Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>Downgrading to Neutral from Buy. Target is now $6 from $9.</li>
<li>ACCO faces greater challenges than could be currently priced in the stock with a longer duration of retailers rebalancing inventory against a weak consumer spending environment</li>
<li>We have grown concerned the softness ACCO experienced in the third quarter of 2022 could spill over into 2023</li>
</ul>


Downgrading to Neutral from Buy. Target is now $6 from $9.
ACCO faces greater challenges than could be currently priced in the stock with a longer duration of retailers rebalancing inventory against a weak consumer spending environment
We have grown concerned the softness ACCO experienced in the third quarter of 2022 could spill over into 2023


<ul>
<li>ACCO had already warned of the sales shortfall in the third quarter but followed through on exhibiting the free cash flow capabilities of the business.</li>
<li>Retailers have changed their purchasing habits and that has led to slower sales at ACCO. </li>
<li>Looking ahead to the fourth quarter, back to school season begins in Brazil and Australia, which should give a lift to sales. </li>
</ul>


ACCO had already warned of the sales shortfall in the third quarter but followed through on exhibiting the free cash flow capabilities of the business.
Retailers have changed their purchasing habits and that has led to slower sales at ACCO. 
Looking ahead to the fourth quarter, back to school season begins in Brazil and Australia, which should give a lift to sales. 


<ul>
<li>The business climate has not improved for Acco Brands (ACCO) in Europe since the Company reported second quarter results, and thus could result in lower than expected third quarter numbers</li>
<li>The macroenvironment has been volatile in a quarter dependent on back-to-school sales and more people working from their offices. </li>
<li>We are updating our earnings model for the rest of the year. Our third quarter sales estimate is now $517.1 million</li>
</ul>


The business climate has not improved for Acco Brands (ACCO) in Europe since the Company reported second quarter results, and thus could result in lower than expected third quarter numbers
The macroenvironment has been volatile in a quarter dependent on back-to-school sales and more people working from their offices. 
We are updating our earnings model for the rest of the year. Our third quarter sales estimate is now $517.1 million


<ul>
<li>Strong back to school sell-in was not enough to offset the impact of a weaker Euro and slowdown in video game spending</li>
<li>The weaker Euro to the US Dollar was expected in our numbers when we revised them in July. However, the drop off was more meaningful than expected</li>
<li>The decline in video game accessory sales also put pressure on the quarter with ACCO now expecting a “reset” in the segment’s performance</li>
</ul>


Strong back to school sell-in was not enough to offset the impact of a weaker Euro and slowdown in video game spending
The weaker Euro to the US Dollar was expected in our numbers when we revised them in July. However, the drop off was more meaningful than expected
The decline in video game accessory sales also put pressure on the quarter with ACCO now expecting a “reset” in the segment’s performance


<ul>
<li>ACCO has no exposure to the apparel overstocked inventory at retailers this year. ACCO manufactures supplies for schools and offices</li>
<li>ACCO’s back to school sell-in season began before retailers were worried about consumer spending. Orders were received earlier than usual to compensate for longer supply chain issues</li>
<li>There is the risk of retailers facing a decline in consumer spending due to inflationary pressures on consumer staples. This risk could cause retailers to become cautious to inventory stocking,</li>
</ul>


ACCO has no exposure to the apparel overstocked inventory at retailers this year. ACCO manufactures supplies for schools and offices
ACCO’s back to school sell-in season began before retailers were worried about consumer spending. Orders were received earlier than usual to compensate for longer supply chain issues
There is the risk of retailers facing a decline in consumer spending due to inflationary pressures on consumer staples. This risk could cause retailers to become cautious to inventory stocking,


United States

Acco Brands Corporation manufactures office products. The Company produces staplers, daily scheduling diaries, shredders, laminating equipment, and presentation boards.

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