Is All Well at Newell Rubbermaid?

Newell Rubbermaid (NYS: NWL) swung to a third-quarter loss as the household-goods company recorded increased costs in an effort to improve its capital structure. Newell is on the path of realizing some changes in its organizational structure, too, with more emphasis being given to high-growth businesses. The company has ramped up its growth model, whereby it expects to utilize the marketing acumen of new CEO Mike Polk and improve its top line. Let's take a closer look at the company.

What do the books say?
Newell's top line grew 5.8% from the year-ago period, to $1.55 billion. This was backed by a 3.3% rise in core sales. Better consumer spending patterns and restocking lent a helping hand to sales of Newell's products, which range from office supplies found at stores like Office Depot (NYS: ODP) , to baby products listed on

Much of this growth can be credited to the emerging markets of Latin America and Asia. For instance, Latin American core growth, although not a very large contributor to total sales, was an encouraging 18.4% this quarter. Some businesses outperformed others. Home and family business sales rose 3% to $626.7 million, sales of office products rose 6% to $474.9 million, and its tools, hardware, and commercial business grew 10% to $448.3 million.

Restructuring? Darn tootin'.
In a move that met with loud cheers from Wall Street, Newell announced its intention to restructure its business to achieve cost efficiencies. This would include reducing the number of operating groups from three to two and the number of global business units from 13 to nine. The new structure will also see pink slips issued to 500 employees, predominately of the expensive, white-collar variety.

Newell intends to turn its focus to businesses that offer high growth potential and the corresponding markets to support it. Polk expects the company to encounter difficult economic conditions in 2012. However, these moves should help place the company in a better position to compete with rivals such as Procter & Gamble (NYS: PG) , Tupperware Brands (NYS: TUP) , Kimberly-Clark (NYS: KMB) , and Polk's former employer, Unilever (NYS: UL) .

The icing on the cake
Other than restructuring its business, Newell is also returning value to shareholders with an authorization to repurchase stock worth $300 million over three years. Newell's forward P/E is less than 10, suggesting that the stock was undervalued considering future earnings. Given that, management's decision to repurchase 1.9 million shares may be a bargain. Newell shareholders also have benefited from a healthy 66% increase in dividend per share, compared to the prior year; definitely something to cheer about.

The Foolish bottom line
Polk's arrival has given Newell a new lease on life. Newell, through restructuring, is determined to bolster its growth by catering to the most lucrative markets. Add to that the new CEO's experience working for Unilever, which is something that investors can bank upon to build the brand globally, and the stock is worth watching.

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At the time this article was published Fool contributor Amitabha Chakraborty does not own shares of any of the companies mentioned in this article.The Motley Fool owns shares of Tupperware Brands. Motley Fool newsletter services have recommended buying shares of, Procter & Gamble, Unilever, and Kimberly-Clark. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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