Newell Brands announced on Oct. 4 that is putting up for sale the winter sporting goods business that it inherited earlier this year from Jarden Corp. through the latter's merger with Newell Rubbermaid. The company subsequently stated, however, that it intends to keep K2 and Völkl Marker Dalbello if it doesn't find suitable buyers for them.
Newell issued this clarification after representatives of Völkl's 400 employees in Germany expressed their concerns following a recent statement by Newell's chief executive, Michael Polk, that the group would consider shutting down the operations that it was unable to sell because they would constitute a “distraction.”
In addition to its winter sports businesses, Newell wants to dispose of the vast majority of its tools segment, its consumer storage container business and its heaters, humidifiers and fans. All in all, the operations for sale represent about 10 percent of the group's entire portfolio. They generated total sales of $1.5 billion in 2015.
More details will be given by Newell on Oct. 18 in connection with the release of its quarterly results. In particular, it's not clear yet whether the planned disposal include small winter sports brands like Madshus, Morrow, Ride Snowboards, Atlas or Tubbs. Jarden had already taken on impairment charges of $145.6 million on its winter sports operations at the end of last year.
K2's inline skates and Zoot are understood to be part of the disposal package. Officials indicate that Newell plans to keep strong outdoor brands like Coleman and Marmot Mountain.
The search for new investors has already started and is expected to be completed in the first half of 2017. Meanwhile, the group said that it will continue to fund planned investments by the companies it plans to sell in the development of their winter 2017/18 lines.
It will probably be more difficult for Newell to sell K2 than Völkl. While the German ski brand is apparently doing relatively well with its own factory in Germany, like Fischer in Austria or Rossignol in France, K2 has been facing some issues through manufacturing its skis at a factory in China, which also works for Shakespeare and other fishing tackle operations that belonged to Jarden.
Newell pointed out that its choices were not dictated by economic reasons but by a change of focus. Still, Newell's planned disposal of the winter sports business was largely expected because most winter sports brands have been suffering from unpredictable snow conditions lately. This has put a lot of pressure on margins at wholesale and retail, benefitting the most companies that could produce and deliver re-orders quickly.
The planned reorganization is meant to maximize growth opportunities, value creation and cost synergies, Newell said, with increased investments in the remaining businesses. Newell says it wants to transform itself from a holding company into an operating company. As part of this strategy, the existing 32 business units of the group will be consolidated into 16 operating divisions.