Newell Brands Inc. (NASDAQ:NWL) Q2 2023 Earnings Call Transcript

So we feel like the productivity program is only gaining strength. And that’s one of the reasons we feel good about gross margins. Also, there’s a lot of other things at play, like the pricing effect that we just put in 471 [ph], which will bring a bunch of additional pricing into the second half. So we feel very good about where we are with gross margin. I think as you know, we’ve had a gross margin compression every year since the Jarden acquisition. And this is the year that we’re hoping to turn that around.

Olivia Tong: Got it. Thanks. And then given your updated views on resource allocation across brands and categories and geography, can you give us some idea on whether there are brands that are potentially seeing more spend rather than less, and then the level of divergence you’re expecting versus where it currently stands on the brands that are going to see less support?

Chris Peterson: Yes, we are — as part of our plan, we are spending more money on A&P. So the A&P spend that we planned in the back half of the year is up versus last year and significantly up versus the front half of this year. And it is disproportionately focused on our leading brands. So for example, we feel — and part of the reason we feel very good about the back-to-school period, which we’re just entering, is that our customer service results have improved markedly, as Mark mentioned, from fill rates in the low 80s to fill rates in the mid to high 90s on the writing business. We’ve had a terrific sell-in and back-to-school. The writing business — despite the core sales for the company being down in Q2, the writing business was up in Q2 on core sales.

Our share of retailer assets is improved this year versus prior year. And because of that, we are planning to spend more money in A&P this year than last year against that, because we believe we’re well positioned for the season. We obviously haven’t seen consumption yet. But we believe that’s a good use of investment dollars. At the same time, we said when we rolled out the strategy that we have 80 master brands and there’s 25 that represent 90% of the sales and profits that we’re going to be focusing on. So at the same time, we are de-prioritizing spending on those bottom 55 brands, because we believe the return on investment is much higher on the top 25.

Olivia Tong: Thank you.

Operator: Thank you. And our next question coming from the line of Andrea Teixeira with JPMorgan, your line is open.

Andrea Teixeira: Thank you. I wanted to go back to what you just said to Olivia’s question on the 55 brands, Chris. And of course this company has been through a huge transformation in kind of optimizing and selling brands and doing all of that amid all kind of deleveraging that you went through. I wonder if there is any thoughts to be made on some of those brands being divested. And conversely, I would just want to think about like was this sell like some of the — as you go through this or this is something that you’re going to reassessed post all this transformation process that this project are still giving you and starting to give you this year. And then on your comment and just a clarification, your comment about back-to-school, of course you haven’t seen consumption yet.

Is this category also going through in your view some of the reductions that retailers have been going through for inventory or this is pretty much more immune given that this still — is still positive impacts on reopening and office and all of that? Thank you.