Newell Brands lowers sales outlook as consumer pulls back

Yahoo Finance Live anchors discuss Newell Brands slashing its third-quarter and full-year outlook amid inflationary pressures.

Video transcript

JULIE HYMAN: We've got a few minutes till the start of the trading day. And we want to take a look at some of the individual movers that we're watching here. Newell Brands is one of them. The consumer products company slashed its third quarter and full year outlook. And it cited inflationary pressures on the consumer. The company now expecting an 8% to 12% decline in core sales for the third quarter and up to a 4% decrease for the full year here.

And analysts basically are saying this is a factor of what we're seeing on the macroeconomic basis. The company has limited visibility here. And the company itself is acknowledging what's going on. We just talked to Ravi Saligram, the CEO, a few weeks ago-- I think two weeks ago it was. And he talked about the strength of the back to school season. And he had emphasized in the statement, they still are seeing that strength in the back to school season, but that people are pulling back because they're paying more for everything.

JARED BLIKRE: Yeah, that seems to be the consensus among the analyst calls or analyst reactions that I've been looking at. Truist Securities rates it a buy, price target at 35. The analysts saying many of Newell's inventory rebalancing efforts would have occurred in the second quarter, but it looks like such reductions are still in progress. Not company specific, so expects this to be transitory, although it is, quote, "disappointing." Says he continues to think that the shares will be rewarding to patient investors.

We can chart this real quickly on the YFi Interactive. I have our food heat map up here. And we've got some consumer staples in there as well. This is the one-year price action. And you can see we are at-- and let me just put a max chart because it goes not too-- well, a lot longer back. But just want to show you, this is the lowest price that we've seen since before the pandemic and really in the lower range of its, admittedly, very sideways trading range over the last, what, 30, 30 plus years here.

JULIE HYMAN: Yeah, I mean, this is a storied brand. It has things like Rubbermaid in the portfolio that are very familiar consumer brands to folks. So are people going to trade down? That's something of an effect that we're seeing perhaps with some of their products. But, you know, it'll be interesting to see where that mix goes in the coming quarter, so got to continue to watch that.