The 2020 back-to-school season was disrupted by COVID-19, but Newell Brands Inc.’s chief executive doesn’t expect a repeat in 2021.
The consumer products company, which is parent to brands like Sharpie, Elmer’s and Paper Mate pens is anticipating something more like what we’ve seen in the past.
“We’re expecting a more normal back-to-school season this summer. We think schools will open going into the fall,” said Ravi Saligram, chief executive of Newell, during a call with MarketWatch.
“We’re monitoring the school year closely,” Saligram said. “There seems to be a real wish to open up the schools. With the vaccine rollout that’s occurring, we’re hopeful.”
Another reason to be upbeat was the rise in the company’s writing business in January, which Saligram says could be a “good harbinger of what’s to come.”
He isn’t quite as sure about offices as companies hold out on getting workers back to the workplace, with some saying that won’t happen this year.
However, Saligram says overall, Newell’s businesses are benefiting in a variety of areas of consumers’ lives, including its home appliance brands like Oster and Mr. Coffee; food brands like Foodsaver containers and Calphalon cookware; and items for the outdoor like Marmot apparel and Coleman coolers and tents.
Saligram expects some COVID-related behaviors, like cooking at home and camping, to continue even after the pandemic has ended. With options limited by the pandemic, millions more people went outdoors. With new gear and a new appreciation for nature, he forecasts that many will continue to spend their free time in the fresh air.
Looking at Newell’s numbers, analysts are upbeat about the year ahead. Newell reported better-then-expected earnings and sales in the most recent quarter.
“While the recent sales outperformance is no surprise, we remain impressed that the turnaround efforts have moved forward, if not accelerated during the pandemic,” wrote Truist Securities.
“We believe these efforts will result in a higher sustainable growth rate and margin profile once it laps the COVID impacts on its categories.”
Truist rates Newell stock buy with a $30 price target.
JPMorgan is more cautious.
“While we think the return to the evergreen model on the top line deserves credit, we think the uncertain back-to-school and tough comparison for at-home categories with reopening will bring volatility in the 2H,” analysts said.
“When we couple the commodities and freight headwinds with limited visibility on underlying trends (particularly in 2H), we would prefer to remain on the sidelines at this juncture.”
JPMorgan rates Newell stock neutral with a $26 price target.
Newell stock has gained 18.1% over the past year outpacing the benchmark S&P 500 index
which is up 16.1% for the period.