Spectrum Brands' bonds and bank debt dropped after the company said its 2006 second quarter earnings would be below expectations. Its '15 bonds dropped six points to 81 1/4, while its term loan "B" was down half-a-point to 100 1/4 100 3/4.
Spectrum expects its second quarter fully diluted earnings a share to be $0.03-$0.06, and pro forma its diluted earnings a share to be $0.00-$0.05. On Jan. 31, it estimated its second quarter pro forma diluted earnings a share would be $0.35-$0.40. The company blames poor sales its North American and European battery businesses. In a release, it said several of its largest retail customers in the U.S. reduced their inventory levels in the second quarter, lowering Spectrum sales.
In Europe, Spectrum's alkaline and specialty battery sales were lower than expected in the second quarter as the company's initiatives to improve battery sales were unsuccessful in offsetting a product mix shift from branded to private label batteries. In addition, non-mass stores, traditionally the company's strongest and most profitable distribution channels, lost market share to food and mass channels. Nancy O'Donnell, v.p. of investor relations, did not return calls seeking comment.