Avery Dennison Swings To 1Q Loss On Charges, Weak Demand

   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; [e-mail]