Spectrum Brands plans to exit fertilizer category
Spectrum Brands, a leading manufacturer of lawn and garden products, pest control products, pet supplies and other consumer goods, will stop making fertilizer and several other products in its Home & Garden Business segment in an effort to stem losses. The Atlanta firm announced the decision as part of its fourth-quarter 2008 results, which posted a net loss of $492.6 million, compared to a loss of $333 million for the same quarter of 2007.
Sales for the quarter, which ended Sept. 30, 2008, were $706.5 million, a 7.2 percent increase over the prior year, after excluding the Canadian division of the Home & Garden Business segment, which the company sold in November 2007.
Year-end figures showed a loss of $931.6 million for 2008, compared to losses of $596.8 million in fiscal 2007. Annual sales for fiscal 2008 were $2.68 billion, a 4.8 percent rise over fiscal year 2007 sales of $2.56 billion.
In a prepared statement, the company said it decided to exit the manufacture of fertilizer, potting soil, mulch and grass seed because they had become "a drag on profitability." The sluggish housing market, tight inventories at retailers, low levels of foot traffic and unprecedented commodity costs -- particularly DAP and potash -- all worked against the company's efforts to boost margins, it said. Spectrum also tried to sell this segment of the business, in part or whole, but failed. "The company believes these attempts were unsuccessful due to the current credit market environment," Spectrum said in its statement.
Spectrum also has exclusive private-label manufacturing agreements with national retail chains, including the Vigoro brand at Home Depot, Sta-Green at Lowe's and Expert Gardener at Wal-Mart. A Spectrum Brands spokesperson could not comment on whether the company would end these particular partnerships.
Spectrum's Home and Garden Business will continue to manufacture a number of other products, including outdoor and indoor insect control products, insect repellants and rodenticides. Continuing brand names include Spectracide, Cutter, Hot Shot, Repel, Garden Safe and Schultz.
Spectrum Brands also makes Rayovac batteries, Remington electric shavers, Tetra aquarium supplies and other consumer products.