in Lisle, Illinois. “The economy is weak in general.”
Newell tumbled $1.98, or 12 percent, to $14.99 at 9:47 a.m. in New York Stock Exchange composite trading. Earlier the shares fell as much as 13 percent, the biggest intraday drop since Dec. 17, 2008.
The company lowered its growth forecast for sales, excluding foreign currency fluctuations, to 3 percent to 4 percent. That’s down a percentage point from a previous estimate April 29.
“Persistent softness in the U.S. economy and increased inflationary pressure have caused us to revise our outlook for the balance of the year,” Ketchum said in the statement.
Other consumer-goods makers have noted that consumers are paring spending. Mothers are buying products in smaller packages at the end of the month to stretch their budgets, Thomas Falk, CEO of Kimberly-Clark Corp., told a Sanford C. Bernstein & Co. conference in New York yesterday. The Dallas-based company makes Kleenex tissue and Huggies diapers.
Rising gasoline prices and unemployment have curbed spending by customers of Dollar General Corp., the largest U.S. dollar-store chain.
“Customers today are experiencing more uncertainty,” CEO Rick Dreiling told analysts this week.
Consumer sentiment unexpectedly decreased in May to the lowest level in six months as Americans grew concerned over the outlook for jobs and the economy, according to the Conference Board, a New York-based private research group. Its confidence index dropped to 60.8 percent from a revised 66 reading in April.
© Copyright 2017 Bloomberg News. All rights reserved.