Newell Brands Restructures to ‘Unlock Operational Efficiencies’
Newell Brands is undergoing a major restructuring. The company said it would be initiating an organizational realignment in order to strengthen front-end commercial capabilities, unlock operational efficiencies, reduce costs and complexity, and free up funds for other investments.
The strategy aligns with the company’s Where to Play / How to Win campaign, which it unveiled this past June.
As part of the restructure, Newell will look to achieve most of the following by the end of 2024:
- Implement a cross-functional brand management organization, realigning the finance department to support a new global brand management model.
- Standardize and implement center-led teams across retail sales, digital technology, accounting, manufacturing quality, and human resources.
- Optimize the company’s real estate footprint
- Pursue additional cost reductions
“After a thorough assessment, we identified opportunities to strengthen Newell’s front-end commercial capabilities, which are critical to returning the company to sustainable and profitable growth. To support our strategic choice to disproportionately invest in the largest and most profitable brands, we are implementing a brand management model within the three existing global segments with full P&L ownership and four regional go-to-market commercial organizations.” — Newell President & CEO Chris Peterson
He expects to achieve increased speed and agility as a result of these changes, along with annualized pre-tax savings in the range of $65 million to $90 million (net of reinvestment) with $55 million to $70 million expected for 2024.
Cost Cutting Measures Include Layoffs
The realignment will result in layoffs, with an expected 7% reduction in office roles. According to the company’s recent SEC filing, estimated charges related to this strategy include $60 million to $70 million for cash severance payments and other termination benefits; $11 million to $16 million due to office space reduction and consolidation; and approximately $4 million for other charges like employee transition and legal costs.
Peterson said the company is looking to reduce overhead cost structure and complexity while investing in the capabilities needed to win.
“We appreciate our employees’ continued efforts during this transition as we take the difficult but necessary actions to strengthen and reshape the organization for sustainable, long-term competitive advantage and value creation,” he added.
Peterson took on the role of CEO early last year, tapped for his experience in overseeing several turnaround initiatives at the company. Previously president of the organization, he oversaw Project Ovid, Newell’s supply chain transformation, and drove “operational excellence through automation and productivity improvements.”
At the time of his promotion, Peterson said Newell had a significant opportunity “to drive profitable growth by building our core brands and taking further decisive actions to operate more effectively and efficiently.”
More Restructures Ahead?
The industry is seeing a surge in corporate restructuring as companies look to streamline and centralize executive functions and cut unnecessary spending during a climate marked by inflationary, political, and socio-economic pressures.
For example, this past November, The J. M. Smucker Co. said it would be restructuring to align its information services function under CFO Tucker Marshall. Previously Kellogg’s, Kellanova and WK Kellogg Co are now separate entities focusing on more niche categories.
Other companies, like Unilever, are restructuring their portfolios as well. Unilever, is pruning and shifting to focus on “power brands” — having recently sold off DTC male grooming brand, Dollar Shave Club and purchasing premium hair care brand K18 to expand the Unilever Prestige portfolio in high-growth premium spaces. This news followed the sale of Elida Beauty to private equity firm Yellow Wood Partners.
Also read: Unilever's New Direction: Streamlined Portfolio, Leadership Refreshes, Power Brand Prioritization
Newell said it would be sharing more restructuring information in its upcoming earnings report. Stay tuned for more details.
