Olivia Tong Cheang

Olivia Tong of Raymond James Financial inquired about the specific efforts to improve 'value superiority' in fiscal 2026, the company's flexibility on brand support, and the key drivers of the fiscal 2026 gross margin guidance.

Answer

CEO Linda Rendle outlined a two-pronged superiority strategy: raising the bar in categories where Clorox already leads and making significant improvements in areas like cat litter. She affirmed the company has financial flexibility to adjust spending. CFO Luc Bellet expressed confidence in the flat to +50 bps ex-ERP gross margin guidance, citing a strong pipeline of cost savings to offset inflation and tariffs.

Olivia Tong Cheang asked why retailer destocking was concentrated in the Household and Cleaning segments and whether it might take longer for consumers to replenish inventory in Clorox's categories.

Answer

CEO Linda Rendle explained that destocking was focused on Household because it contains heavy, space-intensive goods like Kingsford and Litter, which retailers are managing closely. On consumer replenishment, she stated it's too early to tell if there will be a bounce-back, as the downturn began less than one full 90-day purchase cycle ago. She noted it's a question mark for FY26, as it's unclear if consumers will stretch smaller pack sizes or return to buy more frequently.

Olivia Tong of Raymond James Financial inquired about the level of promotion and advertising for Litter embedded in the second-half outlook and the company's flexibility to handle competitive battles. She also asked about the impact of the cough and cold season on the business.

Answer

CEO Linda Rendle stated that the company assumes an average cold and flu season, which has largely played out as expected. For the Litter category, she confirmed the outlook already includes an elevated promotional environment and increased advertising to support new product launches. She affirmed that Clorox has the financial flexibility to respond to competitive pressures as needed.

Olivia Tong asked about inventory positions at retail and in consumer pantries, particularly for heavily promoted categories like Litter. She also sought to understand how much of the Q1 gross margin beat was due to structural improvements versus temporary factors.

Answer

CEO Linda Rendle reported that inventory levels are normalized at both retail and the consumer level, with no major issues to report. CFO Kevin Jacobsen highlighted the structural drivers of the margin beat, including strong cost savings programs (on track for over 200 basis points of improvement) and the accretive impact of divesting two margin-dilutive businesses, which is expected to add 50-70 basis points to margins.

Olivia Tong asked about the regional outlooks beyond the U.S. and Greater China, focusing on demand dynamics in Western Europe and Latin America, and sought expansion on the scope of portfolio restructuring actions, particularly regarding potential larger changes or filling organic growth gaps.

Answer

CFO Andre Schulten provided regional outlooks: Western Europe similar to North America (1% volume, 2% value growth), Latin America strong (7% growth, Brazil up 6-7%, Mexico up 4%), and Asia, Middle East, Africa, and Europe enterprise markets more muted (around 3-4%). He clarified that portfolio actions are 'on the fringes,' focusing on ensuring value creation in existing category-country combinations, and emphasized significant organic growth opportunities within the existing portfolio (e.g., $5B in North America, $10B in Europe, $15B in enterprise markets), negating the need for transformational acquisitions.

Olivia Tong asked about the regional outlooks for Western Europe, Latin America, and the Middle East, including demand dynamics and consumer health, and sought expansion on restructuring actions, particularly portfolio changes in the Middle East and fem care, and potential for larger portfolio shifts or filling organic growth gaps.

Answer

Andre Schulten, CFO, noted Western Europe dynamics similar to North America (1% volume, 2% value growth), strong Latin America growth (7%), and more muted performance in Asia, Middle East, Africa, and European enterprise markets. He clarified that portfolio actions are on the 'fringes,' ensuring value creation in existing category-country combinations, with no plans for dramatic transformational acquisitions, as significant organic growth opportunities exist within the current portfolio.

Olivia Tong of Raymond James asked about the drivers of positive price/mix despite a challenged consumer, P&G's confidence in pricing for next year, and the expected growth contribution from focus versus enterprise markets.

Answer

President, CEO & Chairman Jon Moeller expressed confidence in future pricing, explaining that P&G's portfolio is resilient because it focuses on daily-use categories where performance drives value. CFO Andre Schulten added that he expects Focus and Enterprise markets to have similar aggregate growth performance in fiscal 2026.

Olivia Tong of Raymond James asked why the Q4 tariff impact is smaller than the implied annual run rate and requested specifics on pricing plans to mitigate tariffs, especially in competitive categories like tissue and towel.

Answer

Executive Andre Schulten explained that the Q4 impact of $100M-$160M reflects only one month of the effect due to accounting policies where tariffs are treated as an inventoriable cost. Multiplying this monthly impact by twelve aligns with the $1B-$1.5B annual estimate. He declined to detail specific pricing plans by category, stating it is a complex exercise the teams are currently undertaking.

Olivia Tong Cheang of Raymond James asked about the drivers of China's expected normalization (category growth vs. market share) and whether the level of investment required to achieve P&G's broader goals needs to increase.

Answer

Andre Schulten, an executive, said China's recovery will be a mix of both improving market comps and P&G's own business improvements. Regarding investment, he and CEO Jon Moeller explained the focus is now on optimizing the marketing playbook and improving content quality and efficiency—such as bringing key opinion leader support in-house—rather than simply increasing spending.

Olivia Tong Cheang questioned the divergence in performance across categories, asking why the successful innovation seen in Fabric & Home Care isn't translating with the same impact to other segments like Baby Care or Beauty.

Answer

Executive Andre Schulten explained that the portfolio strategy allows for varied performance across categories at different times. He highlighted that Beauty, excluding China and SK-II, is actually performing very well, with strong growth in North America and Europe. He noted that all categories have rich opportunities for innovation, but they don't all materialize at the same time.

Olivia Tong asked Scott Uzzell (CEO) about the greatest opportunities for innovation and how his past turnaround experience applies to Helen of Troy. She also inquired about balancing heavy discounting in the drinkware category with turnaround plans, competitive dynamics, and the company's confidence in offsetting tariff pressures, including other mitigation plans if price increases are delayed.

Answer

Scott Uzzell (CEO) emphasized integrating innovation and consumer focus into daily operations, leveraging leadership and talent with speed. Brian Grass (CFO) explained that drinkware discounting is concentrated in tumblers, and Helen of Troy is pivoting to bottles, seeking distribution and adjacent category expansion. He expressed confidence in implementing price increases with retailer collaboration and conservative elasticity assumptions, while also pursuing supplier cost reductions and carefully managing growth investments.

Olivia Tong asked CEO Scott Uzzell about the greatest innovation opportunities across Helen of Troy's categories and how his past turnaround experience can be applied. She also inquired about balancing heavy discounting in the drinkware category with turnaround plans, seeking insight into competitive dynamics. She followed up on tariff pressures and confidence in offsetting them, noting the challenging promotional environment and distribution losses, asking about other mitigation plans beyond pricing.

Answer

CEO Scott Uzzell stated that innovation and consumer focus should be embedded across the entire portfolio, prioritizing areas of current strength and future potential, driven by leadership, talent, and swift action. CFO Brian Grass explained that discounting in drinkware is concentrated in the saturated tumbler space, and the company is pivoting to bottles where it has historical strength, seeking distribution opportunities and exploring adjacent categories for Hydro Flask. He detailed the pricing strategy, emphasizing collaboration with retailers for consistent adoption and conservative assumptions on price elasticity. He affirmed that price increases, even with some volume loss, improve profitability and are strategically important for retailers. He also reiterated other mitigation levers like supplier cost reductions and strategic investment in new product development and brand building, avoiding cuts that would jeopardize fiscal 2027 growth. Assistant CFO Tracy Schuerman reinforced the focus on retailer implementation and spending control.

Olivia Tong of Raymond James Financial requested more details on the retail distribution gains expected in the second half, asking about specific categories and whether the gains were a net figure. She also inquired about the status of the CEO search and the desired profile for the new leader.

Answer

CFO Tracy Schuerman confirmed the gains were net and highlighted new distribution for Braun blood pressure monitors at Walmart and international expansion for Hydro Flask and Osprey. CEO Brian Grass added that the board is leading the CEO search, seeking a leader with strong brand-building and growth experience. In the interim, Grass is focused on simplifying the organization and prioritizing sustainable, product-led growth over purely marketing-driven initiatives.

Olivia Tong Cheang sought clarification on whether the spending bifurcation between high and low-end consumers is worsening. She also asked if shelf space gains could become a net positive tailwind over the next year, or if headwinds like the weak illness season and customer bankruptcies would delay a sales inflection into fiscal 2026.

Answer

CEO Noel Geoffroy characterized the consumer environment as a continuation of recent trends, with lower-income consumers remaining cautious. She confirmed that significant distribution gains for OXO and Hydro Flask are a positive tailwind. While the weak illness season is a current headwind for Wellness, she noted the company typically assumes an average season for planning purposes. She concluded that the Beauty business still requires more work but has new innovation in the pipeline.

Olivia Tong Cheang of Raymond James inquired about how the normalization of post-COVID categories like OXO would manifest in terms of strategy and performance, especially given macro headwinds and retailer inventory caution. She also asked for the key variables that would determine whether results land at the high or low end of the full-year guidance.

Answer

CEO Noel Geoffroy explained that normalizing categories like kitchen utensils are now driven by more traditional factors like new home formation and dining-in trends. She noted that while some retailers are managing inventory tightly, she does not see a major, unusual inventory issue across the market. CFO Brian Grass stated that the high end of the guidance assumes current POS trends hold steady, and a decline in those trends would be the primary factor pushing results toward the low end.

Olivia Tong requested a breakdown of performance between mass and prestige cosmetics, focusing on initiatives in the mass market, and also asked about the new brand pipeline for the upcoming year.

Answer

President and CEO Kecia Steelman expressed excitement about a strong and balanced newness pipeline across all categories for the rest of the year and into 2026. She highlighted that both mass and prestige makeup grew during the quarter, a positive trend not seen recently, partly due to lapping the clearance of the old Ulta Beauty Collection.

Olivia Tong of Raymond James Financial asked about the full-year guidance, noting the implied deceleration after a strong Q1. She sought clarity on the quarterly sales cadence and the potential impact of tariffs on pricing and promotions, especially given the forecast for more pressured H2 margins.

Answer

CFO Paula Oyibo explained that while the guidance was updated to reflect Q1's strength, the company remains cautious about second-half uncertainty. She projected low-single-digit comps for the first half, followed by a range of down low-single-digits to up modestly in the second half. Oyibo stated that the promotional environment is expected to remain rational and that the company is working with brand partners to mitigate any potential tariff impacts.

Olivia Tong asked a multi-part question regarding the Q2 performance miss, seeking to understand the attribution between category deceleration and share loss, why certain promotions failed, and how trends late in the quarter influenced the revised full-year outlook.

Answer

CEO David Kimbell identified competitive pressures as the largest driver of the Q2 miss. He explained that incremental promotions layered in late in the quarter drove e-commerce traffic but failed to deliver incrementality in stores. He clarified that the revised outlook is based on a holistic assessment of all challenges and that the go-forward strategy relies on a mix of levers, not just promotions, to drive performance.

Olivia Tong asked about the outlook for pricing and promotions in the second half, whether tariff mitigation would require price increases, and other initiatives to reduce tariff pressures.

Answer

CFO Eva Boratto outlined a multi-year, three-part strategy for tariff mitigation: supply chain optimization, targeted assortment changes, and strategic pricing. She emphasized that the goal is to elevate the brand's value equation through innovation to drive AUR, rather than relying heavily on promotions.

Olivia Tong asked about the company's pricing strategy in a market where competitors may be raising prices due to tariffs, framing it as an opportunity to either raise prices or gain market share. She also asked CEO Daniel Heaf about his international expansion strategy, specifically regarding market selection.

Answer

CFO Eva Boratto stated that the company will remain agile and 'read and react to the customer and the market' on pricing. CEO Daniel Heaf reiterated his earlier comments on international strategy, emphasizing that he will focus on a select group of priority markets and match them with the most appropriate business model, rather than applying a one-size-fits-all approach.

Olivia Tong Cheang of Raymond James Financial, Inc. asked about Q1 trends given a reportedly tough January for retail, and for details on the puts and takes within the flat full-year gross margin guidance.

Answer

CFO Eva Boratto acknowledged that January was lighter but in line with external markets, and reiterated that the company is pleased with the start to Q1, driven by newness. For the full-year gross margin, she noted benefits from prior cost reductions are offset by some pressure from product mix and newness, which typically launch at lower margins before scaling.

Olivia Tong Cheang asked about the future opportunities to leverage the loyalty program and for color on competitor exposure to overseas manufacturing compared to Bath & Body Works' 85% North American base.

Answer

CEO Gina Boswell stated the company aims to deepen engagement with its 38 million active loyalty members (up 4% YoY), focusing on increasing the frequency of earning and redeeming points. Regarding manufacturing, she declined to comment on competitors but emphasized that the company's 85% North American production is a significant competitive advantage, driving speed and agility.

Olivia Tong from Raymond James asked about AUR expectations for the second half, initiatives planned to drive customer traffic, the source of the incremental cost savings, and management's confidence in sustaining those savings.

Answer

CFO Eva Boratto stated the increased cost savings guidance is due to value engineering in the supply chain and ongoing SG&A discipline. She declined to give specific AUR guidance to maintain promotional flexibility. CEO Gina Boswell outlined several traffic-driving initiatives for the second half, including the full launch of the 'Everyday Luxuries' line, new on-trend fragrances, a new collaboration, and two major cross-category launches.

Olivia Tong inquired about the lack of specific guidance for the second half of fiscal 2026, asking for key drivers of the expected improvement. She also questioned the strategy for Consumer Beauty, focusing on investment levels in mass color cosmetics and the growth potential of mass fragrances.

Answer

CFO Laurent Mercier explained that H2 '26 will see growth as retailer inventory headwinds end, supported by strong innovation and the "All In to Win" plan, ensuring full-year EBITDA exceeds $1 billion despite tariff impacts. CEO Sue Nabi added that a second blockbuster launch and a major perfume mist initiative will further drive H2 performance. Nabi also detailed a shift in mass color cosmetics investment towards ROI-driven traditional advertising for core products, while noting that the growing mass fragrance category is highly profitable and additive.

Olivia Tong inquired about the key drivers for the expected improvement in the second half of fiscal 2026, the evolution of investment levels in mass color cosmetics, and the growth strategy for the mass fragrance business.

Answer

CFO Laurent Mercier explained that H2 growth will be driven by the end of retailer inventory reductions, a healthy market, and strong innovations, ensuring full-year EBITDA will exceed $1 billion despite tariff headwinds. CEO Sue Nabi added that two blockbuster launches and a major perfume mist initiative will further bolster H2 performance. On consumer beauty, Nabi noted a strategic shift in marketing for mass color to improve ROI and profitability, while highlighting that the growing mass fragrance category is highly profitable and additive to the business.

Olivia Tong Cheang from Raymond James Financial, Inc. asked for clarification on Consumer Beauty's flat volume despite price/mix weakness, details on the new streamlining plan, and whether the company is scrutinizing its brand portfolio for potential exits.

Answer

CFO Laurent Mercier explained the volume/price gap was due to geographic mix, with strong volume growth in lower-priced markets like Brazil offsetting weakness elsewhere. He described the streamlining as centralizing support functions to align with the new commercial organization. CEO Sue Nabi confirmed the company constantly evaluates its portfolio and is not committed to keeping all brands, citing the recent changes with the SKKN brand as an example.

Olivia Tong Cheang of Raymond James & Associates asked why Prestige Fragrances have shown more resilient growth compared to other categories and what innovation can be done in mass categories to offset external pressures.

Answer

CEO Sue Nabi explained that Prestige Fragrances have higher barriers to entry due to their unique, hard-to-replicate scents and scientific know-how, such as longevity-enhancing molecules. To fuel growth in other categories like Color Cosmetics, she stated the company must create similar high-entry-barrier innovations, moving beyond commoditized products to re-attract consumers with unique value.

Olivia Tong Cheang asked why Prestige Fragrances have demonstrated more resilient growth compared to other beauty categories and what innovation strategies could help mass categories offset external pressures.

Answer

CEO Sue Nabi attributed the resilience of Prestige Fragrances to high barriers to entry, such as unique scents and scientific innovation, which make them less replaceable. For other categories like color cosmetics, she argued that the key to growth is creating similar high-barrier innovations that are difficult to copy, moving away from a reliance on commoditized trends from third-party manufacturers.

Olivia Tong asked for details on the recent consumables price increase, including its timing, customer feedback, and ability to offset tariffs, and also questioned the drivers behind the higher-than-expected customer churn.

Answer

CEO Marla Beck stated the average 5% consumables price increase took effect July 3rd and was well-received, as it was lower than other industry increases. CFO Michael Monahan noted it partially offsets the projected $4 million tariff impact. Regarding churn, Monahan said the cause is still under investigation as it is not concentrated in any single channel, but the company is launching targeted initiatives to reactivate customers.

Olivia Tong Cheang of Raymond James questioned why the full-year sales guidance wasn't raised after a strong Q1, why Q2 guidance implies a sequential slowdown, and whether tariffs would negate the typical second-half strength in gross margin.

Answer

Executive Michael Monahan explained that guidance was maintained due to lowered expectations for consumable sales in APAC, specifically China, because of tariffs. This also drives the apparent Q2 slowdown. He confirmed that the projected tariff impact is expected to be larger in the second half of the year, offsetting the usual seasonal gross margin strength.

Olivia Tong Cheang questioned the reasons for the forecasted worsening revenue decline in Q1 2025 versus Q4 2024 and sought clarity on the company's fixed cost base and the sustainability of consumable sales growth.

Answer

Executive Michael Monahan outlined three drivers for the Q1 guidance: the slowdown from the China distributor shift ($5-6M impact), persistent macro pressure on global device sales, and a consumer shift to lower-priced base treatments. CEO Marla Beck addressed consumable sustainability, emphasizing the 'wrap the treatment room' strategy and the success of new, clinically-backed booster launches like Hydralock. Monahan added that the growing installed base of over 34,000 systems provides a strong foundation for future consumable revenue.

Olivia Tong Cheang asked if the planned changes to the international footprint were focused solely on China or part of a broader global review. She also inquired about the drivers behind the continued growth in consumables per device amid macro headwinds and sought clarification on whether the Q4 gross margin was guided to be down sequentially or year-over-year.

Answer

CEO Marla Beck confirmed the go-to-market review is global, aimed at improving profitability in all markets that lack scale. She attributed strong consumables per device to the treatment's popularity, demand from medical channels, and the business-driving effect of new product launches. CFO Michael Monahan clarified that his guidance was for Q4 adjusted gross margin to be down sequentially compared to Q3 2024.

Olivia Tong from Raymond James followed up on the $30 million sales impact, asking how much is recoverable. She also inquired about consumer demand trends across different price points and the specifics of planned future pricing actions.

Answer

CFO Jeremy Smeltzer estimated that about half of the lost sales were likely recovered in July. CEO David Maura noted the consumer has been surprisingly resilient. Smeltzer added that value brands in Home & Garden are gaining share, while premium Pet brands are seeing consumers return. He stated that the remaining pricing needed for fiscal 2026 is a relatively small $20-$25 million, which is less than 1% of revenue and will be implemented strategically with retail partners.

Olivia Tong of Raymond James asked about the sales percentage of products being exited, the nature of new supplier relationships, the rationale for investing in the HPC supply chain given divestiture plans, and the building blocks for the free cash flow guidance.

Answer

CFO Jeremy Smeltser clarified that the company is committed to managing the HPC business effectively, and the required capital for the supply chain transition is nominal. He stated the vast majority of new production will be with existing suppliers who are moving their operations. The products being de-prioritized represent about 15-20% of HPC's U.S. sales. Regarding free cash flow, he explained the guidance is supported by profitability, cost management, and significant working capital benefits from liquidating HPC inventory in the U.S. without replenishment.

Olivia Tong Cheang inquired about the specific actions being taken to mitigate tariff impacts, including pricing, and how the evolving political backdrop affects the commitment to exiting the HPC segment. She also asked for details on what is embedded in the mid- to high-single-digit EBITDA growth target.

Answer

CEO David Maura detailed plans to mitigate tariffs by moving production, aiming for 30-40% of U.S.-bound HPC products to be sourced outside China by year-end, while also using pricing and supplier negotiations. CFO Jeremy Smeltser quantified the currently announced tariff impact at approximately $12 million for the fiscal year and confirmed the company's plan is to mitigate the vast majority of it through their established playbook of cost improvements, supplier concessions, and pricing actions, thus maintaining the EBITDA outlook.

Olivia Tong of Raymond James asked about the U.S. core business growth in light of decelerating scanner data and questioned if ex-Rhode results could potentially be down in Q2. She also requested details on the international expansion with Sephora.

Answer

Senior VP & CFO Mandy Fields stated there is no scenario contemplated where the core e.l.f. business would be down year-over-year, attributing scanner data deceleration to cycling a very strong fall launch from the prior year. CEO & Chairman Tarang Amin detailed the expanding Sephora partnership, highlighting the successful launch in Mexico and upcoming launches for Rhode in the US, Canada, and UK, as well as for the e.l.f. brand in the six Gulf Cooperation Council countries.

Olivia Tong of Raymond James inquired about the performance outlook for the first quarter, the progress of the Dollar General channel, and the planned operational structure for the newly acquired Rhode brand.

Answer

SVP & CFO Mandy Fields stated that Q1 consumption trends are strong, though the company is cycling significant growth from the prior year. Chairman and CEO Tarang Amin confirmed that the Dollar General partnership is exceeding expectations and explained that Rhode will operate independently from Los Angeles, leveraging e.l.f.'s resources to support its major Sephora launch and global expansion.

Olivia Tong Cheang questioned why e.l.f. isn't outperforming scanner data as significantly this quarter and asked about its ability to capitalize on consumer trade-down with value messaging.

Answer

CFO Mandy Fields emphasized looking at the second half's 14-16% growth outlook in aggregate, given that some pipeline shipments were pulled into Q3. She noted that digital and international channels continue to perform strongly outside of U.S. scanner data. Chairman and CEO Tarang Amin added that the company is taking a cautious stance but sees the environment as a great opportunity to build share, highlighting the 90 basis points gained in a weak January. He confirmed they will continue to emphasize their strong value proposition.

Olivia Tong Cheang asked for perspective on maintaining growth ahead of a slowing mass beauty category, the key drivers of market share gains, and the strategic rationale behind expanding into Dollar General.

Answer

CEO Tarang Amin attributed the outperformance to the brand's core value proposition, powerhouse innovation (6 of the top 10 new launches), and disruptive marketing. He explained the Dollar General expansion aligns with the mission of making beauty accessible, specifically targeting underserved rural consumers, and noted the brand is displacing others with a premium endcap presentation.

Olivia Tong asked for a comparison of performance between the SBS and BSG segments, questioning if BSG's rebound was due to pent-up demand, and explored the potential for expanding into new categories like wellness within Sally Beauty stores.

Answer

President & CEO Denise Paulonis stated that the BSG segment's rebound was consistent throughout Q3 and not merely due to pent-up demand from a challenging Q2. The strength was driven by innovation and a healthy stylist business. Regarding new categories, Paulonis confirmed they are actively testing cosmetics, skincare, and fragrance in the 35 brand refresh stores. This is enabled by SKU rationalization to create space, and the company plans to expand this test to 50 more stores in the next fiscal year to gauge customer response and potential for a broader rollout.

Speaking on behalf of Olivia Tong, an analyst asked about the current commercial environment and whether the company anticipates shifting its strategy in response to evolving consumer sentiment.

Answer

President and CEO Denise Paulonis affirmed confidence in the company's core strategy, highlighting key initiatives like Licensed Colors on Demand, CRM, marketplaces, and innovation. She stated that while tactics may be adjusted in response to the consumer environment, she does not foresee fundamental changes to the overall strategy. Paulonis emphasized the strategy's success in delivering three consecutive quarters of growth prior to Q2's macro pressures, reinforcing her positive view of the core business.

Olivia Tong Cheang asked if the macro disruptions from January have improved, what factors would offset pressures to drive second-half improvement, and about the company's potential exposure to tariffs.

Answer

CEO Denise Paulonis confirmed that the Q2 guidance reflects the January macro impacts and expressed confidence in navigating the year through strategic tactics, highlighting innovation and new brand imaging as key drivers. CFO Marlo Cormier addressed tariffs, stating that exposure is minimal (less than 10% of product from Asia/China) and that the company would use its previous playbook of vendor switching, volume shifts, and potential price increases to mitigate any impact.

Olivia Tong Cheang asked about the key drivers of long-term margin improvement and whether the fiscal 2025 guidance is a good proxy for the future. She also followed up on whether the company is seeing new customers trade down to DIY options and requested details on upcoming e-commerce initiatives.

Answer

President and CEO Denise Paulonis and CFO Marlo Cormier outlined a path to a low double-digit operating margin driven by low single-digit sales growth and the 'Fuel for Growth' program, which is expected to deliver over $40 million in savings in FY25. Paulonis noted that growth is coming from new and reactivated customers, partly via the 'Licensed Colorist OnDemand' platform. E-commerce initiatives include expanding marketplace partnerships like DoorDash and Instacart, which drove $13 million in growth, alongside enhancing the company's own digital platforms.

Olivia Tong of Raymond James Financial questioned the drivers behind the expected Q4 organic sales growth acceleration, including assumptions for category growth and retailer destocking. She also followed up on future brand investment levels and innovation plans.

Answer

COO Daniel Sullivan detailed that Q4 growth is driven by international markets accelerating due to pricing and new product distribution, while North America's decline will moderate thanks to a better Sun Care profile, Fem Care returning to growth, and cycling easier comps for Wet Ones. President and CEO Rod Little confirmed that the company will continue to invest where it sees strong returns, such as with Cremo, Hawaiian Tropic, and HydroSilk, and plans to expand successful campaign strategies to other brands. Sullivan added that these investments will be funded by ongoing productivity and efficiency initiatives.

Olivia Tong Cheang asked about the extent of retailer destocking, the annualized tariff headwind, and how the company reconciles increasing promotional investment with the potential need for pricing to offset tariffs. She also inquired about private label trends.

Answer

COO Daniel Sullivan clarified that incremental Q3 promotional investment in the U.S. is occurring alongside planned price increases in select international markets. He reiterated the tariff impact is $3-4M in-year with a 3-4% of COGS annualized exposure before mitigation. CEO Rod Little stated there has been no meaningful retailer destocking and noted that while their Private Brands business is strategic and growing internationally, they are not yet seeing a material market shift to private label.

Olivia Tong Cheang asked about plans to offset the larger-than-expected negative impact from foreign exchange, including potential pricing actions. She also followed up on Fem Care, seeking reasons for confidence in the current stabilization plan.

Answer

COO Daniel Sullivan stated that while planned pricing for FY25 has been executed internationally, the current focus is on revenue management and productivity rather than new list price increases, though they are not ruled out. President and CEO Rod Little emphasized that the company will not cut brand investment to offset FX headwinds. Regarding Fem Care, Little expressed confidence based on the category's return to stability, clear line of sight into segment performance, and easier year-over-year comparisons ahead.

Olivia Tong Cheang from Raymond James asked for the building blocks supporting the fiscal 2025 sales outlook of 1-3% organic growth, particularly how the company expects to accelerate sales after a projected sluggish Q1, given various business challenges.

Answer

CEO Rod Little explained that growth will be driven by a more effective, locally-driven innovation model, citing recent successful launches in Europe (Wilkinson Sword) and Japan (Schick First). He also noted a significant tailwind from lapping an easy comparison in Fem Care, which is expected to improve from a 10% decline to flat. COO and CFO Daniel Sullivan detailed the reasons for a weak Q1, including cycling a very strong prior-year quarter in Japan, the timing of new product launches and pricing actions hitting later in the year, and the Fem Care recovery being a second-half event.

Olivia Tong from Raymond James Financial asked for color on the sales comps for August and September following a strong July. She also inquired about the net impact of consumer trade-down on the portfolio and the company's view on other underperforming brands beyond the vitamin business.

Answer

President and CEO Rick Dierker declined to give monthly guidance but expressed confidence in the 2.5% back-half growth outlook. He stated that consumer trade-down is a net benefit for the company, though significant recessionary behavior has not yet materialized. Regarding the portfolio, Dierker asserted that after the recent exits and the current vitamin review, there are no further plans for strategic changes, as the remaining brands all have a role to play.

Olivia Tong Cheang questioned how the company could implement pricing in a declining macro environment and asked for its view on future promotions. She also inquired about the strategy to continue driving penetration in newer, high-growth categories like HERO and THERABREATH and the potential gross margin impact from trade-down.

Answer

Executive Richard Dierker responded that the company has worked to mitigate tariff impacts specifically to avoid taking broad price increases in the current environment. He emphasized that driving household penetration for HERO and THERABREATH is a key priority, supported by reallocating media and maintaining an 11% marketing-to-sales ratio. CFO Lee McChesney added that the full-year gross margin outlook of a 60 basis point contraction already accounts for various factors, with tariffs being the primary driver of the revised forecast.

Olivia Tong Cheang asked whether the company's recent premium-priced innovations create a trade-up challenge in a difficult economic environment, given its value-oriented consumer base.

Answer

CEO Matthew Farrell stated that the premium innovations are not a disadvantage, citing the strong performance of Hardball litter and consumer appeal of POWER SHEETS. He noted that while their core brands are value-focused, their consumers have historically traded up. CFO Rick Dierker added that a product like Deep Clean, while premium for the ARM & HAMMER brand, still represents a value in the overall category's mid-tier, attracting consumers from higher-priced brands.

Olivia Tong Cheang sought to understand the drivers of the gross margin upside in Q2 and the reasons for the expected deceleration in the second half, asking if it was primarily due to the 'dry powder' for promotions.

Answer

Richard Dierker (CFO and Head of Business Operations) explained that the Q2 gross margin beat was driven by favorable product mix within the personal care portfolio. He attributed the expected second-half deceleration to a combination of slightly more inflation, a less favorable product mix, and the reserved 'dry powder' for potential trade and couponing expenses.

Olivia Tong asked about the key drivers behind the expected sequential core sales improvement in the fourth quarter and questioned the retailer response to recent pricing actions, particularly in the baby category.

Answer

CFO Mark Erceg clarified that implied Q4 core sales are expected to be roughly flat, not up. CEO Chris Peterson attributed the sequential improvement to Q4-weighted distribution wins from tariff advantages, the major Yankee Candle relaunch hitting in its peak season, and new retailer shelf-set implementations. Regarding pricing, he stated retailers have been constructive, with the main issue being timing. The full consumer impact is not yet clear as the latest price hikes just took effect.

Olivia Tong asked why the market share outlook was unchanged despite new distribution wins, whether pricing was taken in categories besides baby, and about the competitive capacity landscape in North America.

Answer

CEO Christopher Peterson explained the market share outlook is unchanged because potential upside from 17 additional categories under discussion is not yet factored into guidance. He confirmed minor pricing was taken on other items, but baby gear was ~90% of the action. He stated that competitors have largely moved production to Asia, leaving Newell uniquely positioned with available U.S. and Mexico capacity to fill supply disruptions as retailers pause China orders.

Olivia Tong Cheang of Raymond James inquired about the divergent performance across Newell's business divisions and asked for details on the price/mix contribution to sales and gross margin, both in the current quarter and for future periods.

Answer

CEO Christopher Peterson detailed the varied performance, noting strength in Learning & Development, sequential improvement in Home & Commercial, and a longer turnaround for Outdoor & Recreation. He emphasized that future gains will come from product mix rather than price increases. CFO Mark Erceg added that while productivity currently drives margin expansion, improved price/mix management will become a more significant contributor going forward.

Olivia Tong from Raymond James Financial inquired about the drivers for the expected sales acceleration in the second half of the year. She also asked if the new restructuring program is entirely new or an acceleration of existing plans, and if it involves specific headcount or regional actions.

Answer

Chairman, CEO & President Noel Wallace cited consistent advertising levels, a strong innovation pipeline, and pricing opportunities as key drivers for second-half growth, assuming modest category improvement. CFO Stanley Sutula described the productivity program as a combination of supply chain optimization and resource reallocation, which will involve rebalancing assets and headcount over time, but did not provide specific details.

Olivia Tong Cheang from Raymond James Financial, Inc. requested more granularity on pressures in the U.S., specifically why trade-down was limited to super-premium to base, and asked about the company's confidence in maintaining price inelasticity in a challenging Latin American market.

Answer

Noel Wallace, Chairman, President and CEO, clarified the main issue in North America was a volume decline driven by lower store traffic and conversion, which they aim to address with innovation. For Latin America, he expressed confidence due to exceptionally strong brands, a solid innovation pipeline, and announced pricing actions. He sees no fundamental issues, expecting the market to rebound as macroeconomics improve, consistent with historical patterns.

Olivia Tong asked about the expected volume implications of planned pricing actions, the magnitude of pricing in Latin America, and the company's ability to pivot between advertising and promotional spending.

Answer

CEO Noel Wallace stated that the promotional environment remains constructive, with isolated pockets of heightened competition in markets like India and South Africa, which have been factored into their plans. He confirmed that pricing has already been announced in Latin America to offset currency devaluation. He reiterated that in Europe, the strategy is less about direct price increases and more about driving value through innovation.

Olivia Tong Cheang asked about the company's approach to affordability amid consumer spending scrutiny, particularly in North America, inquiring about initiatives related to promotions and mid-tier product offerings to maintain share.

Answer

Noel Wallace, Chairman, President and CEO, reiterated the strategy of accelerating premium innovation while also thoughtfully managing promotional cadence, digital and paper coupons, and price pack architectures across all price tiers. He described the consumer environment as more 'normalized,' with slightly higher coupon redemption rates but promotional activity largely in line with post-COVID levels, and highlighted the use of AI and analytics to optimize promotional ROI with retailers.

Olivia Tong Cheang of Raymond James asked for clarification on whether Milk Makeup was losing space at Sephora, requested a breakdown of the flat Q1 outlook between market deceleration and inventory correction, and inquired if the Ulta Beauty sell-in was completed in Q4.

Answer

Executive Michel Brousset confirmed that Milk Makeup is not losing any space at Sephora. He reiterated that the flat Q1 outlook is overwhelmingly due to anniversarying a uniquely large Jelly launch from the prior year, with a smaller impact from retailer inventory adjustments. He emphasized their strategy is driven by innovation and distribution, making it less dependent on overall market dynamics. Executive Manuel Manfredi clarified that for logistical reasons, the Ulta Beauty sell-in was split between Q4 and Q1.

Olivia Tong Cheang of Raymond James asked for insights into Waldencast's steady-state revenue growth, long-term EBITDA margin potential, the competitive landscape for both Milk and Obagi, and the impact of recent product out-of-stocks.

Answer

Executive Michel Brousset outlined a high-growth algorithm well ahead of the market, fueled by a strong gross margin that enables reinvestment for growth and EBITDA expansion. He noted that while the beauty market is competitive, Waldencast's focus is on creating unique products, like Milk's Jellies, rather than on competitors. He confirmed that out-of-stocks from high demand were a headwind in Q2 but are now largely resolved.

Olivia Tong Cheang asked about the key drivers needed to achieve positive sales growth in fiscal 2025 and whether the current product portfolio is sufficient. She also questioned the company's outlook on category growth rates given the competitive landscape.

Answer

CEO Amanda Baldwin detailed a three-pronged strategy to return to growth: harnessing the innovation engine with new launches like the scalp treatment, executing a new brand marketing strategy to tell the company's story effectively, and maintaining executional excellence. COO & CFO Catherine Dunleavy added that achieving the high end of the guidance range is directly tied to the speed of progress on these three priorities, which are being monitored with detailed metrics.

Olivia Tong Cheang asked about the magnitude of the international business reset, the expected timeline for completion, and the rationale for undertaking these significant changes now, given the company's other transformation priorities.

Answer

CEO Amanda Baldwin explained that the company's strong financial position allows it to make difficult but necessary choices for long-term health. She stressed that realigning the international business is critical to capitalizing on future marketing and innovation. While declining to give a specific timeline, she assured a process that balances urgency with thorough analysis and partner selection.

Olivia Tong asked about discussions with key retailers, the strategy to win consumers in Asia against local brands, and the plan for differentiating the company's products in Western markets.

Answer

CEO Stephane de la Faverie explained that differentiation will be driven by a 'transformative innovation' plan, which aims to triple the number of products launched in under a year. This speed will enable the company to tailor new products to specific retailers, consumer segments, and price points globally, helping to capture consumers in a fragmented distribution landscape.

Olivia Tong Cheang asked for a breakdown of the Q2 profit outlook, seeking to understand the drivers of deleverage and whether it stems from investment spending, challenges with PRGP savings, or other factors.

Answer

EVP and CFO Tracey Travis explained that while gross margin is expected to improve, the significant sales decline, concentrated in highly profitable China and Travel Retail markets, creates substantial operating expense deleverage. This is compounded by protected investments in advertising for the holiday season and store build-outs for growing brands. President and CEO Fabrizio Freda emphasized the negative mix impact from declines in these high-scale, high-profitability markets.