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Newell Brands (NWL) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Jul 31, 2026

Source: earnings call transcript

Executive summary

Newell Brands Q2 FY26 — Return to Top-Line Growth and Raised Full-Year Outlook

Newell Brands returned to top-line growth in Q2 FY26, driven by strengthened innovation, distribution gains, and improved brand marketing, exceeding expectations across key financial metrics. The company raised its full-year outlook, leveraging productivity savings and tariff recoveries to offset significant inflationary pressures without broad-based pricing actions, aiming for sustainable growth and strong cash generation.

Highlights

5

  • Net sales increased 3% and core sales grew 2.3% in Q2 FY26, exceeding guidance and marking the first year-over-year growth in over 4 years.

  • 5 of 6 business units and 7 of 10 top brands delivered year-over-year core sales growth, with U.S. net sales growing approximately 5%.

  • Normalized diluted EPS was $0.42, significantly exceeding the original Q2 guidance range of $0.16-$0.19 (excluding one-time tariff benefits, EPS was $0.21).

  • Operating cash flow improved by $67 million year-over-year in H1 FY26, with cash conversion cycle improving by 15 days.

  • Full-year outlook raised across all key financial metrics, with net sales growth now expected at 1%-2% and normalized diluted EPS between $0.73-$0.77.

Concerns

4

  • Input cost inflation is expected to be closer to $200 million for FY26, up from $100 million expected at the start of the year, with $50 million of that increase appearing since the last earnings call.

  • Commercial segment remained below prior year in Q2, despite sequential improvement.

  • International business was down in Q2, particularly in Europe due to softer demand and Middle East spillover, though expected to improve.

  • Net P&L tariff headwind for FY26 is expected to be $127 million, $12 million higher than FY25, excluding IEEPA refunds.

Guidance & targets

CategoryTargetConfidence
Full-year Net Sales Growth
1% to 2%
high materiality
High
Full-year Core Sales Growth
flat to 1%
high materiality
High
Full-year Normalized Operating Margin
between 10% and 10.4%
high materiality
High
Full-year Effective Tax Rate
around 20%
medium materiality
High
Full-year Normalized Diluted EPS
between $0.73 and $0.77
high materiality
High
Full-year Operating Cash Flow
approximately $400 million
high materiality
High
Full-year Capital Expenditures
about $200 million
medium materiality
High
Year-end Net Leverage Ratio
comfortably below 4.5x
high materiality
High
Q3 Net Sales Growth
between 2% and 3%
high materiality
High
Q3 Core Sales Growth
between 2% and 3%
high materiality
High
Q3 Normalized Operating Margin
between 9.5% and 10.2%
high materiality
High
Q3 Normalized Diluted EPS
between $0.18 to $0.20
high materiality
High
Q3 Effective Tax Rate
about 10%
medium materiality
High
Incremental Cash from Investing Activities
$60 million
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Learning & Development
Strongest part of the portfolio, led by continued strength in Baby and a return to growth in Writing. Baby benefited from strong consumer demand, increased distribution, and new product innovation. Writing supported by distribution gains, innovation, and stronger back-to-school execution.
Baby sales growth: double-digitWriting core sales growth: returned to core sales growthGraco U.S. POS growth: strong double-digit rateGraco market share gain: 2.7 points year-to-dateNUK U.S. POS growth: double-digit
—nearly 5%——
Home & Commercial
Kitchen & Home Fragrance returned to core sales growth, reflecting improved execution and consumer response. Commercial remained below prior year but improved significantly, focusing on strengthening execution and innovation.
Kitchen core sales growth: first quarter of growth since early 2023Home Fragrance owned channels growth: second consecutive quarterHome Fragrance comparable retail stores growth: first time in more than a decade
—returned to core sales growth (Kitchen & Home Fragrance)——
Outdoor & Recreation
Returned to core sales growth during the important second quarter outdoor season, with the U.S. leading. Highlighted Coleman Snap 'N Go as consumer-led innovation.
U.S. leading the improvement
—nearly 4%——

Product announcements

ProductTypeDetails
BRUTE trash can (revamped)launch
Spontex Flex and golaunch
Coleman Snap 'N Golaunch

Risks & headwinds

Input Cost Inflation FY26

$200 million for FY26 (up from $100 million expected at start of year, $50 million increase since last call)

Mitigation:Aggressive fuel productivity program, overhead reduction efforts, AI enablement initiatives, targeted pricing actions.

Net P&L Tariff Headwind FY26

$127 million for FY26 ($12 million higher than FY25, excluding IEEPA refunds)

Mitigation:Offsetting with top line growth momentum, fuel productivity savings, and in-year tariff refunds to avoid broad-based pricing.

Macro Environment Uncertainty and Category Growth H2 FY26

Category growth assumed to decline about 1% for FY26 (cautious outlook for H2)

Mitigation:Newell expects to grow faster than the category due to improved capabilities; monitoring inflation for potential future pricing actions.

Commercial Segment Underperformance Q2 FY26 (expected to improve in Q3)

Remained below prior year in Q2 FY26

Mitigation:Strengthening execution, advancing innovation (e.g., revamped BRUTE trash can, BRUTE farm products, Spontex Flex and go), building on targeted distribution wins.

International Business Weakness Q2 FY26 (expected to improve in Q3)

Down in Q2 FY26 (particularly Europe)

Mitigation:Expect sequential improvement in Q3, leveraging the same capability build-out as domestic markets.

What to watch in Q3 FY26

Commercial Segment Core Sales Growth

Q3 FY26
Current below prior year
Target positive growth

Why it matters

Indicates the effectiveness of innovation and execution efforts in a lagging segment.

But we believe you're going to see that business inflect in the near term, possibly in the third quarter.

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

Q&A highlights

Why is Commercial lagging, and what's the line of sight for improvement?

Commercial improved sequentially but was still negative. Management is optimistic for Q3, driven by new innovation like revamped BRUTE trash cans and farm products, and the Spontex "Flex and go" sponge in Europe. They expect inflection in the near term, possibly Q3.

“We are currently launching a revamped BRUTE trash can that is a superior trash can versus what we had previously. We've also launched the line of BRUTE farm products that is getting strong pickup across rural channels.”

asked by Lauren Lieberman · answered by Christopher Peterson

2 min read 6 chapters

Detailed narrative

Turnaround Strategy Bearing Fruit

Newell Brands' multi-year turnaround strategy, focused on rebuilding commercial and operating capabilities, is now yielding results. This includes stronger consumer insights, disciplined innovation, improved brand management, and enhanced retailer relationships, leading to distribution gains and positive consumer demand. The company is on track to deliver over 25 Tier 1 or Tier 2 innovation launches for the full year, with all 6 business units having launched significant innovations year-to-date.

Broad-Based Growth and U.S. Market Strength

The company achieved year-over-year growth in net sales (3%) and core sales (2.3%) for the first time in over four years, exceeding guidance. This improvement was broad-based, with 5 of 6 business units and 7 of 10 top brands delivering growth. The U.S. market, Newell's largest, led the way with approximately 5% net sales growth, its first growth since COVID, driven by mid-single-digit increases in total distribution points.

Segment Performance Highlights

Learning & Development was the strongest segment with nearly 5% core sales growth, led by double-digit growth in Baby (Graco, NUK) and a return to growth in Writing (Sharpie, Elmer's, Prismacolor). Kitchen & Home Fragrance also returned to core sales growth, with Ball canning and Rubbermaid Brilliance performing well. Outdoor & Recreation grew nearly 4%, with U.S. leading the improvement.

Marketing and Consumer Engagement

Newell is pairing higher brand support with precise and engaging marketing. An example is the Coleman brand's activation around a viral "Lazy River" product, generating over 90 million earned media impressions and attracting nearly 30,000 new consumer subscribers, demonstrating modern, culturally relevant marketing capabilities.

Macro Environment and Cost Management

While the consumer and category environment held up better than expected in H1 (category flat in Q2 vs. 2% decline assumed for FY), the company remains cautious for H2, assuming a 1% category decline for the full year. Significant input cost inflation (now expected at $200 million for FY26) and tariff headwinds are being offset by aggressive fuel productivity savings, overhead reductions, and AI enablement initiatives, allowing for targeted pricing actions rather than broad-based increases.

Tariff Recoveries and Financial Discipline

The company recorded a receivable for nearly $100 million in IEEPA tariff recoveries from 2025, contributing $0.17 to EPS. An additional $26 million in Q1 FY26 IEEPA tariff recoveries were also recorded. These recoveries, combined with productivity, are being used to offset inflation, enabling the company to avoid broad-based pricing actions. The company expects to recover a substantial portion of these funds by year-end and is also liquidating $60 million in life insurance assets for additional cash.

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