Newell Brands (NWL) could see Q1 as the low point of the year, with sales expected to improve from Q2, but consumer weakness, higher input costs, and Middle East risks keep the near-term outlook unclear, RBC Capital Markets said in a note Wednesday.
Q1 results should be close to company guidance and market estimates because the quarter's pressure is already well understood, but the investment firm said it expects management to keep full-year guidance unchanged, while signaling that demand should improve as shelf resets, new products, and distribution gains help later quarters.
RBC said small appliances and general merchandise remain under pressure, while younger consumers and value-focused shoppers appear more sensitive to the economy, as tracked channel sales are down about 2%, with pricing becoming less negative but volumes weakening from the previous period.
Higher commodity, transport, and sourcing costs from Middle East disruptions could pressure margins, though Newell's supply chain improvements and savings efforts may soften some of the impact, according to the note.
RBC kept the company's sector perform rating and $4 price target.
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