Newell Brands sinks on forecast cut as tariff costs pile, shoppers shun price hikes

By Neil J Kanatt

Oct 31 (Reuters) - Newell Brands' NWL.O shares slumped as much as 34% on Friday after the Sharpie maker forecast a wider decline in annual sales than previously expected and cut its profit outlook, anticipating a hit from tariff costs and sluggish demand.

The company has been trying to minimize the impact of U.S. import tariffs by reducing its reliance on Chinese suppliers as well as price hikes, but has seen a pushback from budget-conscious shoppers seeking cheaper alternatives.

"The pricing that we put in the market turned out to position us as being uncompetitive," CEO Chris Peterson said on a post-earnings call, adding that low-income consumers remain under pressure, with spending on general merchandise down sharply.

The company makes discretionary products, such as storage boxes, candles and baby gear.

Newell's shares fell to a 38-year low of $3.09 and were on track for their worst day on record, if losses held. They were down 52% this year as revenue has been declining for several consecutive quarters.

The company now expects annual net sales to decline between 4.5% and 5%, compared with its previous forecast of a 3% to 2% fall. Adjusted profit per share is seen at 56 cents to 60 cents, down from 66 cents to 70 cents earlier.

Newell raised its expected tariff costs for the year to $180 million from $155 million, citing higher import volumes from China following a shipment pause and a hike in steel and aluminum tariffs to 50% from 25%.

For the third quarter, it reported a bigger-than-expected fall in sales, hurt by lower retail inventory levels and softer consumer spending amid price hikes.

"Timing mismatch from a pricing standpoint (competitors that import from China are only now taking pricing) and inventory destocking was a double hit this quarter," J.P.Morgan analyst Andrea Teixeira wrote in a note.