Newell Brands (NASDAQ:NWL) executives said tariff-related disruption and multiple pricing actions kept the company from delivering the sales inflection it expected in fiscal 2025, even as management pointed to progress on margins, productivity, innovation, and supply chain resiliency.
On the company’s fourth-quarter and full-year 2025 earnings call, President and CEO Chris Peterson said Newell’s strategy—introduced in summer 2023—has focused on rebuilding “front-end” capabilities such as consumer understanding, brand building, innovation, marketing, and go-to-market execution, while also strengthening “back-end” capabilities like manufacturing, distribution, procurement, and IT. Peterson said early 2025 results had suggested sales trends and structural economics were improving, but “tariffs intervened,” prompting multiple price increases that altered consumer behavior and retail dynamics.
Tariffs and pricing actions reshaped 2025
Among the key actions discussed:
- Sourcing: Newell reduced China sourcing exposure to below 10%, down from roughly 35% “just a few years ago,” which management said improved supply chain resilience.
- Productivity: The company announced a global productivity plan in Q4 aimed at enhancing competitiveness and simplifying the organization. Peterson said implementation is largely complete in the U.S., Latin America, and Asia.
- Domestic manufacturing: Newell continued investing in automation and said it secured about $40 million of “tariff-advantaged business wins” in the second half of 2025.
- Pricing: The company executed three rounds of pricing in impacted categories to protect structural economics, which management said helped expand normalized operating margin for the year while also increasing advertising and promotional support by 50 basis points.
Peterson also said these actions helped Newell maintain a leverage ratio “at about five times” and that distribution momentum improved as the year progressed, contributing to fourth-quarter sales coming in modestly better than expected.
Segment performance: resilience in Learning & Development, strength in Baby, pressure in Kitchen
Management described Learning and Development as the portfolio’s most resilient segment during 2025. Peterson said Writing was supported by brands such as Sharpie and Expo, innovation including Sharpie Creative Markers and Expo Wet Erase, limited tariff exposure, and domestic manufacturing, which helped Newell secure increased distribution.
In Baby, Peterson said Newell delivered strong performance “in a tariff-laden environment,” noting the shift from direct import to domestic fulfillment is now behind the business. He said Graco’s innovation and improved go-to-market execution drove a 160-basis-point increase in market share for the full year, and that Graco’s market share rose over 350 basis points in the fourth quarter.
Home and Commercial was the segment under the most pressure, according to Peterson, with Kitchen facing soft demand, distribution losses, and elevated promotional intensity. In Q4, Newell increased promotions and took selective price adjustments in the U.S. and Latin America. Peterson said Kitchen pricing and promotional levels are now “where they need to be,” and cited encouraging early consumer feedback on innovation such as Rubbermaid EasyStore lids. He also said Newell secured a “tariff-advantaged Kitchen win” with a large U.S. retailer.
Elsewhere in the segment, Peterson said commercial demand was stable in institutional and hospitality channels but offset by continued softness in DIY. Home fragrance improved through the year, returning to growth in Q4 as the Yankee Candle relaunch was fully implemented across U.S. retail channels. Outdoor and recreation performance stabilized and margins improved as the year progressed, reflecting simplification, tighter inventory management, and improved execution.
Q4 and full-year financials: margin expansion vs. last year, tariffs weighed on results
CFO Mark Erceg reported fourth-quarter net sales of $1.9 billion, down 2.7% year over year, with core sales down 4.1%. He said core sales exceeded revised expectations due to improved POS trends in December, exceptional performance in Baby, and better-than-expected results in Latin America. Erceg noted Argentina’s core sales grew slightly in Q4 as economic activity rebounded sharply, and Brazil’s results improved to down mid-single digits after running down about 10% through November.
Normalized gross margin was 33.9%, down 70 basis points year over year. However, Erceg said excluding “$0.10 per share of tariff-related headwinds,” gross margin would have been up significantly. He added that on a three-year stacked basis (including all tariffs), normalized Q4 gross margin was up 730 basis points, which he framed as evidence of progress in structural economics.
Normalized operating margin in Q4 was 8.7%, up 160 basis points year over year, though Erceg said it was modestly below expectations due to higher promotional activity and continued investment in advertising and promotion. He said A&P was 6.5% of sales in the quarter—the highest level in nearly 10 years. Normalized EBITDA rose nearly 12% to $241 million, and normalized diluted EPS was $0.18, the midpoint of the company’s expected range.
For the full year, Erceg reported net sales of $7.2 billion, down 5%, and core sales down 4.6%. Normalized gross margin was 34.2%, up 10 basis points from 2024, with Erceg highlighting that incremental gross tariff P&L costs of $114 million limited margin expansion. Normalized operating margin increased 20 basis points to 8.4% despite a 50-basis-point increase in A&P support. Normalized EPS was $0.57 versus $0.68 in the prior year; Erceg said $0.05 of the year-over-year differential was directly attributable to a temporary incremental 125% China tariff that was in effect for a short period and was not offset.
Operating cash flow for 2025 was $264 million, which Erceg said was in line with updated expectations and reflected cash tariff costs and a higher cash bonus payout. Fourth-quarter cash generation was about $160 million, helping the company “catch up” after earlier impacts tied to $174 million of gross cash tariff costs for the year. Newell repaid $47 million of senior notes maturing in December 2025 and ended the year with a net leverage ratio of 5.1x.
2026 outlook: category declines expected, innovation and distribution gains targeted
Management said 2026 will center on disciplined commercial execution with retail partners, aiming to convert rebuilt capabilities into improved performance while maintaining margin and cash discipline. Peterson said the company’s guidance assumes its categories decline about 2% in 2026, but Newell expects to outperform categories and grow market share—something management said would be the first time since the Jarden acquisition.
Erceg initiated 2026 net sales guidance of down 1% to up 1%, with core sales in a range of down 2% to flat. The company expects normalized operating margin of 8.6% to 9.2%, with Erceg saying the improvement is expected to come “virtually” entirely from overhead reduction. He said the recently announced productivity plan is expected to generate more than $75 million of year-over-year savings, lowering overhead as a percentage of sales by nearly 100 basis points.
Tariffs remained a central modeling point. Erceg said 2026 assumes $130 million of gross cash tariff impact and $150 million of total gross P&L impact, which he translated to about $0.30 of headwind for the year (roughly $0.07 more than 2025 on an incremental basis). Because of that incremental headwind, he said gross margin is expected to be “relatively flat” in 2026 versus 2025.
The company guided to normalized EPS of $0.54 to $0.60 in 2026, with about $20 million of higher interest expense and an effective tax rate in the high teens. Operating cash flow is expected to be $350 million to $400 million, with Erceg attributing the increase to mid-single-digit EBITDA growth, lower cash taxes, a lower cash bonus payout, lower cash tariffs, and slightly lower working capital. CapEx is planned at $200 million, down from a historical run rate of about $250 million, following completion of large ERP integrations and supply chain projects.
For the first quarter, Newell expects net sales to decline 5% to 3% and core sales to decline 7% to 5%, with normalized operating margin of 2.5% to 3.5% and normalized EPS of negative $0.12 to negative $0.08. Executives characterized Q1 as an “anomaly” driven by shipment timing and shelf resets pushing activity into April and May, along with international expected to improve starting in Q2.
In Q&A, Peterson also detailed January pricing moves: a Baby price rollback tied to tariffs being reduced from 30% to 20%, and a 15% price reduction on Rubbermaid EasyStore lid food storage products made in Ohio, which he said Newell could take because it is “tariff-advantaged” and has benefits from automation and resin pricing trends.
About Newell Brands (NASDAQ:NWL)
Newell Brands Inc, trading on NASDAQ under the ticker NWL, is a global consumer goods company known for its diverse portfolio of household, commercial, and specialty products. Formed through the merger of Newell Rubbermaid and Jarden Corporation in 2016, the company traces its roots back to Newell Manufacturing, which was founded in 1903. Headquartered in Atlanta, Georgia, Newell Brands has built a reputation for widely recognized brands spanning multiple consumer categories.
The company’s business activities are organized across several segments, including writing and creative expression, home solutions, commercial products, and outdoor recreation.
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