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Sunbeam sees 1Q loss
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April 3, 1998: 6:25 p.m. ET
Consumer product maker suffers as retailers try to hold down inventories
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NEW YORK (CNNfn) - Shares of Sunbeam Corp. plunged Friday after the Delray Beach, Fla.-based consumer products maker revised previous forecasts downward to reflect a loss for the first quarter.
But during a midday conference call with Wall Street analysts, Sunbeam's renowned Chairman and Chief Executive Al Dunlap lambasted investors because he believes they have "significantly overreacted to this news."
In recent trading, the stock (SOC) was down 10-13/16, or more than 20 percent, at 34-3/4 in extremely heavy turnover on the New York Stock Exchange.
"Our first quarter started slowly this year," said Dunlap, who has come by his nickname "Chainsaw" by swiftly slashing costs -- as well as workers -- in order to turn around operations.
Sunbeam disclosed on March 19 that first-quarter sales would fall below analysts' estimates ranging from $285 million to $295 million. But at that point the company still expected to generate sales above the $253.4 million recorded a year earlier.
Now Sunbeam says sales are expected to be 5 percent below year-ago levels. As a result of the lower forecast and significant one-time charges associated with its recent acquisitions, the company expects to show a loss for the quarter.
Analysts had expected profits of 32 cents a share, according to First Call.
"A relatively intelligent person would realize we're talking about one-time charges and costs," Dunlap yelled on the conference call.
But Sunbeam's weaker sales also can be attributed to the new strategic focus to minimize corporate inventories -- a trend that has swept through the computer industry to retailers.
Other vendors such as Mattel Inc. and Hasbro Inc. already have warned of flat results as a result of Toys R Us's new inventory policy. And retailers such as Wal-Mart Stores Inc. are having a direct impact on companies like Sunbeam.
Indeed, in his own press release, Dunlap was quoted as saying "We believe retailers are continuing to manage down their inventories, although retail sales reports are encouraging."
To deal with the situation, Dunlap fired one of Sunbeam's top officials, Don Uzzi, executive vice president of consumer products.
"We determined that we needed new leadership in the management of our business units," Dunlap said.
Lee Griffith, who most recently was vice president of sales at Sunbeam, has been named president of the household products division. He formerly was chairman, president and chief executive of Scott Paper's Canadian operations.
Over the next two to three months, Sunbeam officials will evaluate its operations, including the newly acquired outdoor equipment maker Coleman Co.; Signature Brands USA, the maker of Mr. Coffee machines; and consumer products company First Alert Inc.
Asset sales and closing of facilities are possible options, Chief Financial Officer Russell Kersh said.
But in the wake of the latest announcement, some analysts expressed skepticism about the company's fundamental condition.
"This whole turnaround has just been a farce," said Jeff Middleswart, analyst at David W. Tice & Associates.
Sunbeam's 1997 results were attributable primarily to aggressive cost-cutting. "But the problem becomes, how do you match up '97 results with '98? You can't, unless you cloud the issue with acquisitions," Middleswart said.
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Sunbeam
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