Spectrum’s Pet Supplies Sales Increase While Income Declines

Spectrum Brands Holdings Inc.'s global pet supplies division reported net income of $15.1 million on net sales of $143.8 million for the third quarter ended July 3, 2011, compared with net income of $17.2 million on net sales of $136.1 million in the year-ago period.

The recent reclassification of certain pet products into the pet division from the former small appliances division accounted for a net sales increase of $3.2 million in the third quarter of 2011.

The Madison, Wis.-based company, which owns United Pet Group, attributed the higher revenues in part to increased companion animal sales at key retailers. Foreign exchange positively impacted these results by $4.8 million, the company reported.
For the first nine months, the global pet supplies division reported net sales of $425.1 million, compared with $421.3 million in the year-ago period.

"In global pet supplies, we're encouraged by improving volume trends driven by key distribution gains at several major retailers, including new product launches in our Dingo and Nature's Miracle lines as well as in our Tetra aquatics categories," CEO Dave Lumley told investors during a conference call today.

On the acquisition front, Lumley said the company's pet business is actively considering a handful of small, bolt-on acquisitions in the companion animal category. Late last year, Spectrum's pet division acquired Birdola seed cake producer Seed Resources.

The company continues to forecast annualized cost savings of $7 to $11 million over this year and next as its pet business completes a major restructuring. Lumley said the savings will likely be at the higher end of that range.

Overall, the company returned to a profit in the third quarter. Spectrum reported net income of $28.6 million on net sales of $804.6 million for the third quarter of fiscal 2011, compared with a net loss of $86.5 million on net sales of $653.5 million.

For the first nine months, Spectrum posted a net loss of $41.3 million on net sales of $2.4 billion, compared with a net loss of $165.8 million on net sales of $1.8 billion in the first nine months of fiscal year 2010.

"In today's world of sluggish consumer demand, tighter retailer inventories and rising costs, we believe we have the correct strategy for our portfolio of branded and trusted products—delivering superior margins and lower acquisitions costs to our retail customers and offering consumers worldwide the same product performance at a better price of better performance at the same price," Lumley said.