- Sales Decline: Consolidated net sales decreased 3.4% YoY, with organic net sales down 10.8% due to weaker segments.
- Margin Compression: Gross profit margin fell 200 bps to 46.9%, and adjusted operating margin dropped 370 bps to 12.9%.
- Tariff Impact: Tariffs reduced gross profit by $31.3M YTD, with a full-year impact of $50–55M.
- Full-Year Guidance: Net sales outlook of $1.758B–$1.773B, with adjusted EPS narrowed to $3.25–$3.75.
- Brand Portfolio Focus: 30–40% of brands have upside potential; strategic investments in innovation and divestitures are prioritized.
Segment Performance
The company's home and outdoor net sales declined 6.7%, while beauty and wellness net sales decreased 0.5%. The decline in home and outdoor sales was largely driven by categories such as beverageware and hair appliances, which are facing secular decline. However, brands like Osprey, Olive and June, OXO, Braun, and Pure continue to meet and exceed internal expectations.
Tariff Impact and Mitigation Strategies
The company continues to face challenges from tariffs, with a $31.3 million impact on gross profit year-to-date and a full-year impact expected to be $50 million to $55 million. However, they have made progress on mitigation strategies, including supplier diversification and price increases. The company remains focused on investing in its brands, innovation, and talent to drive growth and improve its financial performance.
Outlook and Guidance
The company provided an updated outlook for the full year, with net sales expected to be $1.758 billion to $1.773 billion. The adjusted EPS expectations were lowered to a range of $3.25 to $3.75. The company's 4Q outlook has a divergence on the bottom line versus prior outlook, mainly due to unfavorable pricing realization. Analysts estimate next year's revenue growth at 1.9%.
Valuation
With a P/E Ratio of -0.6, P/B Ratio of 0.56, and P/S Ratio of 0.26, the company's valuation multiples suggest that the market is pricing in significant challenges. The company's ROE and ROIC are also negative, at -67.6% and -35.44%, respectively. However, the Free Cash Flow Yield is 18.44%, indicating that the company is generating cash despite its earnings challenges.
Future Prospects
The company expects FY '27 to see improvement, particularly in stabilization and clarity of future growth, but not necessarily high growth. They are working to recapture revenue lost due to tariffs and other exogenous issues. The company aims to prioritize revenue improvement first, then growth, and finally margin expansion, with a goal of achieving double-digit EBIT margin over time.