Graco 2014 Annual Report Download - page 3

Newell Rubbermaid 3 2014 Annual Report
our Rubbermaid Consumer storage business.
Normalized gross margin increased 90 basis points
to 38.8 percent, enabling a 70 basis point increase in
advertising and promotion investment as a percentage
of sales. Even with this increased investment,
normalized operating margins expanded 40 basis
points to 13.8 percent. Normalized earnings per share
grew 9.9 percent to $2.00, an all-time high for Newell
Rubbermaid, and operating cash flow increased to
$634 million.
Our Win Bigger businesses — Writing, Tools and
Commercial Products — led our performance with
combined core sales growth of 7.3 percent. These
segments, which are the major drivers of future
company growth and our first priority for expansion
in faster-growing emerging markets, have benefited
from significantly increased investment behind our
brands and stronger innovation. Writing segment
core sales increased 7.8 percent, led by double-digit
core growth in Latin America and mid-single digit
core sales growth in North America. These results
were fueled by strong innovation, expanded
distribution and increased advertising support with
activity across all our major brands, including the
launch of Sharpie Clear View® Highlighter, the
relaunch of Mr Sketch® scented markers and ongoing
Three-stage transformation
2014
DELIVERY STRATEGIC ACCELERATION
consistently do
what we say
2013 2015 2016/20172012
shape the
future
accelerate
performance
support of our Paper Mate® InkJoy® platform. Tools
segment core sales improved 6.3 percent, driven by
solid growth across all geographic regions, including
double-digit core growth in Latin America due to
the ongoing success of our expanded product
oerings under the Irwin® brand and a year of
strong growth for the Lenox® brand. Commercial
Products’ core sales grew 7.2 percent, reflecting
pricing and strong volume growth in North
America as we supported key product lines such
as Brute® trash cans and Rubbermaid® HYGEN™
microfiber, as well as distribution gains in
emerging markets such as Brazil and China.
OUR BUSINESS MODEL
IS GAINING MOMENTUM
The success of our Win Bigger businesses gives us
increasing confidence that our new business model
is working. Newell Rubbermaid is in the midst of
transforming from a holding company to an operating
company, from a loose federation of independent
businesses to a single, coherent organization that
harnesses the scale of a $6 billion company. This enables
us to place more strategic bets and allocate resources
more dynamically to those businesses, brands and
initiatives with the greatest right to win. Our unwavering
focus on reducing structural and overhead costs
and reinvesting those savings into brand building
and enhanced capabilities have already contributed
to improved performance, and that trend should
continue to accelerate as we move through 2015
and into the Acceleration phase of the Growth
Game Plan in 2016 and beyond.
Strengthened investment in our brands coupled
with stronger innovation will be key to that outcome.
In 2014, we significantly increased our brand-building
investment, nearly doubling our advertising spend
versus the prior year. This step up in spending
helped drive market share gains and increased
point-of-sale growth across our portfolio, including
key brands such as Sharpie®, Paper Mate®, Expo,®
Mr Sketch®, Irwin®, Lenox®, Rubbermaid® Commercial
Products and Graco®. With the consolidation
of multiple creative agencies into one and a more
disciplined marketing approach, the quality of
our advertising has improved significantly, testing
amongst the best across all industries. Of the
14 major advertising campaigns executed in 2014,
over 85 percent garnered the top box test scores
for both consumer persuasion and awareness,
two key predictive metrics of success. That rate
is double the industry norm. So not only are we
winning on the quality of our innovation ideas,
In the Strategic phase, we are investing in
core activity systems critical to our business
success and establishing an operating company
structure that releases the full potential of our
$6 billion business.