Company Overview - Avery Dennison Corporation, based in Mentor, Ohio, operates as a packaging company providing pressure-sensitive materials and various converted products, with a market cap of $12.9 billion [1][2] Stock Performance - The stock has declined 26.4% from its 52-week high of $224.38 reached on September 27, 2024, and has underperformed the Consumer Discretionary Select Sector SPDR Fund (XLY), which surged 14.3% over the same period [3] - Year-to-date, AVY stock has decreased by 11.8%, and over the past 52 weeks, it has dropped 21.2%, while XLY has increased by 7.2% and 24.8% respectively [4] - The stock has remained mostly below its 50-day and 200-day moving averages over the past year, indicating a bearish trend [4] Recent Financial Results - Following the release of mixed Q2 results on July 22, AVY stock prices gained 1.5%, but demand from apparel and general retail categories remained under pressure due to current tariff policies, leading to net sales of $2.2 billion, down 66 basis points year-over-year, missing expectations [5] - The adjusted EPS remained flat at $2.42, surpassing consensus estimates by 1.7% [6] Analyst Ratings - Among 13 analysts covering AVY stock, the consensus rating is a "Moderate Buy," with a mean price target of $199.50, suggesting a 20.9% upside potential from current price levels [7]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported revenue of $5 million, down from $6.7 million in Q2 2024, primarily due to lower sales of RFID transponder products and reduced sales to its largest customer [14][16] - GAAP gross margin was negative 9.4%, while non-GAAP gross margin was negative 0.8%, compared to 9.1% and 14.6% respectively in Q2 2024 [14][15] - The GAAP loss from continuing operations was $6 million, or $0.26 per share, compared to a loss of $6.9 million, or $0.31 per share in the previous year [17] - The company exited Q2 2025 with $129.6 million in cash and cash equivalents, having used $3 million in cash during the quarter [18][19] Business Line Data and Key Metrics Changes - The core channel business remains on track, but increased competition is noted, particularly in standard product lines [7][20] - The transition of production from Singapore to Thailand has been completed, with all customers successfully requalified [11][15] Market Data and Key Metrics Changes - Approximately 25% of the company's business is exposed to U.S. import tariffs due to its manufacturing footprint in Thailand [9][20] - The company is monitoring macroeconomic risks related to U.S. trade with Thailand, particularly the impact of tariffs on customer demand [8][20] Company Strategy and Development Direction - The company is executing its Perform, Accelerate, Transform (PAT) strategy, focusing on strengthening core business, accelerating growth through high-value applications, and transforming into a market leader in specialty IoT solutions [12][39] - A strategic partnership with ISCO aims to enhance traceability and sustainability in the grocery supply chain, targeting the tagging of over 400 million reusable packaging containers over the next four to five years [10][11] Management's Comments on Operating Environment and Future Outlook - Management believes that long-term trends driving demand for RFID and BLE solutions remain solid despite macroeconomic uncertainties [38][39] - The company anticipates net revenue for Q3 2025 to be in the range of $4.8 million to $5.2 million, reflecting ongoing inventory reductions by its largest customer [21] Other Important Information - The company has completed the transition of production to Thailand, which is expected to improve gross margins in the second half of the year [50][51] - The board has approved a proposal to declassify its structure, enhancing accountability to shareholders [38] Q&A Session Summary Question: Can you help us get a sense of the size of the grocery opportunity? - The partnership with ISCO aims to tag over 400 million plastic containers over the next four to five years, with ongoing replenishment opportunities [44][45] Question: How are order patterns so far in Q3? - Order patterns are on track with the guidance provided [48] Question: What should we expect regarding gross margin in Q3 and Q4? - The company expects to see a positive impact on margins as production in Singapore has been completed, leading to improved efficiency [50][51]