Newell Rubbermaid slashes 4Q, 2008 profit guidance

ATLANTA — Newell Rubbermaid Inc. slashed its fourth-quarter and full-year profit guidance Wednesday, citing the downturn in the global economy and its impact on the company's retail customers.

To cut costs, the company said it will reduce its salaried work force by 8 percent to 10 percent and will institute a wage and salary freeze. The layoffs, first announced this summer, have already begun to take place throughout the company. The company said the cuts will continue in 2009.

BMO Capital Markets analyst Connie Maneaty said the job cuts equate to about 1,000 salaried positions.

The news, along with the lowered outlook, sent the Atlanta-based company's stock into a nosedive.

The maker of products including Rubbermaid storage containers and Sharpie pens said it now expects profit between 6 cents and 10 cents per share for the fourth quarter. That estimate excludes a tax benefit of 9 cents per share.

Previously, the company had predicted earnings per share of 29 cents to 34 cents. At that point, the company did not foresee any tax benefit.

Analysts polled by Thomson Reuters expect profit of 32 cents per share for the quarter. Analyst estimates typically exclude one-time costs and benefits.

For the full 2008 fiscal year, the company cut its guidance to between $1.17 and $1.21 per share from a previous estimate of between $1.40 and $1.45 per share. Analysts predict profit of $1.43 per share for the year.

"While we are not surprised that market conditions have worsened since the company last provided guidance in late October, the magnitude of today's revision was quite alarming," SunTrust Robinson Humphrey analyst William Chappell told investors in a research note.

Newell Rubbermaid said it is also likely to report a year-over-year decline in sales in the low teens percentage range for the fourth quarter.

"We are seeing extraordinary volatility, weaker than expected demand, and customer inventory reductions across virtually all geographies and market segments, with trends worsening as we near the end of our fourth quarter," said Mark Ketchum, president and chief executive.

Ketchum added that he does not anticipate an "economic rebound any time soon."

Besides the layoffs and salary freeze, the company said it will also temporarily shut down a number of manufacturing plants to reduce inventory.

Newell Rubbermaid said it will provide more details on how it will cut costs when it releases its fourth-quarter financial results on Jan. 29.

Newell Rubbermaid shares fell $3.60, or 27.3 percent, to $9.58 Wednesday. Earlier in the session, the stock traded at $9.13, its lowest point since September 1990.

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