Sherwin-Williams cuts outlook, to pare costs

ATLANTA (Reuters) - Paint maker Sherwin-Williams Co (SHW.N: Quote, Profile, Research) pared its earnings forecasts for the first quarter and full year on Monday, and said it would cut some jobs and scale back store opening plans as the U.S. housing downturn and higher material costs pressure its business.

Weaker housing sales and tighter credit standards have squeezed home builders and consumers, while rising oil prices have raised Sherwin-Williams' input costs.

On a conference call, Sherwin said softness in new housing and the do-it-yourself and residential repaint markets hurt sales.

"The length and severity of the housing market decline has caused a business and segment mix change that is contributing to this earnings shortfall," Sherwin-Williams Chief Executive Christopher Connor said during a conference call.

He said Sherwin was "well under way" in implementing job cuts at plants, distribution centers and paint stores. After speeding up closures of redundant stores, Sherwin-Williams expects to have added 40 to 50 net stores by the end of 2008, down from its previous forecast of about 100 net new stores.

The maker of Dutch Boy, Krylon and Duron paints said it expects to earn 56 cents to 61 cents per share in the first quarter, down from its prior forecast of 72 cents to 80 cents.

Sherwin-Williams said it expects stronger international demand to lead to a low single-digit increase in quarterly net sales, down from its previous expectation for net sales to rise at a low-to-mid-single-digit rate.

"Domestic market conditions remain very challenging with no apparent end in sight," Connor said.

The company said it now expects its industry to face materials cost increases in the 4 to 8 percent range this year, compared with previous expectations of a 3 to 6 percent increase. It has announced price increases of up to 6.5 percent.