And you will know them by their trail of brands. Spectrum Brands makes and markets products sold under some of the most recognizable names in the world. They include batteries (Rayovac and VARTA), pet foods and supplies (Tetra, Marineland, Dingo), personal care (Remington), and garden care (Spectracide, Cutter, Hot Shot). Its small appliances unit includes such notable brands as Stanley Black & Decker, George Foreman, Toastmaster, and Farberware. Spectrum Brands markets its products in some 120 countries and is a leader in the sale of rechargeable batteries and hearing aid batteries to manufacturers. It makes more than half of its sales in the US. Harbinger Capital owns about a 54% stake in the company.
The company operates from four divisions, the largest of which include Global Batteries & Personal Care, Global Pet Supplies (United Pet Group), and Home & Garden. Its newest division is Small Appliances, created in 2010 when the company acquired Florida-based Russell Hobbs (formerly Salton), a distributor of household appliances. In 2011 it acquired the Black Flag and TAT insect control brands from The Homax Group adding to the Home and Garden division portfolio.
While best known for its general-purpose alkaline batteries, Spectrum Brands also makes hearing aid batteries (Beltone, Miracle Ear, and Starkey brands), as well as zinc carbon, nickel metal hydride, lithium, silver oxide, and coin cell (used in cameras and computer clocks) batteries. The company sells its VARTA consumer brand batteries primarily in European markets.
The vast majority of its rechargeable batteries and chargers, personal care products, and lighting products are manufactured in Asia. It also has manufacturing and product development operations located in Europe, Latin America, and the US. Products are sold through retailers, wholesalers, and distributors, including Wal-Mart, The Home Depot, Target, and PetSmart.
Even after emerging from bankruptcy, Spectrum still has significant debt, around $1.8 billion at the end of fiscal 2010. Such a large amount of debt means that much of its cash flow is directed towards paying principal and interest, rather than making investments in research and development and capital expenditures. It also restricts Spectrum's ability to make acquisitions -- an important part of its growth strategy -- and makes it more susceptible to swings in consumer demands and down economic cycles.
Sales for fiscal 2010 grew by 15% over the prior period, with increases across all product lines except pet supplies, which was down 2%. Spectrum's growth can be traced in part to the addition of to its small appliances division, which added $238 million (9%) to overall sales. In spite of the sales gains and cost reduction efforts, Spectrum remained in the red, posting a $189 million net loss on higher than expected operating and interest expenses.
The company bases its business strategy on consumer marketing trends, product mix, distribution network, technology, promotions and pricing, and geographic foothold. It makes acquisitions that bolster its product lines and expand its global presence.
Mergers and Acquisitions
In late 2012 Spectrum announced it was acquiring the Hardware & Home Improvement Group (HHI) belonging to Stanley Black & Decker for $1.4 billion. HHI is a leader in the North American market for making residential locksets, hardware for homebuilders, and faucets. The deal will widen Spectrum's product diversity and solidify its relationships with key retail partners. Spectrum in 2012 also invested $50 million in cash to acquire a 56% interest in Shaser Bioscience, a privately held developer of energy-based aesthetic dermatological technology for home use devices. – less