Financial Data and Key Metrics Changes - The company acknowledged that its absolute performance in the quarter was unsatisfactory, but it managed to hold unit share in a category that faced greater than expected declines [6][7] - The company is experiencing a dynamic and fluid environment, making it difficult to forecast improvements in unit share for the current year, with management suggesting a more realistic outlook towards 2026 [12][13] Business Line Data and Key Metrics Changes - The company is focusing on innovation and targeting faster-growing categories to mitigate weaknesses in traditional segments, particularly in the packaged bread category [6][7] - The Wondercake innovation is reportedly pacing ahead of expectations, contributing to unit share gains, although it is still early to determine its long-term impact on the legacy cake business [16][17] Market Data and Key Metrics Changes - The company noted a premiumization trend in consumer behavior, with traditional white bread segments facing challenges due to a shift towards healthier options [13][26] - The private label segment has shown marginal improvement in market share, with total units still down but not as significantly as the overall category [53] Company Strategy and Development Direction - The company is committed to aligning its portfolio with evolving consumer tastes and investing in brand innovation to drive sustainable growth [6][7] - Management emphasized the importance of differentiation in the traditional bread segment to reinvigorate sales and address competitive pressures [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment and consumer health, indicating that improvements may take longer than previously anticipated [12][31] - The company remains confident in its long-term financial targets despite current setbacks, with plans to address health and wellness trends through innovation [26][31] Other Important Information - The company is undergoing supply chain optimization, which includes the closure of an older bakery as part of its restructuring efforts [55] - Management highlighted the introduction of smaller product sizes to cater to changing consumer needs, particularly for smaller households [57] Q&A Session Summary Question: Insights on the core packaged bread category and stabilization - Management indicated that the current environment is challenging, and while there are new business wins, significant improvement in unit share is not expected this year [11][12] Question: Details on the Wondercake innovation's impact - Management noted that it is too early to determine the long-term impact of Wondercake on the legacy cake business, but initial results are promising [16][17] Question: Changes in promotional strategy and consumer behavior - Management acknowledged an increase in promotional activity for differentiated offerings, particularly towards the end of the quarter, while maintaining a cautious approach to avoid devaluing the brand [22][23] Question: Addressing structural headwinds in the bread category - Management confirmed plans to innovate and address health and wellness trends, positioning the company as a leader in the category [26][27] Question: Impact of tariffs on guidance and cost structure - Management explained that tariff impacts are primarily affecting gross margins, with ongoing efforts to mitigate costs in selling, general, and administrative expenses [30][43] Question: Performance of private label and away-from-home business - Management reported continued weakness in foodservice sales but noted improvements in profitability and margins due to restructuring efforts [52][53]

Financial Data and Key Metrics Changes - Organic net sales decreased by 1.5% in Q2 2025, with international markets growing by 3% while North America declined by 4% [22][36] - Adjusted gross margin rate increased by 100 basis points, with productivity savings of approximately 380 basis points [37][30] - Adjusted earnings per share were $0.87, slightly down from $0.88 in the prior year quarter [38] Business Line Data and Key Metrics Changes - Wet Shave organic net sales were down about 1%, while international Wet Shave grew by 3% [24] - Grooming organic net sales increased by 9%, led by a 20% growth for the Cremo brand [28] - Fem Care organic net sales decreased by approximately 9%, primarily driven by declines in tampons and pads [29] Market Data and Key Metrics Changes - Consumption in the U.S. Sun Care category decreased by 1% in the quarter, with total market share down by 60 basis points [27] - Double-digit organic growth was observed in Greater China, with mid-single-digit growth in Japan and Europe [22] - The U.S. razors and blades category saw a consumption decline of 30 basis points, with market share decreasing by 90 basis points [25] Company Strategy and Development Direction - The company is focused on restoring momentum in North America, with significant investments in sun care and women's shave categories [12][33] - A new campaign for Hawaiian Tropic is set to be the largest investment in the U.S. in five years, targeting Gen Z consumers [34] - The company aims to leverage recent successes in international markets to replicate growth in North America [13] Management's Comments on Operating Environment and Future Outlook - Management noted increasing pressure on consumers and a decline in consumer confidence, impacting spending behaviors [17][14] - The outlook for the second half of the fiscal year anticipates a modest growth profile, with organic net sales growth expected to be flat to 1% [41] - Management expressed confidence in sequential improvement in North America, driven by new leadership and strategic initiatives [14][75] Other Important Information - The estimated impact of tariffs on cost of goods sold for fiscal 2025 is approximately $3 million to $4 million [43] - The company plans to continue exploring opportunities to mitigate tariff impacts through productivity and potential price increases [92][93] - Free cash flow for the full year is now expected to be in the range of $130 million to $140 million, reflecting lower earnings and higher inventory levels [45] Q&A Session Summary Question: Can you provide more details on the tariff impact? - The estimated in-year impact of tariffs is $3 million to $4 million, primarily affecting the fourth quarter, with a broader annualized exposure of 3% to 4% of COGS [50][52] Question: What is the confidence level for second half organic sales growth? - The company expects a 2% organic growth in the second half, driven by international growth, Sun Care category growth, and a more thoughtful approach to fem care [62][64] Question: How does the company view the North American execution? - Management clarified that while sales did not meet expectations, they are confident in execution and are investing in key programs for improvement [76][78]

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