Sunbeam Outlook Bleak; Loss Worse Than Expected
Sunbeam Corp., the top U.S. small appliance maker, on Wednesday posted a third-quarter loss far worse than analysts had expected, darkening the financial outlook for the heavily indebted company.
Sunbeam is burdened with shareholder lawsuits and other long-term effects of former Chief Executive “Chainsaw Al” Dunlap, who was ousted in 1998 after cutting business lines, halving Sunbeam’s work force and taking on debt to expand through acquisitions.
“They’re extremely highly leveraged; they’ve got a ton of debt they used to acquire companies under Chainsaw Al,” said analyst Rommel Dionisio of Freedman, Billings, Ramsey.
Sunbeam remains best known for product lines acquired by Dunlap--Mr. Coffee coffeemakers, First Alert smoke alarms and Coleman camping gear--but those acquisitions and related interest expenses are the main source of the company’s debt, analysts said.
Sunbeam said it reached an agreement with its lenders to amend its existing credit agreement. The amendment provides additional liquidity and waives financial covenants through December. It also defers principal and fee payments due at the end of November until April 10, 2001.
The company has about $2.5 billion in debt, analysts said.
For the third quarter, Sunbeam said its net loss widened to $84.1 million, or 78 cents a share, from a loss of $47 million, or 47 cents, a year ago. Sales fell 23% to $466 million.
The loss was much deeper than the 58-cent average estimate of analysts polled by First Call/Thomson Financial.
Sunbeam said the lower sales were heavily influenced by product line divestitures and a fall-off in demand for Y2K-related products, in particular Coleman camping gear and Powermate generators.
Shares of Sunbeam, which traded above $50 in early 1998, fell 6 cents to close at 63 cents on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
RETAILING:
* Nordstrom Inc. said fiscal third-quarter profit tumbled 41% to $23.4 million, or 18 cents a share, missing forecasts by a penny, as the retailer took steep price markdowns on slow-selling women’s apparel. Sales rose 13% to $1.25 billion.
* Restoration Hardware Inc. said its fiscal third-quarter loss widened to $5.1 million, or 30 cents a share, from $1.7 million, or 10 cents, a year ago, as the home furnishings retailer cut prices on products to push sales. Analysts on average were expecting a loss of 28 cents, according to First Call/Thomson Financial. Sales rose 23% to $79.7 million. Sales at stores open at least a year fell 1.7%.
* Ross Stores Inc. said profit fell 14% in its fiscal third quarter to $29.7 million, or 36 cents a share, as costs rose and sales growth slowed. The off-price retailer’s revenue rose 5% to $639.5 million, while sales at stores open at least a year fell 2%. The earnings were a penny better than analysts expected.
* Tiffany & Co.’s profit soared 65% in the third quarter to $36.32 million, or 24 cents a share, three cents better than analysts expected, on strong sales and successful new store openings. The upscale jeweler and specialty retailer, which is bucking the trend toward slower consumer spending reported by many retailers, said sales grew 15% to $369.7 million. Sales in stores open at least a year climbed 18%. In Japan, Tiffany’s largest international market, same-store sales grew 10%. The earnings news sent Tiffany shares up $4.13, or 12%, to close at $39.38 on the New York Stock Exchange.
* Wet Seal Inc. said its third-quarter earnings rose to $3.96 million, or 31 cents a share, including a separation payment to its former president, from $2.75 million, or 22 cents, a year ago. Excluding the one-time payment, the Foothill Ranch-based retailer earned 39 cents a share. Sales grew 10% to $145 million, while same-store sales rose 6.8%.
OTHER INDUSTRIES:
* Campbell Soup Co. said a big promotional push in its U.S. soup and Pepperidge Farm cookie and cracker businesses drove earnings down 13% to $204 million, or 47 cents a share, in its fiscal first quarter. Sales rose 1% to $1.8 billion at Campbell Soup, which also makes V8 vegetable drinks, Goldfish crackers and Godiva chocolates. The results beat revised estimates of 45 cents. Campbell had warned on Sept. 7 that its earnings would fall well short of the 52 cents analysts then expected.
*
Bloomberg News contributed to this report.
