Newell Brands Inc. (NWL), the global consumer goods conglomerate behind iconic brands like Rubbermaid, Sharpie, and Yankee Candle, has navigated a challenging operating environment with admirable resilience. Despite facing significant macroeconomic headwinds, the company has demonstrated a steadfast commitment to its strategic turnaround plan, delivering marked improvements in its financial performance and operational efficiency.
Business Overview and Chronology Newell Brands traces its roots back to 1903, when it was founded in Ogdensburg, New York as a small manufacturer of window glass and other household products. Over the decades, the company has undergone a remarkable transformation, evolving into a diversified consumer goods powerhouse through a series of strategic acquisitions and organic growth initiatives.
The company's expansion into new product categories gained significant momentum in the 1980s and 1990s. During this period, Newell acquired several companies, including Faber-Castell, Berol, and Sanford, which allowed it to broaden its portfolio into writing instruments, art supplies, and adhesives. These strategic moves laid the foundation for Newell's diverse product offerings and market presence.
The landmark acquisition of Jarden Corporation in 2016 marked a pivotal moment in Newell's history, significantly expanding its brand portfolio and geographic reach. This transformative deal brought iconic brands like Yankee Candle, Crock-Pot, and Mr. Coffee under the Newell umbrella, solidifying its position as a global leader in the consumer products industry. However, the integration of Jarden presented operational challenges, as Newell worked to streamline its expanded supply chain and business units.
Throughout its history, Newell has faced various obstacles, including increased competition from private label brands, retailer consolidation, and shifting consumer preferences. The company has consistently adapted its strategies to address these challenges, focusing on brand building, innovation, and operational efficiency to maintain its market position.
Today, Newell Brands boasts a diverse stable of well-recognized brands spanning the Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation segments. The company's long history of growth, both organically and through acquisitions, has established it as a well-recognized player in the global marketplace.
In 2023, Newell embarked on a comprehensive strategic review, culminating in the implementation of a new corporate strategy aimed at unlocking the full potential of its brand portfolio. This multifaceted plan has entailed streamlining the company's organizational structure, centralizing key functions, and doubling down on its most profitable and fastest-growing business lines.
Financial Performance and Liquidity Newell's financial performance in recent years has been marked by both challenges and notable progress. In 2024, the company reported net sales of $7.58 billion, a 6.8% decrease compared to the prior year, reflecting the impact of soft global demand, foreign exchange headwinds, and the company's strategic decision to exit certain low-margin product lines.
Despite the top-line pressures, Newell's focus on improving its structural economics has yielded tangible results. The company's normalized gross margin expanded by 460 basis points to 34.1% in 2024, driven by productivity initiatives, strategic pricing actions, and favorable product mix management. This margin expansion, coupled with disciplined cost controls, enabled Newell to deliver a 210-basis-point improvement in normalized operating margin to 8.2% for the full year.
The company's cash flow generation has also been a bright spot, with 2024 operating cash flow reaching $496 million. This strong cash flow, combined with proactive debt management, allowed Newell to reduce its net debt by $175 million during the year, lowering its leverage ratio to a more manageable 4.9 times by the end of 2024.
Newell's financial position as of the end of 2024 shows a debt-to-equity ratio of 1.82, with cash and cash equivalents of $198 million. The company maintains a $1 billion revolving credit facility, of which $40 million was drawn as of December 31, 2024, leaving $925 million available. The current ratio stands at 1.14, while the quick ratio is 0.56, indicating a relatively stable short-term liquidity position.
Segment Performance Newell's operations are comprised of three primary operating segments: Home and Commercial Solutions (HCS), Learning and Development (LD), and Outdoor and Recreation (OR).
The HCS segment, which includes brands such as Ball, Calphalon, Crockpot, FoodSaver, Rubbermaid, and Yankee Candle, generated net sales of $4.07 billion in 2024, representing approximately 54% of the company's total net sales.
The LD segment, featuring brands like Dymo, Elmer's, EXPO, Graco, Paper Mate, and Sharpie, contributed $2.72 billion in net sales, accounting for about 36% of total net sales.
The OR segment, which includes brands such as Campingaz, Coleman, Contigo, and Marmot, generated $794 million in net sales, or approximately 10% of the company's total.
Distribution Channels and Key Customers Newell Brands sells its products through various distribution channels, including mass merchants, warehouse clubs, home centers, department stores, drug/grocery stores, specialty retailers, discount stores, e-commerce retailers, commercial products distributors, and direct to consumers online and in Yankee Candle retail stores. The company's largest customers in 2024 were Amazon, accounting for approximately 15% of net sales, and Walmart Inc. and subsidiaries, accounting for approximately 14% of net sales.
Navigating Macroeconomic Challenges Newell's performance must be viewed in the context of an increasingly complex and volatile macroeconomic landscape. The company has grappled with persistent inflationary pressures, geopolitical tensions, and shifting consumer behaviors, all of which have impacted its operations and financial results.
The imposition of tariffs on imports from China, Mexico, and Canada has presented a particular challenge for Newell, given its reliance on global supply chains. In response, the company has accelerated its efforts to diversify its manufacturing footprint and reduce its exposure to China-sourced products. By the end of 2024, Newell had already lowered the share of its cost of goods sold attributable to Chinese imports to just 15%, with a plan to further reduce this figure to less than 10% by the end of 2025.
The company's proactive approach to managing these macroeconomic headwinds has allowed it to mitigate the impact on its financial performance to some degree. However, the lingering effects of these challenges, coupled with softening consumer demand, have nonetheless weighed on Newell's top-line results.
Outlook and Strategic Priorities Looking ahead, Newell has provided preliminary guidance for 2025 that reflects both the company's resilience and the continued uncertainty in the operating environment. The company expects core sales to range between a 2% decline and 1% growth, with sequential improvement throughout the year as its innovation pipeline and distribution expansion initiatives gain traction. Net sales are projected to decline between 4% to 2%, accounting for a 2-4% headwind from foreign exchange and business exits.
Newell anticipates its normalized operating margin to improve to between 9% and 9.5%, representing an approximately 110 basis point increase compared to 2024. Normalized earnings per share are expected to range from $0.70 to $0.76, an 18% increase versus 2024 on a tax-equivalent basis. The company projects operating cash flow of $450 million to $500 million for 2025.
To drive this performance, Newell has outlined five key priorities for 2025:
1. Returning the company to sustainable growth through enhanced product innovation, commercial execution, and international expansion. 2. Continuing to drive operating margin improvement, targeting a 110-basis-point increase at the midpoint of its guidance range. 3. Further deleveraging the balance sheet and improving the cash conversion cycle, with an expected year-end 2025 leverage ratio of approximately 4.5 times, an improvement of about 0.5 times versus current levels. 4. Driving operational excellence through complexity reduction, technology standardization, and SKU optimization. 5. Advancing the company's transformation into a high-performance, innovative, and inclusive culture.
These strategic initiatives, coupled with Newell's proven ability to navigate challenging conditions, position the company well to weather the current macroeconomic storm and emerge as a stronger, more resilient player in the consumer goods landscape. The company plans to invest $250 million in high-return cost savings projects and consumer product innovations to support these objectives.
Risks and Uncertainties Despite Newell's progress, the company continues to face a range of risks and uncertainties that warrant close monitoring. These include ongoing supply chain disruptions, volatile commodity and transportation costs, shifting consumer preferences, and the potential for further geopolitical tensions and trade policy changes.
Additionally, Newell's substantial debt load, although reduced in recent years, remains a point of concern. The company's ability to effectively manage its capital structure and refinance maturing obligations will be crucial to maintaining financial flexibility and preserving its credit profile.
Furthermore, the company's ambitious turnaround plan carries inherent execution risks, as the successful implementation of its strategic initiatives is key to driving sustainable growth and profitability. Newell's ability to effectively integrate new technologies, streamline operations, and foster a high-performance culture will be critical to the realization of its long-term goals.
Conclusion Newell Brands has navigated a turbulent operating environment with admirable resilience, delivering meaningful improvements in its financial performance and operational efficiency. While the company continues to face significant macroeconomic headwinds, its strategic priorities, diversified brand portfolio, and proven ability to adapt position it well to weather the current storm and emerge as a stronger, more competitive player in the consumer goods industry.
As Newell Brands continues to execute on its turnaround plan, investors would do well to closely monitor the company's progress in achieving its growth targets, driving margin expansion, and strengthening its balance sheet. With a steadfast focus on innovation, operational excellence, and cultural transformation, Newell appears poised to create substantial value for its shareholders in the years to come.
The company's performance across its geographic markets, while not explicitly broken out, indicates that approximately 38% of its net sales in 2024 were derived from non-U.S. markets. This global presence provides Newell with diversification benefits but also exposes it to currency fluctuations and varying economic conditions across different regions.
Industry trends suggest that the overall product categories in which Newell operates are expected to be about flat in 2025, improving from a low single-digit decline in 2024. This modest improvement in the market backdrop, combined with Newell's strategic initiatives, underpins the company's cautiously optimistic outlook for the coming year.
As Newell Brands moves forward, its ability to execute on its strategic plan, capitalize on emerging consumer trends, and effectively manage its portfolio of brands will be crucial in determining its long-term success in the highly competitive consumer goods industry.