Chris inquired about the implied Q4 gross margin being the best in five years and if FY27 gross margins should be up given the structurally higher margin business post-FemCare divestiture.

Rod confirmed that FemCare divestiture was gross margin dilutive and capital intensive, and the company is investing in higher-margin businesses. He expects gross margin to be up year-over-year in FY27. Fran explained Q4 acceleration is due to productivity initiatives, tariff mitigation (1/3 of uptick), and cycling last year's at-bats and one-time items (2/3 of uptick). She noted that structurally, the run rate is similar to Q3, but FY27 should see gains from productivity, modest inflation, and SRGM. “what I would tell you as we go into next year, I expect gross margin to be up year over year. percentage points versus fiscal 26.”

Chris asked about headlines regarding an unsolicited offer and how management views long-term value creation relative to external views.

Rod stated the company cannot comment on rumors or speculation. He emphasized the focus on building organic value by growing sales, building margin, and improving structural profitability. He added that the board has a fiduciary duty to consider any inbound offers that could beat the organic plan. “Look, Chris, we can't comment specifically on rumors or speculation in the market. So there's nothing to say or confirm relative to that story that broke mid-quarter.”

Susan asked for clarification on international weakness (private label vs. branded), Japan's performance, and the outlook for the Billy brand given slowing growth.

Rod clarified that international weakness was primarily private label shave in a few European/LATAM markets, which is transitory and largely solved. Branded shave grew internationally as expected. Japan continues to be a strong market, expected to grow mid-to-high single digits in Q3/Q4 combined, driven by innovation. For Billy, Rod stated the brand continues to grow share, though growth rate is slowing, and expressed excitement for upcoming innovation. Fran added Billy shave grew low-to-mid single digits in the quarter, with continued share gains and increased household penetration. “Japan will be in growth as you look at Q3, Q4 combined. in that mid to high single digit rate.”

EPC

Edgewell (EPC) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Consumer Staples· Aug 5, 2026

Source: earnings call transcript

Executive summary

Edgewell Q3 FY26 — Organic Sales Return to Growth, Strong North America Performance

Edgewell delivered a solid third quarter, returning to organic net sales growth driven by strong North American performance across grooming, sun, and branded wet shave. Despite international headwinds and gross margin pressure, the company exceeded adjusted earnings expectations and reaffirmed its full-year outlook, signaling confidence in its strategic investments and operational transformation. Management expects stronger Q4 performance and a stronger position entering FY27.

Highlights

Organic net sales increased 1.1% in Q3 FY26, marking a return to growth.
North America organic sales increased 3%, driven by double-digit grooming growth and mid-single-digit sun and skin growth.
Adjusted earnings per share was $0.72, flat to prior year, and ahead of expectations.
Adjusted EBITDA was $78.9 million, exceeding expectations.
Cremo achieved its seventh consecutive quarter of approximately 20% or more growth in grooming.

Concerns

International organic sales declined 1.4% due to the Middle East conflict, private label supply disruption, and a weaker sun season start.
Adjusted gross margin declined 30 basis points compared to the prior year.
Wetshave organic net sales declined 1.9% due to continued supply disruption within private label.
U.S. branded unit market share in razors and blades declined 40 basis points due to cycling elevated promotional activity.

Guidance & targets

Category	Target	Timeline	Confidence
Organic net sales	flat to +50 basis points high materiality	FY26	High
Adjusted EPS	$1.80 to $2 per share high materiality	FY26	High
Adjusted EBITDA	$250 to $260 million high materiality	FY26	High
Adjusted free cash flow (excluding FemCare divestiture impact)	approximately $80 to $110 million high materiality	FY26	High
Adjusted net debt leverage	3.3 to 3.4 times medium materiality	FY26	High
Gross margin	material expansion high materiality	Q4 · FY26	High
International sales	return to growth medium materiality	Q4 · FY26	High
North America sales	continued growth medium materiality	Q4 · FY26	High
Gross margin	up year over year percentage points high materiality	FY27	High
Sales growth	low single digits growth rate high materiality	FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
North America Organic sales increased, driven by double-digit grooming growth, mid-single-digit growth in sun and skin, and a return to growth in branded wet shave. Performance exceeded expectations.	—	3%	—	—
International Organic sales declined, reflecting the impact of the Middle East conflict, lower private label sales due to temporary supply disruption, and a weaker-than-anticipated start to the sun season in Europe and LATAM. Expected to return to growth in Q4.	—	-1.4%	—	—
Wetshave (Total) Organic net sales declined as continued supply disruption within private label more than offset growth across the branded portfolio.	—	-1.9%	—	—
Branded Wetshave Performance improved across focus brands, and commercial initiatives in the US are beginning to gain traction.	—	returned to growth	—	—
Private Label Wetshave Impacted by supply disruption, primarily in a couple of European markets and Latin America. This is viewed as a transitory impact.	—	down 10%	—	—
Sun and Skincare Organic net sales increased, driven by mid-single-digit growth in sun in North America, strong global grooming performance, and continued growth in skincare.	—	5%	—	—
Grooming Strong performance, particularly in North America. Cremo achieved its seventh consecutive quarter of approximately 20% or more growth.	—	double-digit growth	—	—
Japan Expected growth for Q3, Q4 combined, driven by strong innovation on the base hydro line and new innovation in SICK First Tokyo range.	—	mid to high single digit rate	—	—

Deals & partnerships

N/A Divestiture of feminine care business

The feminine care divestiture has made the portfolio simpler and allows for more focused investment. It also created stranded costs that the operating model transformation aims to offset.

Capital programs

Wet Shave Manufacturing Consolidation underway

Start: post-2015

Benefit:Simplify manufacturing network, modernize capabilities, improve service levels, create structurally lower cost position, deliver meaningful productivity, margin, working capital, and free cash flow benefits.

The largest operational initiative undertaken since becoming a standalone company in 2015. It created some temporary disruption and affected supply in certain international markets during Q3, but meaningful progress is being made against the implementation plan.

Risks & headwinds

Market uncertainty and increased pressure ongoing

N/A

Mitigation:Strengthening brands and capabilities, improving execution, accelerating operating model transformation.

Middle East conflict impact on international sales Q3 FY26

Contributed to 1.4% decline in International organic sales in Q3 FY26.

Mitigation:Expect overall international to return to growth in Q4 as supply chain challenges improve.

Private label supply disruption Q3 FY26

Contributed to 1.4% decline in International organic sales and 1.9% decline in Wetshave organic net sales in Q3 FY26. Impacted international by 350-400 bps.

Mitigation:Much of the production capacity issue has been solved; expect improvement in Q4.

Weaker-than-anticipated start to sun season Q3 FY26 (Europe and LATAM)

Contributed to 1.4% decline in International organic sales in Q3 FY26.

Mitigation:Expect overall international to return to growth in Q4.

Inflation across certain commodities and input costs Q3 FY26 and ongoing

Higher than expected in Q3 FY26, contributing to 30 bps gross margin decline.

Mitigation:Partially offset by tariff refunds and higher productivity. Expect productivity savings and modest inflation to drive FY27 gross margin gains.

Heightened competitive and promotional environment Q3 FY26 and ongoing

US razors and blades category consumption increased 160 bps, but branded share declined 40 bps in Q3 FY26.

Mitigation:Improving commercial execution, increased distribution, and brand investments.

Tariff impacts ongoing

Modest tariff refunds partially offset inflation in Q3 FY26. Tariffs are 'hurting us' going forward.

Mitigation:Tariff mitigation is a factor in Q4 gross margin acceleration.

Oil and commodities complex volatility ongoing

N/A

Mitigation:Not giving guidance on oil expectations, but current spot rate is 'materially less' than previously quantified and 'much more manageable'.

Potential slowdown in category growth FY27

N/A

Mitigation:Planning accordingly for stable, potentially slower growth, but confident in achieving low single-digit sales growth through internal capabilities.

What to watch in Q4 FY26

International Sales Growth

Q4 FY26

Current declined 1.4% in Q3 FY26

Target return to growth

Why it matters

International markets were a drag on Q3 performance; their return to growth is critical for overall top-line acceleration and full-year targets.

return to organic sales growth in third quarter, we expect growth to strengthen in the fourth quarter, supported by a return to normalized growth trends in international and continued growth in North America.

Find out whether EPC delivers this. Inve re-checks your case every morning.

Q&A highlights

Peter asked about the confidence behind the implied Q4 acceleration given Q3 international/wet shave weakness, and if the company is exiting FY26 with a better underlying growth profile for FY27.

Rod Little expressed confidence in Q4 acceleration due to all branded segments growing, cycling of Q3 transitory supply chain impacts (especially private label in Europe/LATAM), and unchanged A&P spend with a Q4 profile shift. Fran added that international Q3 impact was 350-400 bps, making underlying growth ~3%, and Q4 expects mid-single-digit international growth. For FY27, Rod stated increasing confidence in low single-digit growth, citing strong brand momentum (Cremo, Hawaiian Tropic), improved supply chain, and net distribution gains.

“I think if you look at the second half in total, we think that's a good proxy as we look out to 27 for 2020. top line growth rate. We should be growing next year.”

asked by Peter Graham · answered by Rod Little

2 min read 6 chapters

Detailed narrative

Strategic Transformation & Operating Model

Edgewell is accelerating its operating model transformation, investing in technology, advanced analytics, and AI-enabled capabilities. This initiative aims to simplify the organization, improve speed and agility, enhance decision-making, and create a structurally lower cost base. These actions are intended to offset stranded costs associated with the feminine care divestiture, positioning Edgewell as a faster, more efficient, and responsive organization, and are expected to drive more consistent growth, profitability, and cash flow over time.

Wet Shave Manufacturing Consolidation

The company's largest operational initiative since becoming a standalone entity in 2015 is the wet shave manufacturing consolidation. Its objectives are to simplify the manufacturing network, modernize capabilities, improve service levels, and achieve a structurally lower cost position. While this project caused temporary disruption and affected supply in certain international markets during Q3, management expects performance to improve, leading to meaningful productivity, margin, working capital, and free cash flow benefits.

North America Performance Improvement

The U.S. business, identified as Edgewell's largest value creation opportunity, returned to growth in Q3. This improvement was driven by enhanced commercial execution, increased distribution gains, and traction from strategic initiatives. Specific brands like Hawaiian Tropic, Cremo, and Schick demonstrated strong momentum, with improving awareness metrics, increased branded search activity, and strengthening consumer engagement, reinforcing confidence in the investments made.

Brand Strength & Momentum

Edgewell highlighted significant brand strength, particularly with Cremo and Hawaiian Tropic. Cremo achieved its seventh consecutive quarter of approximately 20% or more growth in grooming and is now a top three brand in men's grooming at a top retailer. Hawaiian Tropic advanced from the number six brand in sun care a year ago to number four, showing the largest increase in household penetration in the category, demonstrating effective brand building.

Capital Allocation & Balance Sheet

The company maintains a disciplined capital allocation strategy, prioritizing investments in high-return opportunities within the business. This approach aims to strengthen the balance sheet, reduce net debt leverage, and maintain the necessary flexibility to create long-term shareholder value. The goal is to improve structural profitability, allowing for continued investment while also building margin.

Consumer Environment & Category Trends

Management observed remarkable consumer resilience despite the dynamic and challenging operating environment. While categories are experiencing a slight slowdown and increased competitiveness, there has not been a meaningful change in overall trend direction. For fiscal year 2027 planning, the company anticipates stable, potentially slower, category growth, but expects to achieve low single-digit sales growth driven by internal capabilities and brand momentum.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.