Consumer goods company, Spectrum Brands Inc. SPB, has partnered with China’s largest e-Commerce company and retailer, JD.com JD to launch an online sales program in the country. This will not only enhance its worldwide presence but also mark the company’s entry into the world’s largest e-commerce market.
Per the deal, Spectrum Brands will offer its expanded range of innovative and high-quality products through JD.com’s seamless online portal to entice the emerging middle-class section of consumers in China. Additionally, the company expects its products to find a place in the carts of the more than 258 million active customers in China by opening new flagship stores across the country.
Spectrum Brands expects to start offering a wide range of consumer products through multiple flagship stores in China, effective this month. This will allow the Chinese customers to gain access to some high-quality products from leading brands under various categories including home appliances, personal care, pet supplies, hardware and home improvement, home and garden, batteries and auto care.
As part of the phase one of the plan, new flagship stores including brands like Remington, Rayovac, George Foreman, Armor All, STP, Tetra, Dingo, FURminator and Nature’s Miracle will open doors in coming weeks.
Given its partnership with JD.com, the company stated that all products sold in its flagship stores as well as other assortments on JD.com will be delivered to customers’ doorsteps through JD.com’s top-notch logistics network and same-or next day shipping guarantee.
Notably, JD.com’s fulfillment capabilities are outstanding as its fulfillment infrastructure is the largest among e-Commerce companies in China. As of Jun 30, JD.com controlled seven fulfillment centers and 335 warehouses covering 2,691 counties and districts across China. Each of these facilities is staffed by its own employees.
Spectrum Brands’ Performance
Spectrum Brands’ shares have declined 5.3% in the past month, against the industry’s growth of 0.3%. The recent decline in share price can be largely attributed to the company’s second consecutive bottom-line miss reported in third-quarter fiscal 2017. Further, the top line lagged estimates for the fourth straight quarter. Sales were hurt by lower personal care and small appliances revenues.
Additionally, this Zacks Rank #4 (Sell) company continues to battle adverse foreign currency effects, which is likely to mar results in the near term. Management expects net sales for fiscal 2017 to include about 70-90 basis points impact from currency headwinds.
On the positive front, we remain encouraged by the company’s innovative products in all categories and persistent leverage of its global infrastructure and shared services. Additionally, it is making acquisitions and exiting underperforming businesses to improve profitability, margins and free cash flow.
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