Rayovac 2014 Annual Report Download - page 63

Small appliance sales decreased $32 million, or 4%, during Fiscal 2013 versus Fiscal 2012, primarily
attributable to declines in North American sales of $45 million and negative foreign exchange impacts of $4
million, partially offset by a $17 million increase in European small appliance sales. The North American sales
declines resulted from the planned exit of certain low margin products. Strong small appliances sales in Europe
were driven by market share gains in the United Kingdom, regional expansion in both Eastern and Western
Europe and successful new product introductions.
Electric shaving and grooming product sales decreased $2 million, or 1%, during Fiscal 2013 compared to
Fiscal 2012, attributable to an $11 million decline in North American sales and $1 million of negative foreign
currency impacts, partially offset by an increase of $10 million in European sales and a slight increase in Latin
American sales. North American sales declined as a result of labor disruptions at U.S. ports of entry during the
peak holiday period in Fiscal 2013, coupled with decreased retail space available for the product category at a
major retailer and customer inventory management. European sales gains were driven by successful new product
launches and promotions, market growth, increased distribution and customer gains. The gain in Latin American
sales was driven by expansion in Brazil due to successful new product launches and distribution gains, tempered
by lower sales to customers who export to Venezuela and import restrictions in Argentina.
Electric personal care sales increased $5 million, or 2%, in Fiscal 2013 versus Fiscal 2012, resulting from a
sales increase of $8 million in Europe, driven by new innovative products, coupled with additional distribution
channels and customer gains. The gains were tempered by a $3 million decline in Latin American sales, resulting
from decreased promotions and lower sales to customers who export to Venezuela, partially offset by distribution
gains in Brazil and Central America.
Hardware and home improvement sales were $870 million for Fiscal 2013, reflecting the results of the HHI
Business subsequent to the acquisition on December 17, 2012. Proforma net sales for Fiscal 2013 and Fiscal
2012 as if the acquisition had occurred at the beginning of both periods were $1,062 million and $974 million,
respectively. The Fiscal 2013 sales growth was driven by double-digit improvements in the HHI Business’ U.S.
residential security and plumbing categories due to the housing market recovery. The results of TLM Taiwan are
included in the results of hardware and home improvement sales subsequent to its acquisition on April 8, 2013.
Global pet supplies sales increased $7 million, or 1%, during Fiscal 2013 versus Fiscal 2012, driven by
increased companion animal sales of $16 million, tempered by a $4 million decline in aquatics sales and $5
million of negative foreign currency impacts. Gains in companion animal sales resulted from strong growth in
the Dingo and FURminator brands, expansion in Europe, new product launches and the inclusion of FURminator
sales during all of Fiscal 2013 as the acquisition was completed on December 22, 2011. The decline in aquatic
sales was primarily due to a decline in tropical food and outdoor pond product sales in Europe as a result of a
later arrival of the spring season due to cooler temperatures.
Home and garden product sales increased $3 million, or 1%, in Fiscal 2013 versus Fiscal 2012, driven by a
$4 million increase in lawn and garden control sales resulting from an extension to the season due to favorable
fall weather, combined with reduced returns and more efficient trade spending. The negative impact on
household insect control sales due to a late spring season was offset by increased year over year fourth quarter
sales driven by the extension of the season due to favorable fall weather and gains in the first quarter of Fiscal
2013 from new retail distribution. Also contributing to the sales gains was the inclusion of Black Flag sales
during all of Fiscal 2013, as the acquisition was completed on October 31, 2011, and retail replenishment
following strong retail sales in the fourth quarter of Fiscal 2012.
Gross Profit. Gross profit for Fiscal 2013 was $1,390 million versus $1,116 million for Fiscal 2012. The
increase in gross profit was driven by the acquisition of the HHI Business which contributed $273 million in Gross
profit in Fiscal 2013. Our gross profit margin for Fiscal 2013 decreased slightly to 34.0% from 34.3% in Fiscal
2012. The slight decline in gross profit margin was driven by a $31 million increase to cost of goods sold due to the
sale of inventory which was revalued in connection with the acquisition of the HHI Business, which offset
improvements to gross profit resulting from the exit of low margin products in our small appliances category.
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