CHD Q2 Deep Dive: Margin Pressures Persist Amid Flat Sales, Management Focuses on Portfolio Realignment

Household products company Church & Dwight (NYSE:CHD) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $1.51 billion. The company expects next quarter’s revenue to be around $1.53 billion, close to analysts’ estimates. Its non-GAAP profit of $0.94 per share was 9.7% above analysts’ consensus estimates.

Is now the time to buy CHD? Find out in our full research report (it’s free).

StockStory’s Take

Church & Dwight’s second quarter was marked by flat sales but a better-than-expected bottom line, as the company navigated a volatile consumer environment and persistent cost pressures. Management attributed the quarter’s results to strong performance from key brands like ARM & HAMMER, THERABREATH, and HERO, as well as continued market share gains in both domestic and international markets. CEO Richard Dierker noted that “category consumption has improved” and highlighted ongoing resilience in brand performance despite retail destocking and a challenging macroeconomic backdrop. The company’s operating margin decline reflected higher input costs, tariffs, and a product recall impact.

Looking ahead, Church & Dwight’s guidance points to cautious optimism, with flat to modest growth expected and margin headwinds set to persist due to ongoing inflation and tariff costs. Management remains focused on protecting marketing investments and accelerating innovation across its brand portfolio, while also pursuing strategic options to address underperforming businesses, particularly in vitamins. Dierker emphasized that “uncertainty around the U.S. consumer and global economy” remains a risk, and CFO Lee McChesney highlighted that elevated input costs and tariffs are expected to weigh on margins, even as productivity initiatives and targeted pricing aim to offset some of these pressures.

Key Insights from Management’s Remarks

Management credited resilient brand performance and targeted innovation for supporting sales, despite margin contraction from external cost headwinds and selective portfolio exits.

• Brand share gains: Church & Dwight grew market share in five of its seven U.S. power brands, with ARM & HAMMER laundry and litter, THERABREATH mouthwash, and HERO acne products all outperforming their respective categories in consumption growth, underpinning the company’s flat overall sales.
• International expansion: The international business delivered over 5% sales growth, led by HERO, THERABREATH, and FEMFRESH. The company’s ability to grow share in all major power brands abroad highlights the effectiveness of its export strategy and recent acquisitions.
• Innovation pipeline: New products—including BATISTE Light dry shampoo and the Mighty Patch Body for HERO—are central to ongoing share gains. Management reported that half of organic growth in recent years came from innovation, with current consumer trial initiatives supporting future expansion.
• Portfolio realignment: The acquisition of Touchland hand sanitizer was finalized, adding a high-growth brand to the portfolio. Meanwhile, Church & Dwight is actively reviewing strategic alternatives for its underperforming vitamin business, including possible divestitures, joint ventures, or a focused turnaround.
• Retail destocking impacts: Retailer inventory reductions continued to drag on reported sales, though management noted these effects are moderating. The company expects only modest further impacts in upcoming quarters as inventory levels normalize.

Drivers of Future Performance

Management expects margin pressures to continue as tariffs and inflation persist, while execution on innovation, marketing, and portfolio streamlining will be key to future performance.

• Tariffs and inflation: Persistent cost inflation and shifting tariff policies are expected to remain the primary headwinds for gross and operating margins. Management projects these factors will result in further margin contraction, with productivity initiatives and selective price increases partly offsetting the impact.
• Marketing and innovation investments: The company plans to maintain elevated marketing spend—targeting 11% of net sales—especially to support new product launches and sustain brand momentum. Management believes this is critical to drive share gains, even at the expense of near-term profits.
• Portfolio actions and divestitures: Strategic decisions around exiting or restructuring underperforming brands, particularly in vitamins, will influence future revenue growth and profitability. The recent addition of Touchland is expected to provide margin accretion over time, while the outcome of the vitamin business review could impact the company’s growth profile and cost structure.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the outcome of the strategic review and potential divestiture or turnaround of the vitamin business, (2) the effectiveness of new product launches and ongoing marketing investments in driving category and share gains, and (3) the company’s ability to mitigate margin pressures from tariffs and inflation through productivity and targeted pricing. Progress on integrating Touchland and further international expansion will also be key indicators of execution.

Church & Dwight currently trades at $92.25, down from $93.76 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

High Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.