Newell Brands Inc.'s (NYSE: NWL) announcement that it will consider divesting assets across its consumer, industrial and business divisions shows the extent that retailers are struggling to keep their brick-and-mortar stores alive. For example, Toys "R" Us filed for bankruptcy in 2017 and recently announced it will shut at least 180 stores. Toys "R" Us, which owns the Babies "R" Us brand and is a Newell customer of baby products, recently announced it will shut at least 180 stores.

Hoboken-New Jersey-based Newell said that its core sales were hurt by retailers rebalancing their inventories. In other words, they are shrinking the amount of products that are holding in their stores. Newell is going to focus on nine core businesses that will have around $11 billion in sales and $2 billion in Ebitda.

Among the brands and products Newell is considering shedding are: Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, U.S. Playing Cards, Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa. The company notes that the process will cut its customer base in half and reduce the number of factories and warehouses it operates by the same count.

"We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” says Newell CEO Michael Polk. Newell expects the process to be completed by the end of 2019.

Best known as the maker of the Sharpie brand of pens and markers, Newell has been streamlining its portfolio through M&A to focus on faster growing businesses including candles. Newell launched its Growth Game Plan in 2012 to create a “larger, faster growing, more global and more profitable company."

In 2015, Newell added Elmer’s to its writing division, which houses the Sharpie brand. In 2016, the company completed the $15 billion purchase of Yankee Candle owner Jarden. Newell won Mergers & Acquisitions’ 2015 M&A Mid-Market Award for Strategic Buyer of the Year.

More recently. Newell agreed to buy Chesapeake Bay Candle from its founders for $75 million and completed the sale of the Rubbermaid consumer storage business to United Solutions and sold sells its winter sports unit to Kohlberg & Co. Newell also completed the $100 million acquisition of candle producer Smith Mountain Industries and sold Irwin tools to Stanley Black & Decker Inc. (NYSE: SWK) for $1.95 billion.

“A stronger, simpler, faster Newell, together with leading brands, brilliant marketing, outstanding innovation and an advantaged e-commerce capability, better positions us to win in these dynamic times. As a result, we have chosen to explore these strategic options," adds Polk.


Rawlings
Bloomberg News

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Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market deamaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.