Spectrum Rayovac Battery Sales Off 18%

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Atlanta — Battery and lighting sales in the North American business at Spectrum Brands declined 18 percent in the company’s fiscal first quarter, although overall North American sales climbed to $244.6 million from a year-ago $215.8 million.

The inclusion of certain category sales from recently purchased United Industries added $52.4 million to the 12-month total, the company said.

The battery slide was due to markdowns and closeouts of Rayovac brand’s old marketing program, 50% More Batteries, which was not completed until the end of the first quarter, ended Jan. 1, as well as an ongoing inventory emphasis on retail inventory optimization that impaired sell-in in order to balance out year-end inventory levels, said Spectrum.

At retail, consumer-pack purchases of Rayovac batteries increased by 6 percent, although dollar sales were down slightly due to promotional activities related to the marketing transition.

North American business profit in the first quarter reached $24.8 million vs. $41.3 million the prior year. The lower number was due to lower battery sales and normal seasonal losses in the acquired lawn and garden category.

Included among the positive trends Spectrum reported that should contribute to improving performance for the remainder of the year are completion of a rollout of the company’s new North American battery marketing program, full realization on implemented price increases for battery products and expanded plans for cost reduction in the region.

First-quarter consolidated results show net sales of $620 million, up 26.3 percent from $490.8 million for the same period in 2004. Revenue contribution from acquisitions reached $185.1 million.

Operating income dropped 14.7 percent, to $52.3 million in the first quarter, from $61.3 million year-on-year. Pro forma operating income for the first three months was $58.9 million, or 9.5 percent of sales, compared with $60.8 million, or 12.4 percent of sales last year.

Net income plunged to $2.3 million in the first quarter, down from $27.9 million the in the same three months the previous year. With adjustments, pro forma net income was $11 million this year, compared with $27.6 million year-on-year.

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