Edgewell slashes financial outlook after sales and profit decline

Edgewell Personal Care has reported third-quarter fiscal 2025 results that fell short of Wall Street expectations. The company posted adjusted earnings per share (EPS) of US$0.92, US$0.08 below analyst estimates, and quarterly revenue of US$627.2 million, missing the projected US$655.17 million.

The company also lowered its full-year adjusted EPS outlook to US$2.65, compared to the previous US$2.85 to US$3.05 range.

Edgewell attributes the underperformance to a “very weak” Sun Care season in North America and Latin America, alongside ongoing challenges from foreign exchange rates and tariffs.

“This was a challenging quarter, with our top and bottom-line performance falling below expectations,” says Rod Little, Edgewell’s president and CEO. “Furthermore, the operating environment remains challenging with both tariffs and foreign exchange contributing to full-year profit headwinds.”

Net sales declined 3.2% year-over-year, with organic sales down 4.2%. International markets posted 2.2% organic growth, but North American sales dropped 8% due to lower volumes and higher promotional activity in Sun Care, Wet Shave, and Feminine Care categories.

Generally Accepted Accounting Principles (GAAP) diluted EPS fell to US$0.62 from US$0.98 in the same quarter last year, while adjusted net earnings declined to US$43.4 million from US$61.2 million.

Sun and feminine care lag

Edgewell’s Sun and Skin Care segment was the primary drag on performance, with net sales falling 5.3% and organic sales down 5.5%.

The company cites weather-related volume declines and intensified competition in North America. Segment profit for Sun and Skin Care dropped 28.3% to US$46 million, as margin erosion and higher marketing spend weighed on earnings. Also under Sun and Skin Care, Grooming products grew by 6.1%.

Feminine Care also saw pressure, with sales down 10.5%, driven mainly by declines in pads and tampons. Profit dropped 31.8%, although lower marketing, selling, general, and administrative (SG&A) expenses helped offset part of the earnings decline.

Although Edgewell did not provide a specific reason for the drop in pad and tampon sales, the broader market has seen rising consumer interest in reusable menstrual care formats such as discs and underwear, driven by sustainability and comfort concerns.

Wet Shave remained relatively stable, with a marginal 0.2% sales increase.

Feminine Care sales fell 10.5%, driven by declines in pads and tampons.In contrast, Edgewell’s international business saw 2.2% organic growth in the quarter, supported by price increases. However, these gains were not enough to counteract the overall 1.8% organic sales decline, which was primarily driven by weaker performance in North America.

Margins squeezed by costs

Gross profit declined to US$268.5 million, down from US$287.1 million in the prior-year quarter. Adjusted gross margin shrank by 150 basis points to 42.8%, largely due to inflation, unfavorable product mix, higher promotional spending, and foreign exchange losses.

At constant currency, the margin decline was less severe, narrowing to 40 basis points.

Edgewell reported adjusted operating income of US$75.1 million, or 12% of net sales, compared to US$94.8 million, or 14.6% in the prior year.

Restructuring and repositioning efforts also impacted earnings, with the company incurring US$17.8 million in pre-tax charges as part of broader cost-saving programs in Mexico and North America. A US$6.3 million currency drag further impacted operating margin.

Spending on advertising and promotions increased to US$80.4 million, or 12.8% of net sales, up from 11.8% a year ago.

Meanwhile, adjusted SG&A expenses remained flat at 16.2% of sales. Although the company saved money through favorable exchange rates and lower employee bonuses, those savings were largely offset by higher consulting costs and weaker sales.

Forecast downgraded but payouts continue

Edgewell lowered its full-year forecast across most financial metrics, citing ongoing macroeconomic challenges.

Weak sun care sales in North America weighed heavily on Edgewell’s Q3 results.Adjusted EBITDA is now expected to reach US$312 million, down from an earlier range of US$329 to US$341 million.

Free cash flow guidance was revised sharply downward to US$80 million, compared to the prior outlook of US$130 million to US$140 million.

The company now expects GAAP EPS of US$1.73 and adjusted EPS of US$2.65.

Foreign exchange headwinds are expected to take a US$0.46 per share toll on EPS and reduce EBITDA by US$29 million, both increases from previous estimates.

Additionally, Edgewell expects to earn less from each sale this year, with both production and operating profits shrinking even before factoring in currency impacts (gross margin down 0.6 points, operating margin down 1.5 points).

Despite weaker financials, Edgewell continued returning value to shareholders. In the third quarter, it repurchased 0.9 million shares for US$24.5 million and paid out US$7.2 million in dividends.

Today, the board declared a quarterly dividend of US$0.15 per share, payable by October 8, 2025. As of the end of June, the company had US$199.6 million in cash and access to nearly US$290 million in revolving credit.