Edgewell Personal Care (NYSE:EPC) executives said the company’s first-quarter fiscal 2026 results came in modestly ahead of internal expectations, as strength in North America—particularly earlier-than-anticipated sun care shipments—offset expected softness in international markets. Management also emphasized that the company has now closed the sale of its feminine care business to Essity, a transaction the company characterized as strategically important and expected to be favorable versus its prior outlook on an annualized basis.
Fem Care divestiture shifts reporting and portfolio focus
Investor Relations Vice President Chris Gough noted that beginning in the first quarter of fiscal 2026, the feminine care business is classified as discontinued operations, with prior periods recast accordingly. Unless otherwise stated, management’s commentary focused on continuing operations, which include wet shave, sun, and skincare businesses. The company also provided selected consolidated figures to help investors compare results and prior outlooks that included feminine care.
First-quarter performance: sales slightly down, but ahead of expectations
On a consolidated basis, CFO Fran Weissman said organic net sales declined 30 basis points, adjusted EPS was $0.03, and adjusted EBITDA was $38 million, each better than the company’s outlook. On a continuing operations basis, organic net sales declined 50 basis points.
Weissman said North America organic net sales grew just under 1% as meaningful sun care growth—driven by some retailers placing seasonal orders earlier than expected—combined with strong grooming growth, partially offset by declines in wet shave and skin. Internationally, the company saw declines tied to timing and phasing, including product development phasing in Japan and lower sun care sales in distributor markets where Edgewell cycled a large sell-in a year ago due to formulation changes.
- Wet shave: Organic net sales declined about 4%, with growth in preps more than offset by declines in disposables and men’s and women’s systems. International wet shave declined less than 1%, with volume declines partly offset by price gains. North America wet shave declined amid what management described as challenged category and channel dynamics.
- Sun and skincare: Organic net sales increased about 8%. Sun care grew nearly 20%, led by nearly 60% growth in North America. Grooming grew nearly 7%, while skincare declined about 15%.
- Wet Ones: Organic net sales declined about 15% as the company cycled strong growth a year ago, which reflected a return to normal operations following a fiscal 2024 facility fire. Weissman said performance was approximately flat on a two-year basis.
On market share trends, Little said share pressure in the U.S. was “modest” and concentrated in core wet shave, while men’s grooming showed relative strength. Outside the U.S., he said Edgewell delivered share gains in several markets including Australia, Europe, Canada, and China, with “over 70% of the markets either grew or held market share.” Weissman added detail that U.S. razor and blades consumption was down 250 basis points; Edgewell’s overall market share declined 100 basis points, but branded value share declined 30 basis points while branded volume share increased 50 basis points. She said Billie increased share by 40 basis points.
Margins: productivity gains offset by inflation and tariffs
Weissman said adjusted gross margin rate decreased 210 basis points but was ahead of expectations. Productivity savings of roughly 240 basis points were more than offset by about 450 basis points of core inflation, tariffs, and volume absorption. Little said the company is executing a supply chain productivity agenda intended to offset tariff pressures, reduce complexity, and create capacity to reinvest behind brands. He also said that with feminine care exited, the company has a clearer view of underlying margins and believes the continuing business can return to or above pre-COVID gross margin levels over time as cost pressures normalize and structural productivity actions take hold.
Advertising and promotion (A&P) expense was 10.8% of net sales, down from 11.1% last year, and Weissman said increases are planned later in the year. Adjusted SG&A was 23.7% of sales versus 23.6% last year.
GAAP diluted net loss per share from continuing operations was $0.63, compared to a loss of $0.21 in the prior-year quarter. Adjusted EPS from continuing operations was a loss of $0.16 compared to a loss of $0.10 in the prior-year quarter, with currency providing a $0.07 tailwind. Adjusted EBITDA from continuing operations was $25 million, including a $5.8 million favorable currency impact, compared with $30.9 million a year ago.
Cash flow, dividend, and capital allocation
Net cash used by operating activities was $125.9 million in the quarter, compared to $115.6 million last year, which Weissman said was primarily due to lower earnings. The company paid a quarterly dividend of $0.15 per share and returned about $7 million to shareholders via dividends.
Management reiterated that proceeds from the feminine care sale are being used for debt reduction, while continuing to fund investment in core brands and capital expenditures tied to innovation and productivity. Weissman said the company is nearing the peak of elevated capital spending tied to the supply chain transformation and expects capital intensity to decline as the new footprint stabilizes.
Fiscal 2026 outlook maintained for continuing operations
Little said the outlook for continuing operations is unchanged from the prior quarter, despite what he called a “choppy” operating environment with muted category growth, cautious consumers, and tariff-related inflation. Weissman reiterated guidance for organic net sales growth of down 1% to up 2%, excluding 150 basis points of currency tailwinds. She said second-quarter organic sales are expected to be down about 3%, driven in part by phasing items, and added that the third quarter is expected to be the strongest sales quarter.
Edgewell expects 60 basis points of year-over-year gross margin rate accretion for the full year, with first-half margin rates expected to decline year-over-year before improving in the second half as pricing, tariff mitigation, and productivity reach full run rate. For the second quarter, Weissman said the adjusted gross margin rate is expected to be 43% to 44%.
Other guidance metrics provided for fiscal 2026 continuing operations included:
- A&P: Expected to rise by 70 basis points to about 12.3% of net sales.
- Adjusted operating profit margin: Expected to decrease by about 50 basis points as higher A&P and SG&A more than offset gross margin improvement.
- Adjusted EPS: $1.70 to $2.10, incorporating a $0.44 headwind from the feminine care divestiture and assuming an effective tax rate of 22% to 23%.
- Adjusted EBITDA: $245 million to $265 million, including a net $44 million headwind from the divestiture. Weissman said about two-thirds of EBITDA is expected in the second half.
- Adjusted free cash flow: $80 million to $110 million, excluding cash impacts of the divestiture.
On the divestiture impact, Weissman said the net impact for fiscal 2026 is expected to be about $0.44 in adjusted EPS and $44 million in adjusted EBITDA, reflecting lost segment earnings and stranded costs, partially offset by transitional services agreement (TSA) income, interest savings, and other efficiencies. Management also discussed plans to address stranded costs over time.
During Q&A, Little said promotional intensity remains elevated in North American shave, particularly in women’s, and he expects that environment to persist through the remainder of the fiscal year. He also said the company is not seeing meaningful retail inventory pockets or meaningful trade down to private label, though he noted consumers are “deal seeking” with heightened price elasticity.
In closing remarks, Little said the quarter included “a lot of noise” due to the divestiture and reporting changes, but he emphasized the company is “on track through the first quarter,” feels good about the fiscal year, and has “cash in the bank” from the feminine care sale.
About Edgewell Personal Care (NYSE:EPC)
Edgewell Personal Care Inc, incorporated in 2015 and headquartered in Shelton, Connecticut, is a global consumer products company specializing in personal care, sun care, shaving and feminine care solutions. The company emerged as a spin-off from Energizer Holdings’ personal care division, listing its shares on the New York Stock Exchange under the ticker “EPC.” Edgewell’s portfolio comprises well-known brands that cater to everyday personal grooming and protection needs.
In the shaving segment, Edgewell markets razors and refill blades under brands such as Schick and Wilkinson Sword, targeting both men’s and women’s grooming categories.
