Edgewell Personal Care Co. - 10-Q Summary (Q1 Fiscal 2026)
Business Context and Reporting Period
This report covers the quarterly period ended December 31, 2025 (First Quarter of Fiscal 2026). Edgewell Personal Care Company operates in two primary segments: Wet Shave (Schick, Wilkinson Sword) and Sun and Skin Care (Banana Boat, Hawaiian Tropic, Jack Black). A material event during this period was the divestiture of the Feminine Care segment to Essity for $340 million, closed on February 2, 2026. Results for this segment are presented as discontinued operations.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $422.8 million | $415.1 million |
| Gross Profit | $161.0 million | $172.5 million |
| Gross Margin | 38.1% | 41.6% |
| Operating Income (Loss) | $(18.9) million | $9.3 million |
| Net Loss (Continuing Ops) | $(29.2) million | $(10.1) million |
| Net Loss (Total) | $(65.7) million | $(2.1) million |
| Diluted EPS (Continuing Ops) | $(0.63) | $(0.21) |
| Cash and Equivalents | $223.3 million | $175.5 million |
| Long-Term Debt | $1,520.8 million | $1,383.3 million |
| Operating Cash Flow | $(125.9) million | $(115.6) million |
Material Changes vs. Prior Period
- Revenue: Net sales increased 1.9% to $422.8 million, driven by a 2.4% favorable currency impact. Organic sales declined 0.5% due to volume declines in Wet Shave and Sun Care in international markets.
- Profitability: Operating loss widened significantly to $(18.9) million from a profit of $9.3 million. This was primarily driven by a 350-basis point decline in gross margin (due to inflation, tariffs, and mix) and increased restructuring charges.
- Restructuring: Restructuring charges totaled $18.1 million, compared to $4.1 million in the prior year. This includes costs for consolidating Mexico facilities and Wet Shave operations.
- Discontinued Operations: The Feminine Care segment reported a loss of $36.5 million, largely due to a $37.4 million goodwill impairment charge and a $3.8 million loss on assets held for sale.
- Segment Performance:
- Wet Shave: Sales down 1.1%; Segment profit down 9.4% to $42.2 million.
- Sun and Skin Care: Sales up 9.0%; Segment loss widened slightly to $(3.6) million.
Guidance, Outlook, and Risks
- Divestiture Proceeds: The company received approximately $340 million from the sale of the Feminine Care segment. Proceeds were used to repay all outstanding borrowings under the U.S. Revolving Credit Facility. Remaining funds are earmarked for core brand investment and capital expenditures.
- Restructuring Outlook: Management expects to incur approximately $65 million in pre-tax restructuring charges for the full fiscal year 2026.
- Share Repurchases: The Board authorized a new $100 million share repurchase program in November 2025. No shares were repurchased in Q1 2026.
- Dividends: A quarterly dividend of $0.15 per share was declared for Q1 2026.
- Risks: Key risks include inflationary pressures, tariffs, foreign currency fluctuations, supply chain volatility, and the successful integration of the post-divestiture operating model.
Investor Verification Checklist
- Discontinued Operations Impact: Verify the final calculation of the loss on assets held for sale, as an additional loss may occur upon deconsolidation in Q2 2026.
- Restructuring Execution: Monitor the timeline and cost realization of the Mexico facility consolidation and Wet Shave operations consolidation.
- Margin Recovery: Assess whether productivity savings can offset the 450-basis point impact of core inflation and tariffs on gross margins.
- Debt Utilization: Confirm the repayment of the Revolver using divestiture proceeds and the resulting impact on interest expense in subsequent quarters.
- Organic Sales Trends: Investigate the specific drivers of volume declines in the Wet Shave segment in North America and international markets.