Edgewell Personal Care Co ((EPC)) has held its Q2 earnings call. Read on for the main highlights of the call.
Edgewell Personal Care Co’s recent earnings call painted a mixed picture, with significant international growth and strong brand performance in certain areas like the Billie brand, but challenges in North America. The company faces declines in Sun Care and Fem Care sales, as well as the impact of tariffs on costs. The outlook for the second half of the fiscal year remains cautious due to expected lower consumption trends.
Record International Growth
Edgewell Personal Care Co reported a notable 3% organic growth in international markets, marking the 12th growth quarter in the last 13. This growth was fueled by both price and volume gains, showcasing the company’s strong presence and strategic initiatives in global markets.
Productivity Savings
The company achieved approximately 380 basis points of productivity savings, contributing to a 110 basis points constant currency gross margin accretion. This demonstrates Edgewell’s commitment to operational efficiency and cost management.
Strong Brand Performance
The Billie brand emerged as a standout performer, achieving significant market share gains with a 15% share at Walmart and 14% at Target in women’s systems. This highlights the brand’s growing popularity and market penetration.
Successful International Innovations
Edgewell’s international markets saw successful product launches, including the expansion of the Billie brand to Australia and new product innovations in Japan. These initiatives underscore the company’s focus on innovation and market expansion.
Decline in North America Sales
North America sales saw a decline of about 4%, primarily due to decreases in Sun, Shave Preps, and Fem Care. This indicates challenges in the domestic market that the company needs to address.
Tariff-Related Cost Impact
The company estimated the in-year cost impact of tariffs to be between $3 million to $4 million, with an annualized exposure of 3% to 4% of COGS. This highlights the financial pressures faced due to external economic factors.
Lower U.S. Sun Care Sales
Sun Care sales in the U.S. declined, attributed to poor weather and order phasing related to the Easter holiday. This suggests that external factors have impacted seasonal product sales.
Fem Care Portfolio Struggles
The Fem Care segment experienced a 9% decline in organic sales, with slow recovery and consumption declines in tampons and pads. This indicates ongoing challenges in this category.
Forward-Looking Guidance
Edgewell provided a cautious outlook for the future, revising their full-year organic net sales growth expectation to a range of flat to 1%, with a forecast of 2% growth in the second half. The company anticipates full-year adjusted earnings per share to be between $2.85 and $3.05, impacted by currency headwinds. Adjusted EBITDA is expected to be in the range of $329 million to $341 million. Despite these challenges, Edgewell plans to invest in North America, particularly in Sun Care and Women’s Shave, to strengthen its market position and anticipates sequential improvement in the region’s performance.
In summary, Edgewell Personal Care Co’s earnings call highlighted a mixed sentiment, with strong international growth and brand performance offset by challenges in North America and tariff impacts. The company’s cautious outlook reflects the current macroeconomic environment, but strategic investments in key areas aim to drive future growth.