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Spectrum Battery Biz Declines

Atlanta — A decline in Rayovac battery sales, combined with a 6 percent reduction in selling days during its fiscal fourth quarter, helped reduce sales in North America about 22 percent at Spectrum Brands (formerly Rayovac), down to $133.4 million from a year-ago $169.4 million.

North American segment profit dropped by more than half, down to $18.4 million, from $45.1 million in the same three months in 2004.

Battery sales in the company’s fiscal year, ended Sept. 30, as well as gross margin, were negatively impacted by the transition from Rayovac’s “50% More” battery marketing campaign to a new performance-based marketing strategy, and by high retail battery inventory levels during the fourth quarter.

At the retail level, Rayovac-brand alkaline battery market share was unchanged, while the category declined by about 6 percent, said Spectrum.

For the 12 months, North American sales decreased to $610.8 million from a year-on-year $654 million, due primarily to a decline in battery sales during the fourth quarter.

North American segment profitability slipped to $113.2 million in the fiscal year, down from the $130.7 million reported last year, due primarily to the impact of the marketing transition in the battery business and increased raw materials and fuel and transportation costs.

Although consolidated fourth quarter sales at Spectrum jumped 60 percent to $603.7 million, from $377 million the previous year — the sales results include acquisitions of United Industries and Tetra Holding — the company reported a net loss of $2.9 million, compared with net income of $18.2 million the previous year. Gross profit in the quarter was $219.3 million vs. $155.5 million year-over-year. Pro forma operating income was $47.7 million, compared with $51.4 million the prior year.

Consolidated sales for the 12 months hit $2.4 billion, up from $1.4 billion, with gross profit reaching $883.9 million, up from $606.1 million last year. Net income was $46.8 million, down from $55.8 million a year earlier.