Paint maker Sherwin-Williams reduced its third-quarter outlook on Thursday, predicting that store closures resulting from the recent string of hurricanes would cost it from $50 million to $70 million in sales.
The company also expects costs related to clean up and recovery efforts and tightened supply of propylene and ethylene based raw materials will trim profits but Hurricanes Harvey, Irma and Maria won’t necessarily impact full-year results.
“The sales momentum we are seeing across most geographies — particularly in our company-operated stores in the unaffected regions of the U.S. and Canada — should enable us to recover some of the third-quarter earnings shortfall over the balance of the year,” CEO John G. Morikis said in a news release.
Sherwin-Williams operates 706 paint stores in Texas, Florida and the Caribbean, and has 145 company-operated stores and 387 dedicated dealers in Mexico, which has been hit recently by two earthquakes.
Citing the impact of the hurricanes and the earthquakes, the company now anticipates core net sales in the third quarter will increase a low-single digit percentage compared to the third quarter last year. It previously had forecast a low- to mid-single digit percentage gain.
With incremental sales from the acquisition of Valspar expected to remain unchanged at approximately $1.0 billion, Sherwin-Williams also lowered its per-share earnings guidance for the quarter to $3.40 to $3.70, down from a prior $3.70 to $4.10. The earnings forecast reflects a $1.10 per share charge from costs stemming from the Valspar acquisition.
Investors, however, apparently took the news in stride as Sherwin-Williams shares rose 2% to $357.04 in trading Thursday.
“The majority of company-operated stores and facilities in [the hurricane-affected] regions have reopened, and we have made tremendous efforts to quickly resume operations while supporting those in need during this difficult time,” Morikis said.