abhishreshthaa
Abhijeet S
Jarden Corporation, (NYSE: JAH) a U.S. consumer products manufacturer, owns brands in more than twenty niche markets. The conglomerate makes everything from Mr. Coffee kitchen appliances to Coleman camping products and Bicycle and Bee playing cards. Because Jarden's brands are concentrated in mature, slow-growth markets, [1] the company has seen little organic growth in recent years and has used acquisitions to grow revenue. With approximately $2 billion in debt, the company is highly leveraged and will find further acquisitions more difficult in the face of tightening credit conditions that began in 2008.
Jarden also faces growing competition from its own customers' private label brands. Mass retailers like Wal-Mart are offering fewer third party products as they try to bolster slowing profits with extra revenue from their own lines of generic consumer goods.
Company Overview
As a consumer goods conglomerate, Jarden covers a wide spread of markets. The company has aggressively pursued revenue growth in the past through acquisitions- however, this has not led to significant growth in its net income. To improve its results, the company's management plans to take fuller advantage of potential economies of scale in its manufacturing processes.
Business Financials
In 2009, JAH earned a total of $5.2 billion in revenues. This was a decline from its 2008 total revenues of $5.4 billion. However, despite the decrease in revenues, JAH was able to improve its net income. Between 2008 and 2009, JAH went from a net loss of $59 million in 2008 to a net profit of $129 million in 2009.[2]
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Outdoor Solutions
1.2.2 Consumer Solutions
1.2.3 Branded Consumables
2 Key Trends and Forces
2.1 Private Label pressures from major customers
2.2 Dependency on mass retailers
2.3 High commodity costs hurt already declining margins
2.4 Outdoor Solutions sensitive to weather
3 Competitors
4 References
Business Segments
JAH operates three primary business segments: Outdoor Solutions, Consumer Solutions and Branded Consumables.
Outdoor Solutions
The Outdoor Solutions segment manufactures or sources, markets and distributes global consumer active lifestyle products for outdoor and outdoor-related activities. For general outdoor activities, Coleman® is a leading brand for active lifestyle products, offering an array of products that include camping and outdoor equipment such as air beds, camping stoves, coolers, among others.[3]
Consumer Solutions
The Consumer Solutions segment manufactures, markets, and distributes a diverse line of household products, including kitchen appliances and personal care and wellness products for home use. This segment maintains a strong portfolio of globally recognized brands including Bionaire®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam® and Villaware®.[4]
Branded Consumables
The Branded Consumables segment manufactures, markets and distributes a broad line of branded consumer products, many of which are affordable, consumable and fundamental household staples, including arts and crafts paint brushes, children’s card games, among others.[5]
Key Trends and Forces
Private Label pressures from major customers
The mass retailers and department stores that Jarden sales its products to are increasingly moving toward private label brands. These brands are typically marketed under the retailer's brand name and come with higher margins than traditional branded products.
Dependency on mass retailers
Jarden's dependency on mass retailer (Wal-Mart Stores (WMT) alone accounted for roughly a quarter of Jarden's total sales. This exacerbates the threat from generic or private-label competition. When Wal-Mart and fellow big-box retailers push their own private-label alternatives to compensate for lower overall retail revenue, Jarden feels the squeeze. The effects of private-label competition are most pronounced in the Branded Consumables segment and in the camping-oriented Coleman product lines.
High commodity costs hurt already declining margins
Low commodity prices are vital to a company like Jarden, since its successful integration of mature low-margin businesses depends on the creation of cost-reducing production and distribution synergies for growth. Thus, rising oil prices put Jarden's cost structure under pressure, especially since its manufacturing business requires vast quantities of energy-derivative materials like resin (see Plastics Prices) and fuel.
Outdoor Solutions sensitive to weather
Jarden's Outdoor Solutions segment is highly responsive to variations in weather patterns. For instance, seasons of heavy snow increase demand for Jarden's various winter sports brands, and thus raises sales for the affected quarters. Similarly, a warm, dry autumn could increase demand for Jarden's Coleman line of camping products (currently one of its weaker offerings).
Competitors
Jarden's spread-out nature makes it impossible to pinpoint a single main competitor. Apart from a few relatively similar consumer goods/appliances conglomerates like Newell Rubbermaid (NWL), which has numbers roughly parallel to Jarden's for earnings and revenue in both business segments, Jarden's primary competitors are conglomerates whose holdings overlap with Jarden's in only a handful of niche markets, small companies entirely invested in niche markets (like Lifetime Brands (LCUT)), and private label competitors, some backed by hefty retailers like Wal-Mart Stores (WMT).
Jarden also faces growing competition from its own customers' private label brands. Mass retailers like Wal-Mart are offering fewer third party products as they try to bolster slowing profits with extra revenue from their own lines of generic consumer goods.
Company Overview
As a consumer goods conglomerate, Jarden covers a wide spread of markets. The company has aggressively pursued revenue growth in the past through acquisitions- however, this has not led to significant growth in its net income. To improve its results, the company's management plans to take fuller advantage of potential economies of scale in its manufacturing processes.
Business Financials
In 2009, JAH earned a total of $5.2 billion in revenues. This was a decline from its 2008 total revenues of $5.4 billion. However, despite the decrease in revenues, JAH was able to improve its net income. Between 2008 and 2009, JAH went from a net loss of $59 million in 2008 to a net profit of $129 million in 2009.[2]
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Outdoor Solutions
1.2.2 Consumer Solutions
1.2.3 Branded Consumables
2 Key Trends and Forces
2.1 Private Label pressures from major customers
2.2 Dependency on mass retailers
2.3 High commodity costs hurt already declining margins
2.4 Outdoor Solutions sensitive to weather
3 Competitors
4 References
Business Segments
JAH operates three primary business segments: Outdoor Solutions, Consumer Solutions and Branded Consumables.
Outdoor Solutions
The Outdoor Solutions segment manufactures or sources, markets and distributes global consumer active lifestyle products for outdoor and outdoor-related activities. For general outdoor activities, Coleman® is a leading brand for active lifestyle products, offering an array of products that include camping and outdoor equipment such as air beds, camping stoves, coolers, among others.[3]
Consumer Solutions
The Consumer Solutions segment manufactures, markets, and distributes a diverse line of household products, including kitchen appliances and personal care and wellness products for home use. This segment maintains a strong portfolio of globally recognized brands including Bionaire®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam® and Villaware®.[4]
Branded Consumables
The Branded Consumables segment manufactures, markets and distributes a broad line of branded consumer products, many of which are affordable, consumable and fundamental household staples, including arts and crafts paint brushes, children’s card games, among others.[5]
Key Trends and Forces
Private Label pressures from major customers
The mass retailers and department stores that Jarden sales its products to are increasingly moving toward private label brands. These brands are typically marketed under the retailer's brand name and come with higher margins than traditional branded products.
Dependency on mass retailers
Jarden's dependency on mass retailer (Wal-Mart Stores (WMT) alone accounted for roughly a quarter of Jarden's total sales. This exacerbates the threat from generic or private-label competition. When Wal-Mart and fellow big-box retailers push their own private-label alternatives to compensate for lower overall retail revenue, Jarden feels the squeeze. The effects of private-label competition are most pronounced in the Branded Consumables segment and in the camping-oriented Coleman product lines.
High commodity costs hurt already declining margins
Low commodity prices are vital to a company like Jarden, since its successful integration of mature low-margin businesses depends on the creation of cost-reducing production and distribution synergies for growth. Thus, rising oil prices put Jarden's cost structure under pressure, especially since its manufacturing business requires vast quantities of energy-derivative materials like resin (see Plastics Prices) and fuel.
Outdoor Solutions sensitive to weather
Jarden's Outdoor Solutions segment is highly responsive to variations in weather patterns. For instance, seasons of heavy snow increase demand for Jarden's various winter sports brands, and thus raises sales for the affected quarters. Similarly, a warm, dry autumn could increase demand for Jarden's Coleman line of camping products (currently one of its weaker offerings).
Competitors
Jarden's spread-out nature makes it impossible to pinpoint a single main competitor. Apart from a few relatively similar consumer goods/appliances conglomerates like Newell Rubbermaid (NWL), which has numbers roughly parallel to Jarden's for earnings and revenue in both business segments, Jarden's primary competitors are conglomerates whose holdings overlap with Jarden's in only a handful of niche markets, small companies entirely invested in niche markets (like Lifetime Brands (LCUT)), and private label competitors, some backed by hefty retailers like Wal-Mart Stores (WMT).