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Sunbeam sees weak sales
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March 19, 1998: 11:57 a.m. ET
Consumer company attributes shortfall to changing order patterns by retailers
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NEW YORK (CNNfn) - Sunbeam Corp. Thursday raised the possibility that sales in the latest period would fall short of Wall Street's expectations, sparking a sell-off in its stock.
Net sales for the first quarter of 1998 may be lower than the range of analysts' estimates of $285 million to $295 million, the consumer products company said. However, they are expected to exceed the $253.4 million recorded in the first quarter of 1997.
Sunbeam's stock (SOC) retreated on the news, falling 2-11/16 to 47-3/8 around noon after plunging as low as 45-5/8 earlier on the New York Stock Exchange.
The first-quarter warning and subsequent sell-off comes just two weeks after Sunbeam announced a series of acquisitions valued at nearly $2.5 billion. The stock shot higher following word of the acquisitions.
(Click to see historic stock price)
The company attributed the shortfall to changes in inventory management and order patterns at certain of its major retail customers. For example, companies such as Wal-Mart Stores Inc. and Kmart Corp. have been trying to maintain lower inventory levels, putting direct pressure on manufacturers like Sunbeam.
But Sunbeam and other manufacturers may also see a late surge in orders as retailers figure out what they need, explained Justin Maurer, an analyst at McDonald & Co. Investments.
A spokesman for the Delray Beach, Fla.-based company wasn't available for comment.
Sunbeam's top officials are currently on the road to raise financing to cover the recent acquisitions, which included outdoor equipment maker Coleman Co.; Signature Brands USA, the maker of Mr. Coffee machines; and consumer products company First Alert Inc.
Maurer predicts the financing will take the form of a debt offering. As a result of the upcoming offering, Sunbeam executives likely felt the need to disclose all material issues about its financial health, the analyst said.
Sunbeam added that it remains "highly confident" about the overall sales outlook for its products for 1998. However, the company did not elaborate on specific projections or make comments regarding its operating profits.
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Sunbeam
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