Spectrum Brands topped Wall Street expectations in the second quarter while advancing plans to separate its Home & Personal Care business through a new partnership with Oaktree Capital Management.
An analyst consensus estimate compiled by Zacks Investment Research called for earnings per adjusted diluted share of $1.04 and revenues of $672.8 million.
Organic net sales, excluding foreign exchange impact, increased 1.5%, Spectrum noted. Net sales grew to $708.9 million from $675.7 million in the year-prior quarter, the company noted. Operating income was $43.5 million versus $19.5 million in the year-earlier period
The sales advance was driven primarily by strong performance in Global Pet Care and Home & Garden, with market share growth across key brands. External factors, including favorable weather and strategic order accelerations by certain retailers, also contributed. The gains were partially offset by soft consumer demand in Home & Personal Care across North America and Europe.
The Home & Personal Care segment’s net sales decreased 5.5% year over year to $240.1 million in the quarter. Reported net sales in Personal Care were down in the low single digits and net sales in Home Appliances were down in the high single digits. North American net sales declined in the mid-teens, primarily driven by lower volumes related to elevated product cost from higher tariffs and customer inventory management actions to address pockets of excess inventory.
The Home & Garden segment net sales increased 11.3% year over year to $169.5 million, driven by favorable weather conditions that boosted POS and retailer order patterns, while key brands enjoyed above-market growth.
The Global Pet Care segment net sales increased 11.2% to $299.3 million. With favorable foreign currency impacts excluded, organic net sales increased 7.6%. Reported net sales in the Companion Animal business increased in the low double digits, while sales in Aquatics increased in the mid single digits. North American net sales increased, primarily driven by market share gains across Companion Animal brands and by strength in the E-commerce channel.
“We are pleased with our results this quarter, where we returned to top-line growth for the first time since first quarter of fiscal 2025,” said David Maura, Spectrum chairman and CEO. “Our key brands across Global Pet Care and Home & Garden continue to outperform the market, driven by strong innovation and distribution gains. In Home & Personal Care, while net sales declined, adjusted EBITDA increased, demonstrating the positive impact of the actions taken over the past year. These results continue to reinforce the effectiveness of our strategic initiatives and the strength of our team. Looking forward, while we remain focused on the dynamic macroeconomic environment, our first-half results represent meaningful progress for the full fiscal year. We are updating our earnings framework and increasing our adjusted EBITDA expectation to low to mid single digit growth while maintaining our net sales expectation of flat to low single digit growth in fiscal 26.”
Maura added that Spectrum had struck an important deal that will weigh on its ongoing structure.
“On the strategic front, following quarter close, we entered into a partnership with Oaktree Capital Management on our Home & Personal Care business,” he said. “The transaction includes a strategic $127 million cash investment from Oaktree Capital in the form of preferred equity and debt, and we will continue to own approximately 73% of the Appliances business. Upon closing, which is expected to occur later this month, the HPC subsidiaries will be designated as unrestricted subsidiaries with their own capital structure that is non-recourse to Spectrum Brands Holdings. We believe that a partnership with Oaktree Capital, which has a strong track record in disciplined capital allocation, validates our vision for creating value in our Appliances business through both organic and inorganic growth initiatives. Importantly, this transaction represents a meaningful step in our previously announced strategy of separating the HPC business from our Pet and Home & Garden businesses.”
