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No Bounce For Rubbermaid

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When Chairman Wolfgang R. Schmitt stares out at the inevitably packed house at Rubbermaid Inc.'s annual meeting on Apr. 26, he's likely to confront an unaccustomed sight: sour-faced shareholders.

Although Schmitt will report another record year, Rubbermaid's stock since Jan. 3 has plummeted by more than 10 points, to 243/4, losing $1.6 billion in market value. First-quarter results--a mere 2% earnings increase, to $50.6 million, on sales that rose 2%, to $492 million--confirmed Wall Street's worries.

For more than a decade under former Chairman Stanley C. Gault, who retired in 1991, Rubbermaid could do no wrong. It savvily marketed mundane housewares, had new products galore, and kept costs down. Profits rose steadily, more than quadrupling between 1979 and 1989, and its shares traded at an average 42% premium to the market, says Andrew Shore of PaineWebber Inc.

BAD WEATHER. But the juggernaut has slowed. Despite a barrage of new products, Rubbermaid hasn't seen a sales gain close to its 15% goal since 1989. Schmitt argues that last year's 9% sales growth was "commendable," given low inflation. But Rubbermaid's housewares and Little Tikes Co. toy units aren't gaining like they used to, and smaller divisions such as office products haven't delivered consistent results. "They have made their numbers by trimming expenses," says a shareholder.

Reality hit hard in this year's first quarter. Rubbermaid says bad winter weather scared off consumers even as it curtailed some factory operations. It also says some retailers reduced inventories. But "high-quality growth companies don't use the weather as an excuse," says one investor.

Can Rubbermaid rebound? Schmitt says it already has, calling the first quarter "an aberration" and suggesting the second quarter will match 1993's 15% earnings gain. On Apr. 26, he will announce new initiatives to become more price-competitive and increase productivity, and investments in international operations. But for now, the old cachet--and the pricey stock--is missing.Zachary Schiller in Cleveland

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