Newell retools for future gains

Article Excerpt

Newell Rubbermaid took its present form in 1999, when Newell Companies bought Rubbermaid Inc. That doubled the size of the old Newell, which felt it needed to get bigger to improve its negotiating position with big retailers like Wal-Mart. Even now, Wal-Mart still accounts for 12% of the company’s sales. The combined company went on to buy several other businesses over the next few years. These acquisitions included Gillette’s stationery operations, and the maker of Vise-Grip hand tools. However, big purchases like these rarely go as smoothly as expected. That’s been the case with Newell, which continues to streamline its operations. Recently, it closed plants and got out of low-margin businesses, particularly plastic-resin products that expose it to volatile oil prices. The company is also expanding into more-profitable products, such as children’s car seats and strollers. We feel Newell’s well-known brands and falling costs will fuel its growth for years to come, particularly in emerging markets. The stock is also attractively priced at…