Newell Brands Inc. (NASDAQ:NWL) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 11:00 am ET


Newell Brands Inc. (NASDAQ:NWL) Q2 2020 Earnings Conference Call - Final Transcript


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Ravi Saligram

delivered flat to modest sales growth versus a year ago. The good news is that we're broadly seeing consumption growth rates accelerate sharply in certain categories of the food, commercial and appliance businesses. We believe this is a function of both the fiscal stimulus here in the U.S., as well as shift in consumer behavior that are significantly benefiting some of our categories.

Across our portfolio, we've seen 12, and I repeat, 12 consecutive weeks of U.S. point of sales growth. In fact, in the first half, POS was up slightly. We have proactively leveraged our e-commerce capabilities and marketing investments to capitalize on the accelerating shift of shopper behavior to online channels. Excuse me. During the second quarter, our online POS penetration reached 33%, an improvement of 800 basis points versus last year. Online, as a percentage of sales, reached 24% this year, this quarter, an all-time high, up 1,000 bps versus prior year, and double second quarter 2018. Penetration improved meaningfully for every single business unit; in some cases, doubling or tripling on a year-over-year basis. Our e-commerce team, in conjunction with the business units, is doing a great job in capitalizing on the evolving consumer behavior. Consumer takeaway and sales performance is widely diverged across our business units and categories based on demand, supply and retail closures. Let me give you a quick run-through of each of our businesses.

Let's start with food. Well, it's been a rocket ship, both in terms of strong double-digit consumption growth as well as improved share momentum in the last six weeks on all four major brands: FoodSaver, Ball, Rubbermaid and Sistema. We hope to continue to see growth momentum in the second half as we launch Rubbermaid Brilliance glass in September. We are also planning to launch Rubbermaid food storage containers that contain antimicrobial product protection online with major retailers starting in the fourth quarter. This would represent roughly six months to identify, qualify and ship this product in response to changing consumer needs. An illustration of the new sense of urgency and spirit of innovation back at Newell. Let's go to Home Fragrance. U.S. consumption was under pressure in the second quarter, primarily due to the closure of all Yankee Candle retail stores and most specialty retail, although we saw strong takeaway retailers that stayed open throughout the pandemic. Online penetration more than tripled in the quarter as consumers were unable to purchase candles in store. The headwinds were further exacerbated by significant supply constraints stemming from the shutdown of both our main distribution center and factory in South Deerfield, Massachusetts.

As supply ramps back up, we expect trends to improve and are excited about the new product pipeline, which in the second half, includes Home Fragrance innovations such as Yankee Candle Sleep diffuser, WoodWick, Auto Reeds and others. Now commercial. After inconsistent performance in the last few years, the commercial business has now delivered two consecutive quarters of core sales and profit growth. The commercial team has driven