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| Statement |
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| Our full year outlook cost for demand trends to improve in the second half of 2024 as the economic environment improves and technology spends rebounds |
| I am confident our actions will improve our potential for sales growth and strengthen our future profits and cash flows |
| These results reflect our team's strong execution against the priorities we laid out at the beginning of 2023 |
| Through the cumulative effect of our pricing and cost actions, we successfully restored our gross margins to pre-pandemic levels, ending the year at a rate of 32.6%, a 420 basis point improvement compared to 2022 |
| We delivered $29 million in cost savings from our restructuring and productivity actions slightly ahead of the target we set at the start of 2023 |
| Our broad assortment of value-to-premium offerings allowed us to win in back-to-school, especially in a price-conscious environment |
| We do expect 2024 to be a reset year as we believe the actions we are currently undertaken when implemented will better position us to deliver longer-term growth |
| As a part of our restructuring, I have put leaders with the best track records in charge of these initiatives |
| In 2025 and 2026, we expect a greater benefit to both profits and cash flows while positioning the company for growth |
| Earlier this week, we announced the licensing agreement with Epic Games, the maker of Fortnite, one of the most popular video game franchises, and we are excited about this opportunity |
| These savings will help offset merit and overall inflation, stabilizing profitability in a challenging sales environment |
| And we think they both better position us long term |
| This broad assortment allows our retail customers to win in key seasonal sets, which has strengthened these important relationships and made ACCO Brands a trusted supplier |
| Growth profit for the fourth quarter was $170 million, an increase of 17% despite lower sales, as growth margin improved 570 basis points from the cumulative effect of our pricing and cost reduction actions and moderating input costs |
| This will reduce supply chain complexity, leverage best practices, deliver cost savings, and better meet our customers' needs |
| Our gross margin profile significantly improved in the fourth quarter and full year and we managed cost well, which allowed us to deliver adjusted EPS and cash flow above our outlook |
| The improvement in adjusted operating income was due to our pricing and cost reduction actions as well as moderating input costs |
| While this continued in the fourth quarter, we were able to report sales ahead of our outlook and we did benefit slightly from favorable foreign currency exchange |
| Lastly, we have an experienced leadership team with a deep knowledge of the categories we compete in and strong customer relationships |
| Our brands have held up quite well |
| So we think we're well positioned long term, but we have seen some things that are a little bit different than what we've seen historically in the last 12 months |
| We think we're a better value for all of the consumers who choose PowerA |
| We see opportunities across our portfolio to bring new products to market, which will help reinvigorate our growth profile |
| We think we're well positioned long term with our retail partners |
| They have the experience to execute on the actions we are taking and I am confident we will successfully position ACCO Brands to deliver long-term sustainable, profitable growth |
| On a segment basis, we finished the year strong in our international segment, with revenue up 5% in 2023 on a comparable basis, led by the recovery of back-to-school sales in Latin America |
| We deliver unmatched customer service and sell our products in over 100 countries |
| Near term, the agreements will be small on a revenue basis, but we expect as we strengthen these partnerships, they will provide revenue growth long term |
| Our balance sheet is strong, with no debt maturities until 2026 and low fixed interest rates on over half of our outstanding debt |
| So POS, as Deb mentioned earlier, moderated a bit in Q4, which was an encouraging development for the business |
| Statement |
|---|
| Sales of our products were also challenged by a lower than anticipated return to office trend, and retailers continued to manage their inventory tightly, replenishing only to POS |
| In our gaming accessories category, demand was uneven throughout the year and saw a decline for the full year due to weaker consumer spending trends and increased competition |
| Before touching on our 2024 priorities, let me discuss our comparable sales results for the full year, which were down 6.5% from the prior year, reflecting soft demand in many of our categories |
| Our two global technology businesses, Kensington and PowerA, were also challenged by category-specific factors |
| North America was also affected by the macroeconomic environment as retailers continued to manage inventory tightly and to POS, which was down |
| For the full year, reported sales declined 6% and comparable sales were down 7% due to volume declines |
| Our commercial channel sales were lower than anticipated because of the lack of white collar workers returning to end office work |
| Globally, lower IT spend and PC purchasing continued to impact sales of our Kensington branded computer accessories in the fourth quarter and with a significant headwind for the full year |
| Turning to 2024, we are anticipating softer sales given economic indications of muted consumer demand and the uncertainty of business spending |
| Regarding our PowerA branded gaming accessories category, the recovery and third-party gaming accessories was uneven throughout 2023 due to lower consumer demand and industry specific competitive dynamics |
| In addition, industry expectations for our back-to-school products are to be down modestly |
| When we last spoke in November, we highlighted a slow demand environment due to the current macroeconomic backdrop |
| Therefore, we expect reported sales to be down 6.5% to down 8% in the first quarter |
| Demand for our commercial products remain challenged due to the economic environment |
| Lower sales of technology accessories were the main driver of the decline, largely due to weaker IT and gaming spend |
| The declines largely reflect a more challenging macroeconomic environment especially relating to our computer accessories offering |
| Reported sales in the fourth quarter of 2023 decreased 2.5% versus the prior year |
| As typical, our first quarter has the lowest level of sales and EPS compared to the other quarters |
| In EMEA, the demand environment remained muted, reflecting the economic and inflationary pressures |
| The sales decline was due to lower volumes in North America and EMEA more than offsetting global price increases and growth in the International segment |
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