By Charley Blaine
Investing.com - Changes at the top may be afoot for Newell Brands (NASDAQ:NWL), which shouldn't come as a surprise to investors who've seen the stock dive while the company showed little traction in its turnaround plans.
The Wall Street Journal reported Thursday that Newell's board, mostly made up of activist shareholders, is thinking of replacing CEO Michael Polk, who's been in his job since 2011. A decision is not imminent, the Journal said, because it's possible that a turnaround will succeed. If Polk can make it happen, he'll reap lucrative rewards.
Newell, a consumer goods conglomerate best known for Rubbermaid products, Sharpie markers, Elmer's Glue, Graco baby strollers and Mr. Coffee coffee makers, has had a horrible run as a stock.
The shares peaked at $55.06 in June 2017 and were trading at $17.14 in the early afternoon today. That's a decline of 68%. The S&P 500's performance over the same time frame is a gain of about 14%.
For shareholder activists, this is manna from heaven, a chance to push management to unload underperforming assets and streamline operations. Carl Icahn controls three board seats. Starboard Value, another activist investor, has two. A number of top executives have left as a result of their prodding.
The problem is that the stock has yet to respond to the company's turnaround plan, which is focused on selling businesses that represent 35% of total sales. In fact, a disappointing fourth-quarter earnings report last Friday -- and a forecast for more bad news in 2019 -- caused the stock to fall 21% that day. The company said it was hurt by the U.S. trade war, higher costs and the bankruptcy of Toys 'R' Us, a key outlet for baby strollers.
Newell is demonstrating the risk all conglomerates potentially face: buying too much and then not being able to get results. Newell, then known as Newell Rubbermaid, bought Jarden Corp. for $15 billion in 2016. The deal brought in such brands as Rawlings sporting goods, K2 Sports, Mr. Coffee, outdoor equipment company Coleman and Diamond Match.
The problems emerged almost immediately. And Newell has been unloading many of its businesses, including Rawlings, K2 Sports, Diamond Match, and Waddington Group, a packaging manufacturer.