Spectrum Brands tops profit and sales expectations, but gross margin contracts as inflation takes a bite

Spectrum Brands Holdings Inc. SPB, +3.92% reported fiscal second-quarter profit and sales that beat expectations, while gross margin contracted as inflationary costs were higher than related price increases. Shares of the consumer products company, which brands include George Foreman, Remington and Health-Hide, were still inactive in premarket trading. Net income for the quarter to April 3 fell to $15.9 million, or 39 cents a share, from $36.6 million, or 86 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 41 cents beat the FactSet consensus of 36 cents. Sales grew 6.2% to $807.8 million, above the FactSet consensus of $793.4 million, as home and personal care sales increased 6.1%, global pet care sales rose 0.5% and home and garden sales jumped 16.5%. Gross margin declined 270 basis points (2.7 percentage points) “due to accelerated freight and input costs pacing ahead of pricing adjustments, partially offset by improved productivity.” For 2022, the company expects an inflation impact on results to be $310 million to $330 million. The stock has tumbled 19.7% year to date, while the S&P 500 SPX, -0.57% has dropped 13.0%.