Consumer Brands Division

Share of Group Net Sales

The Consumer Brands Division possesses a broad and strong product offering, a portfolio of well-­recognized brands, long-standing retail relationships and a solid market share position. Being part of Husqvarna Group gives competitive advantages such as access to industry-leading technology, innovation and scale. By leveraging on a renewed focus on its key strengths, the division has the opportunity to turnaround its financial performance.

Consumer Brands aims to be the leading forest and garden supplier for the broad mass consumer segments. The division includes brands such as McCulloch, Poulan Pro, WeedEater and Flymo as well as private label brands. In the US, the division also sells the Husqvarna brand to selected retail channel customers. Net sales in 2015 totaled SEK 9.9bn (9.8), representing 27 percent (30) of Group sales and an operating margin of –1.2 percent (–1.6), excluding items affecting comparability.

North America, retail channel and wheeled products dominate

North America represents more than 80 percent of the division’s sales and Europe accounts for almost 20 percent. Products are sold mainly through retailers such as Lowe’s and Walmart in the US, and Castorama and B&Q in Europe. The retail landscape is highly consolidated in North America and competition in the mass consumer segment is fierce with a strong emphasis on price. Sales are dominated by petrol-powered ride-on and walk-behind lawn mowers and handheld products including chainsaws, trimmers and leaf blowers, but battery-powered products are becoming increasingly popular.

The estimated addressable market amounts to SEK 60bn, of which around 60 percent in North America, 30 percent in Europe and the remaining 10 percent in the rest of the world.

Leveraging on Group innovation and scale

Consumer Brands has an important role. It has the opportunity to leverage on technology, innovation and scale from other parts of the Group, such as the Husqvarna Division. This will allow the division to benefit from new features and technology to keep products and brands relevant and exciting. The division also has an opportunity to leverage on and provide scale in areas such as manufacturing and sourcing. Leveraging these opportunities effectively will bring advantages over competitors positioned only in the consumer segments. The division also aims to protect premium and professional focus in other areas of the Group by providing compelling alternatives in the mass distribution retail channel.

Profitability first

Given the unsatisfactory financial starting point and current headwinds in terms of currency development, the priority is given to value or margin before revenue growth. Initially, the division will deliver on the Accelerated Improvement Program and additional measures aiming to reduce overall costs, optimize manufacturing and logistics practices and reduce complexity in the product offering. Furthermore, focus will be on improving profitability from an account perspective, on right-sizing the supply chain and additional product cost reductions. In Europe, there will be a special focus on logistics, sales and service costs. In the longer term, investments will be made to strengthen the market position, such as in online distribution, service parts and accessories and battery-powered products.

Questions for Jeff Hohler, President, Consumer Brands Division

Operating income and margin Consumer Brands

Priorities

• Value before revenue
• Secure final deliverables of the Accelerated Improvement Program
• Additional cost reductions and efficiency improvements: manufacturing, logistics and product cost
• Excellence in retail partnerships

Brands

  • McCulloch
  • Poulan Pro
  • Weed Eater
  • Flymo
  • Private labels

Product range

  • Ride-on lawn mowers: mainly garden tractors and zero-turn mowers.
  • Walk-behind lawn mowers, snow throwers and tillers.
  • Handheld products, both petrol-powered and electric, such as chainsaws, trimmers, hedge trimmers and leaf blowers.
  • Accessories and spare parts.

End-customers

  • Mass market consumers

Distribution channels

  • Retail-centric
  • Multi-channel

Main competitors

  • Modern Tool and Die Company (MTD)
  • Global Garden Products (GGP)
  • TTI
  • Private labels