Newell Brands on Monday announced a restructuring plan set to eliminate approximately 13% of office positions by the end of 2023. The corporation owns brands like Sharpie, Graco, Coleman, Marmot and Yankee Candle.
Once fully implemented, the company expects to achieve annualized pre-tax savings ranging from $220 million to $250 million. The plan will result in $100 million to $130 million of restructuring and related charges by the end of 2023.
As part of the plan, the company is simplifying its operating model to include three segments: home and commercial solutions, learning and development, and outdoor and recreation. With this shift, Newell Brands named new CEOs for the three sectors.
The layoffs at Newell come as the retail industry as a whole has turned to staffing cuts. The company has struggled financially in recent months, with third-quarter net sales declining 19.2%.
“We are taking action to simplify and strengthen our organization by leveraging the scale and power of One Newell to optimize our cost structure and operate more efficiently," CEO Ravi Saligram said in a statement. "Specifically, we are evolving our operating model into three operating segments based on similarities of consumer and customer dynamics, which will reduce duplication."
Saligram added that the company is also shifting to a unified manufacturing organization to grow margins.
On an October earnings call, Saligram listed five priorities for the company: accelerating cash flow generation, driving a recovery in gross margins, significantly reducing overheads both in the U.S. and internationally, redirecting investments toward higher-margin businesses, and optimizing advertising and promotion spending as well as the company’s office footprint.
“Due to concerns about the high price of everyday goods and gas, a potential recession, rising interest rates and declining personal savings rate, we are seeing a more cautious consumer today, but one that is willing to purchase an offering that provides good value,” Saligram said, according to a Seeking Alpha transcript.
In response to this, Saligram said Newell Brands has been working to improve the value proposition of its assortment as well as using more value-oriented messaging to shoppers.
The company has also been hit by retailers’ efforts to clear out excess inventory in recent months, Saligram said.
“As a result of shifting consumer behaviors, the decision by many retailers to aggressively manage their inventory levels and reduce orders weighed on performance on the majority of our consumer-facing businesses,” Saligram said.
Newell Brands is set to provide further details on its restructuring plan during its fourth quarter and full-year 2022 earnings call on Feb.10.
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