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UPDATE 3-Newell shares plunge as Toys 'R' Us liquidation, strong dollar weigh on forecast

Soundarya J

on forecast@ (Adds details from conference call, analyst quote, updates share movement)

Feb 15 (Reuters) - Newell Brands Inc on Friday forecast lower-than-expected full-year sales and profit, hit by a strong dollar, higher costs and sluggish sales of its Graco baby products in the aftermath of the liquidation of Toys 'R' Us, sending its shares down nearly 19 percent.

Large U.S. consumer goods makers like Newell, which sell products across the world, have been pressured by strengthening dollar and higher commodity and freight costs in its domestic market. Adding to the pressure is cost escalation related to retaliatory tariffs imposed by Europe and Canada as well as U.S. tariffs on certain imports from China.

Newell, on a post-earnings conference call, said inflationary pressures, including tariffs, strong dollar and higher input costs, would dent profits by $200 million in 2019.

It also expects a 2.5 percent impact to its core sales in the current quarter because of the loss of a key customer in Babies 'R' Us, the infant unit of Toys 'R' Us, after its liquidation last year.

Overall, full-year sales will be in the range of $8.2 billion to $8.4 billion, the company said, below the average analyst estimate of $8.78 billion, according to IBES data from Refinitiv. It also forecast a full-year adjusted profit that missed estimates.

"The company continues to expect a core sales growth decline, which would be viewed as a disappointment in light of very easy comparisons (to last year)," Oppenheimer analyst Rupesh Parikh said in a note.

Newell's Chief Financial Officer Christopher Peterson blamed a "disruptive external business environment" and management changes within the company to have hit its performance in the fourth quarter ended Dec. 31.

Peterson's comments come just a day after a U.S. Commerce department report showed that U.S. retail sales had fallen precipitously in December, indicating shoppers pulled back spending on discretionary items.

Total net sales for Newell fell 6 percent to $2.34 billion in the quarter, missing the average analyst estimate of $2.43 billion, its fourth straight quarterly miss.

A fall in sales in its learning and development unit, its biggest business that houses Graco, was mainly due to the loss of distribution to Babies 'R' Us. The company's home and outdoor living, and food and appliances divisions also registered decline in sales.

Still, excluding some items, Newell earned 71 cents per share and beat estimates. Shares of the company were down about 19 percent to $17.63, its worst day since Jan. 25, 2018. (Reporting by Soundarya J in Bengaluru; Editing by James Emmanuel)