Church & Dwight’s Earnings Call: Mixed Sentiments and Strategic Focus

Church & Dwight Company ((CHD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Church & Dwight’s recent earnings call revealed a mixed sentiment, highlighting both achievements and challenges. The company showcased strong brand performance, particularly in online sales and specific product categories like TheraBreath and HERO. However, it also faced hurdles with an organic sales decline and tariff exposure. Strategic decisions to exit certain businesses aim to concentrate on core brands and mitigate tariff impacts, yet the decline in U.S. organic sales and struggles in the gummy vitamin business remain significant concerns.

Strong Brand Performance

Church & Dwight reported gaining share in nine of its 14 major brands, with over 80% of the business experiencing volume share growth during the quarter. This indicates a robust brand presence and effective market strategies.

Online Sales Growth

The company saw its online sales reach nearly 23% of global sales, marking a significant expansion in the online trade class. This growth underscores the increasing importance of digital channels in the company’s sales strategy.

TheraBreath and HERO Performance

TheraBreath mouthwash consumption surged by 26%, and HERO acne care consumption grew by 13%, both significantly outpacing their respective categories. This performance highlights the strength of these brands in the market.

International Business Growth

Church & Dwight’s international business achieved a sales growth of 2.7% for the quarter, with organic sales increasing by 5.8%. This growth reflects the company’s successful expansion efforts outside the U.S.

EPS Performance

The company’s adjusted earnings per share (EPS) was $0.91, surpassing the outlook by $0.01. This slight beat indicates effective cost management and operational efficiency.

Organic Sales Decline

Organic sales decreased by 1.2%, primarily due to retail destocking, which accounted for a 300 basis point drag. This decline highlights the challenges faced in maintaining sales momentum.

U.S. Organic Sales Decline

U.S. organic sales saw a 3% decline, driven entirely by negative volume from retail destocking. This decline underscores the challenges in the domestic market.

Gummy Vitamin Business Struggles

While the gummy vitamin category grew by 4.8%, Church & Dwight’s consumption fell by 19%. This significant drop indicates competitive pressures and challenges in this segment.

Revenue and Organic Sales Decline

The company reported a revenue decline of 2.4%, with organic sales down by 1.2% for the quarter. These figures reflect the broader challenges impacting the company’s financial performance.

Tariff Exposure

Church & Dwight is projecting a gross 12-month run rate tariff exposure of $190 million, with efforts to reduce this exposure by approximately 80%. This strategic focus aims to mitigate financial risks associated with tariffs.

Forward-Looking Guidance

In its forward-looking guidance, Church & Dwight revised its full-year organic sales growth outlook to 0% to 2%, reflecting a weaker U.S. consumer environment and no expected recovery from Q1 retailer destocking. The company plans strategic actions, including exploring alternatives for certain businesses and reducing tariff exposure. ARM & HAMMER brands showed resilience, with laundry detergent consumption growing despite category declines. The company remains committed to marketing investments and anticipates EPS growth in the latter half of 2025.

In summary, Church & Dwight’s earnings call presented a balanced view of its current position, with strong brand performances and online sales growth countered by challenges in organic sales and tariff exposure. The company’s strategic focus on core brands and reducing tariff impacts, along with its forward-looking guidance, provides a roadmap for navigating future challenges and opportunities.