Newell Brands(US:NWL)2025-04-30 13:00Financial Data and Key Metrics Changes - The company reported a core sales decline of 2.1%, which was at the high end of the guidance range, reflecting new product innovation and some pricing benefits [26][32] - Normalized gross margin increased by 150 basis points to 32.5%, marking the seventh consecutive quarter of year-over-year improvement [27][32] - Normalized operating margin was 4.5%, exceeding the guidance range despite increased advertising and promotion investments [32][33] - The company recorded a normalized diluted earnings per share loss of $0.01, which was $0.05 to $0.08 above the guidance range [33] Business Line Data and Key Metrics Changes - The Learning and Development segment and the International business, which represent nearly 40% of total sales, posted positive core sales growth for five consecutive quarters [26][32] - The first quarter net sales included about 2.5 points of currency headwind and just over half a point from category exits [27][32] Market Data and Key Metrics Changes - Over 60% of total sales were in the United States, with significant investments made in U.S. manufacturing, totaling nearly $2 billion since the 2017 Tax Cuts and Jobs Act [12][13] - The company plans to reduce U.S. sourced finished goods from China to 10% by the end of 2025 [11] Company Strategy and Development Direction - The company is focused on product innovation and has rebuilt its multiyear innovation funnel, with new products set to launch in the second half of the year [7][25] - The strategy includes leveraging U.S. manufacturing capabilities to mitigate tariff impacts and capitalize on competitive advantages [14][25] - The company is actively pursuing sales opportunities in categories where it has domestic production exempt from tariffs [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic operating environment and emphasized the potential for long-term gains despite short-term challenges [25][44] - The company is maintaining its net sales guidance for the year but moderating expectations for category growth from flat to down 1% to 2% due to lower consumer confidence [16][41] - Management highlighted that the number of categories with domestic production significantly exceeds those that are disadvantaged by tariffs [25][86] Other Important Information - The company has paused virtually all outstanding Chinese purchase orders in response to the new tariffs and is focusing on alternative sourcing solutions [22][23] - A significant portion of the baby gear business is exposed to tariffs, with management actively working on mitigation strategies [55][56] Q&A Session Summary Question: Retail destocking and tariff mitigation efforts - Management noted that core sales growth was at the high end of guidance and that they have not seen significant changes in retailer inventory levels in Q1 [50][52] - They have taken proactive actions to mitigate tariffs, particularly in the baby gear category, which is their most exposed segment [53][54] Question: Leveraging U.S. manufacturing capacity - Management clarified that they are not set up for private label production but are encouraging retailers to replace private label products with their branded products [63][64] Question: Guidance and market growth expectations - Management acknowledged the challenges in forecasting market growth but emphasized that the majority of their business is not significantly impacted by tariffs [84][86] Question: Sensitivity of China tariffs and impacts - The majority of the tariff impact is concentrated in the baby gear category, which is primarily sourced from China [93]