Financial Data and Key Metrics Changes - Third-quarter net sales decreased by 7.2%, and core sales declined by 7.4%, primarily due to unfavorable macroeconomic conditions [17] - Normalized gross margin was 34.5%, down 90 basis points year over year, impacted by tariff costs and inflation [17][18] - Normalized operating margin was 8.9%, a decrease of 60 basis points compared to the previous year [18] - Year-to-date operating cash flow was $103 million, significantly lower than $346 million in the previous year [19] Business Line Data and Key Metrics Changes - The Writing segment performed well during the back-to-school season, remaining flat overall, but expected stronger results were not realized due to competitor pricing delays [8][9] - The Baby segment gained market share despite price increases, with three rounds of pricing taken to offset inflation and tariffs [10] - The Home and Commercial segment faced challenges, particularly in the Kitchen category, which was affected by macroeconomic softness in key markets [11][12] - The Outdoor and Recreation business showed signs of improvement, with third-quarter sales flat compared to the previous year [12] Market Data and Key Metrics Changes - International sales, which account for approximately 40% of total sales, are expected to return to growth in the fourth quarter after a slowdown in Brazil and Argentina [6] - Brazil's sales declined by 25% in the third quarter, a significant drop from previous growth rates [33] - Retailer inventory adjustments were largely one-time events, with expectations for stabilization moving forward [6][65] Company Strategy and Development Direction - The company is focused on productivity and overhead cost savings, with plans to increase promotional activities to restore price competitiveness [4][10] - A strong innovation pipeline for 2026 is anticipated, with over 20 new product launches planned [48] - The company aims to broaden distribution and enhance product innovation while navigating the challenges posed by tariffs and macroeconomic conditions [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment, including trade disruptions and tariff costs, but expressed confidence in the company's turnaround strategy [4][16] - The company expects sequential improvement in normalized profitability and cash flow as tariff-related costs subside [15][26] - A more conservative view of consumer demand for the fourth quarter has been adopted, with expectations for a 3% decline in aggregate categories [14][15] Other Important Information - The balance sheet remains solid, with net debt at $4.5 billion, down from the prior year [14] - Advertising and promotion spending reached its highest rate as a percentage of sales in nearly a decade, reflecting a commitment to brand building [13] Q&A Session Questions and Answers Question: Can you discuss the organic sales standpoint and the visibility into trends? - Management noted that retailer inventory reductions were more significant than expected, particularly in September, impacting sales [32][34] Question: What is the impact of aggressive pricing actions across categories? - Management indicated that while pricing in the Baby category was successful, the Kitchen segment faced challenges due to competitors not following pricing increases [36][37] Question: How does the company view the inventory destocking and pricing in international markets? - Management expressed confidence that the inventory destocking impact is behind them and noted that pricing adjustments have been made in Brazil and Argentina following recent elections [66][67] Question: What are the expectations for category growth and sales growth looking into 2026? - Management remains optimistic about 2026, citing a strong innovation pipeline and improved distribution as key factors for growth [57][58]