Margin recovery in small kitchen appliances (HBB, SN)
Hamilton Beach reported EPS of $.74 in Q3, up 72% YOY, driven by margin recovery. Revenues grew 1.9%, with growth in consumer markets offset by declines in the commercial market. Unit volume growth was offset by lower ASPs. Sales growth in Latin America and Mexico was offset by declines in the U.S. and Canada. After reporting a 7% sales decline in Q2, management said they expected a pickup in orders in the 2H. The company said the small kitchen appliance industry had a modest sales decline through September.
Gross margins expanded by 300bps due to lower product, distribution, and warehouse costs. SG&A spending was nearly flat due to a non-recurring insurance recovery last year. Working capital also had a significant swing back YOY from a use of $62M to a source of $64M in the nine months this year.
Management expects revenue for the year to be down modestly. Last quarter, management expected flat revenue growth for this year and modest growth in Q4. Management is pleased with the placements and promotions for the holiday-selling season, but noted uncertainty in continued momentum and retail sell-through.
Like Hamilton Beach, SharkNinja has easy comparisons lapping higher product and shipping costs as well as canceled orders from retailers. SharkNinja’s guidance this year implies a snapback in margins and a better top-line outlook.
Canadian beer (TAP)
Total beer volumes in Canada decreased 8.5% YOY in September, decelerating from -6.9% in August, as seen in the chart below. Domestic beer volumes decreased 7.2% YOY, decelerating from -5.1% in August. Imported beer volumes decreased 18.4% in September, similar to the 18.6% decline in August. Beer volumes have been declining for several years in Canada. For Molson Coors, the Canadian on-premise channel is still trailing pre-pandemic levels. Bud Light's current struggles are directly benefiting Molson Coors in the U.S.
Texas on-premise alcohol beverage tax receipts (BUD)
Texas reports its alcoholic beverages sales tax receipts monthly. In October, alcoholic beverage receipts increased 2.4% YOY, decelerating from 4.0% in September. The CPI for alcoholic beverages away from home rose 5.7% YOY in September. Together, the tax receipts and CPI imply a significant decline in alcohol volumes in the on-premise channel in the past six months in Texas.
