By Claire Reilly
Following the release of disappointing half-yearly results today for Sunbeam, the small appliance brand’s parent company, GUD Holdings, has announced a series of cost-cutting measures and strategic initiatives to help return the brand to market dominance.
GUD’s consumer division, which includes Sunbeam and Oates cleaning products, saw a 15 per cent decline in profits and a 39 per cent drop in earnings before tax in the last 6 months, with Sunbeam largely taking the blame.
“The largest decline was experienced in Sunbeam, which was affected by a number of significant competitive factors,” the results statement read. “These included the demise of Retravision as a major retailer, along with increasing competition from cheaper, lower quality house brands and further market inroads made by European brands, in particular, as they seek volume outside of their depressed home markets.
“Sunbeam retained its local market leadership but was compelled to make adjustments to product pricing to remain competitive.
GUD Holdings conceded that Sunbeam has been operating “in a changing industry environment” and that the brand “needs to adjust its approach to sustain market leadership and restore superior returns”.
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In light of this, the company issued a three-point response plan to help tackle the root causes of Sunbeam’s poor performance and help return the brand to a stronger position in the market. These measures include:
- Implementing a cost reduction program to align the cost base with the competitive situation, leading to margin and efficiency improvements,
- Pursuing offshore alliances to build scale and generate improved return on product development investments and higher revenues, and
- Revising the product development program to be more focused to combat brand proliferation and to support margins in the future.
The company has not outlined what specific measures will be taken to reduce costs, but GUD Holdings managing director Ian Campbell said it would take time for the measures to turn around the Consumer business.
“The Consumer business will remain under pressure in the second half, while we introduce our strategic initiatives to strengthen Sunbeam’s financial performance,” Campbell said.
“GUD remains in a strong financial position and continues to seek acquisition opportunities to drive future growth.”