NEW YORK – Playtex Products Inc. (PYX) on Tuesday said it would cut more than 300 jobs, or about 20 percent of its work force, and outsource some production as part of a move to improve its focus on core products, sending its shares up 4 percent.
The company, whose products include Playtex tampons and latex gloves, expects to take charges related to the changes of $17 million to $19 million by the end of 2005.
"These charges should give (Playtex) the flexibility to take the serious moves to improve the company's competitive position," Prudential Equity analyst Constance Maneaty said in a note to clients.
The moves come just over a year after Playtex, based in Westport, Conn., said it would take $4 million in restructuring charges, including costs for an unspecified number of job cuts.
Playtex is a relatively small player in an industry dominated by the No. 1 consumer products maker Procter & Gamble Co. (PG), which competes directly with Playtex with its Tampax tampons.
Playtex said it would outsource the production of latex and disposable gloves to Malaysia and reduce office space in its corporate headquarters.
Playtex also said it would switch to a product category structure, instead of having domestic and international divisions, and realign its sales and marketing organizations.
Shares of Playtex rose 33 cents to $8.51 on the New York Stock Exchange (search), after earlier trading as high as $8.55, their highest level since April 2003.
In April 2004, Playtex said it had decided to remain independent after a two-year review to determine whether it should sell all or part of the company. It named a new chief executive officer and chief financial officer in the last few months of 2004.
Playtex said about $11 million of the new charges would be recorded in the fourth quarter of 2004. It forecast savings from the plan of $12 million to $14 million in 2005 and $22 million to $24 million in 2006.
Playtex also said it would take a fourth-quarter asset impairment charge of about $17 million to write down the value of its Baby Magic and Binaca trademarks.
The company, whose other products include Banana Boat (search) sunscreen, did not give many details on its plans, but Maneaty said moves could include "lowering the price of Beyond tampons to compete better with Tampax and lowering the return rate of suncare products."
She has an "underweight" rating and $6 price target on Playtex shares.
Playtex plans to release fourth-quarter results on Feb. 10 and host a conference call on Feb. 11.
Analysts, on average, expect Playtex to earn 3 cents per share in the fourth quarter, according to Reuters Estimates.
The company posted a loss of 2 cents per share in the fourth quarter of 2003, or a profit of 3 cents excluding charges.
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