The Finnish company best known for its orange-handled scissors is making major changes amid disappointing financial results for 2019.
Fiskars, the Finnish company you know for its orange-handled scissors, is undergoing major corporate restructuring after a 2019 that fell short of expectations.
“It could have been better when it comes to the Q4 and the full year 2019,” Jaana Tuominen, Fiskars’ president and CEO since 2018, said on the earnings call. Overall sales for Fiskars Group were €1.09 billion in 2019, a drop of 2.5% from the previous year. Earnings before interest, taxes, and amortization in 2019 dropped 25.5% to €90.6 million.
But the company is undergoing a massive restructuring to create a unified organization after a series of major acquisitions between 2007 and 2015.
Currently, Fiskars divides its business into two categories: Functional (including gardening, crafting and outdoor tools) and Living (dishware, gifts and interior décor). A plan announced in December has already begun to reorganize the brands into three business divisions:
- Terra: gardening and outdoor; about 47% of the business
- Brands include Gerber and Gilmour
- Vita: tableware, drinkware and interior design; about 40% of the business
- Brands include Iittala, Royal Copenhagen, Waterford and Wedgwood
- Crea: scissors, cooking and creative tools; about 13% of the business
- Brands include Fiskars
The restructuring is expected to be complete by the end of 2021 and to cost a total of about €30 million. But annual savings are expected to be €20 million.
The recent acquisitions had caused the company’s total number of SKUs to balloon from just above 10,000 in 2012 to about 40,000 in 2015. Fiskars had acquired the Iittala Group in 2007, Royal Copenhagen in 2013, gardening brand Gilmour in 2014 and Waterford Wedgwood in 2015.
As of last year, the number of SKUs was down to about 20,000, and Fiskars aims to continue to improve average sales per SKU, which had neared €70,000 in 2012 and dropped to under €30,000 per SKU in 2015.
Highlights from 2019
Although the financial report for 2019 doesn’t look so hot compared to previous years, the CEO pointed out that 2017 and 2018 had been Fiskars’ best years on record. It’s safe to say that Fiskars is looking at the long game: It’s the oldest company in Finland, founded in the village of Fiskars in 1649.
The Functional segment (including gardening and outdoor) faced challenges in the Americas from unfavorable weather conditions, lower sales volumes in the watering and crafting categories, and increased tariffs. Fiskars also reported weak performance during back-to-school season and an overall decrease in the school, office and craft category in the third quarter of 2019.
CFO Sari Pohjonen said that sales in China were a bright spot in 2019 in spite of overall flat sales in Asia. Gifts within the Living division were also strong. After the ball drop on New Year’s Eve in New York City, designer Wedgwood Crystal saw a huge uptick in web traffic.
In 2020, Fiskars expects earnings to increase from 2019, but is not providing specific numbers on targets and acknowledges that fluctuations in currency rates, threats of tariffs and the spread of coronavirus could have a considerable impact.