DOW JONES NEWSWIRES
Avery Dennison Corp. (AVY) swung to a first-quarter loss on
restructuring and other charges as the office-supply and label
manufacturer saw demand continue to fall.
President and Chief Executive Dean A. Scarborough said business
conditions remain weak, especially in the retail sector, but noted
sales and profit declines moderated after a "very weak" January.
Earnings fell well short of analysts' expectations.
Office-supply companies have seen demand weaken during the
recession as business customers delay replacing old office-supply
products, leading some in the sector to cut costs by closing
underperforming stores and reducing new store openings. For its
part, Avery said in December it will cut 10% of its work force to
produce roughly $150 million in annualized savings over the next
couple of years.
The company posted a net loss of $46.2 million, or 46 cents a
share, compared with year-earlier net income of $68.4 million, or
69 cents a share. Excluding restructuring charges and other costs,
earnings fell to 11 cents a share from 80 cents a share.
Revenue skidded 13% to $1.43 billion.
Analysts polled by Thomson Reuters expected earnings of 22 cents
a share on revenue of $1.42 billion.
Gross margin decreased to 24.2% from 25.8% on the sales
slump.
The pressure-sensitive materials business, the company's largest
segment that provides Fasson-brand roll labels and reflective
highway safety products, saw profits tumble 49% as revenue fell
12%.
Earnings in Avery's office and consumer-products business -
which makes writing implements, binders and notebooks - grew 6.8%,
but revenue declined 5.1%.
Shares are down 40% since September, but have rebounded 73%
since hitting a 14-year low a month ago, closing Monday at $29.45.
There was no premarket trading.
-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294;
katherine.wegert@dowjones.com