Sales Performance: Reported lower than planned due to slower supply recovery in certain businesses.
Gross Margin: Reported higher than anticipated, benefiting from a margin transformation program in a challenging environment.
Adjusted Earnings Per Share (EPS): Finished the quarter ahead of expectations despite lower sales and significant investments in brands.
Future Guidance
Gross Margin Target: Positioned to exceed the original gross margin target set at the beginning of the year before the cyber attack.
Adjusted EPS Guidance: Expect to meet or exceed the adjusted EPS guidance provided at the start of the fiscal year.
Market Share Recovery: Regained nearly 90% of the market share lost and anticipate further progress in the fourth quarter (Q4).
Volume Growth: Confident in returning to volume growth over time after fully restoring lost distribution and normalizing merchandising levels.
Trends, Market Conditions, Sentiment
Cyber Attack Recovery: Continuing recovery from an August cyber attack has been complex, but significant progress has been made towards restoring business fundamentals.
Supply Chain Restoration: Fully rebuilt inventories and normalized service levels by the end of the third quarter, addressing temporary distribution and supply issues.
Innovation and Brand Investment: Launched innovation and made strong investments in brands and capabilities, indicating a focus on long-term growth and shareholder value.
Strategic Focus: Execution against the Ignite strategic priorities, including substantial progress in rebuilding gross margins, streamlining operations, digital transformation, and portfolio evolution to deliver consistent and profitable growth.
Consumer Behavior: Observations suggest that the consumer remains under pressure, with value-seeking behaviors observed across all income tiers, impacting purchasing patterns.
Investment in Recovery: Increased levels of merchandising and promotion, along with higher advertising spend in H2, driven by the need to rebuild share loss from the cyber attack and to attract a financially weaker consumer base.
Notable Quotes
”Despite the significant disruption and lost sales we have experienced… we are now positioned to exceed our original gross margin target and meet or exceed our adjusted EPS guidance.” - Linda Rendle, Chair and CEO
”Through Q3, we regained nearly 90% of the market share we lost and expect to make further progress in Q4.” - Linda Rendle, Chair and CEO
”Given the magnitude of disruption from the cyber attack, we knew our plans to restore the fundamentals of our business would be complex, and a recovery path would not be linear.” - Linda Rendle, Chair and CEO
”We launched innovation, invested in our brands and capabilities, progressed streamlined operating model and digital transformation and completed the divestiture of our Argentina business.” - Linda Rendle, Chair and CEO
