ENR Q3 Deep Dive: Guidance Cut Overshadows E-Commerce and International Gains

Battery and lighting company Energizer (NYSE:ENR) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 3.4% year on year to $832.8 million. On the other hand, next quarter’s revenue guidance of $695.1 million was less impressive, coming in 8.9% below analysts’ estimates. Its non-GAAP profit of $1.05 per share was 9.8% below analysts’ consensus estimates.

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StockStory’s Take

Energizer’s third quarter results were met with a significant negative reaction from the market, as investors focused on both a miss in non-GAAP profit expectations and a marked decline in operating margin compared to last year. Management pointed to robust growth in e-commerce and international markets as key drivers, alongside targeted network changes and cost savings from Project Momentum. CEO Mark LaVigne acknowledged the challenging environment, highlighting that, “tariffs have increased our costs, consumer demand softened late in the year, and supply chains required rapid rebalancing.”

Looking ahead, Energizer’s guidance reflects caution about persistent headwinds, particularly from tariffs, moderating consumer sentiment, and transitional costs associated with supply chain adjustments. Management expects the first quarter of next year to remain pressured, with improvements building in later quarters as operational changes take hold. CFO John Drabik explained, “We did not rely on anything necessarily changing except for the progression that we will talk about from a category standpoint,” emphasizing a conservative outlook that factors in ongoing macroeconomic pressures and only expects category stabilization in the back half of the year.

Key Insights from Management’s Remarks

Management attributed third quarter performance to e-commerce expansion, international sales growth, and ongoing cost initiatives, but cited margin compression and consumer softness as key challenges.

• E-commerce momentum: Energizer’s e-commerce business delivered over 35% growth in the quarter, outpacing the broader category and helping offset weaker sales in traditional retail channels. Management described this channel as a key area of investment and projected continued double-digit growth into next year.
• International sales growth: The company saw meaningful gains outside the U.S., particularly in markets where it has recently expanded distribution. These regions provided a partial buffer against softer North American demand and remain a focus for future growth.
• Project Momentum cost savings: Project Momentum, Energizer’s multi-year operational efficiency program, has generated over $200 million in cumulative savings. Management credited this initiative for supporting profitability amid rising input costs and ongoing tariff headwinds.
• Network and supply chain changes: To address shifting trade policies and minimize tariff exposure, Energizer realigned its manufacturing footprint and adjusted supply chain logistics. These actions were designed to protect margins but led to temporary operational inefficiencies impacting recent results.
• Consumer behavior shifts: Management observed that consumers are increasingly value-conscious, shifting to larger pack sizes and alternative channels, and occasionally skipping purchase cycles. This contributed to weaker category demand and added pressure on near-term sales trends.

Drivers of Future Performance

Energizer’s forward outlook is shaped by anticipated recovery in the battery category, ongoing tariff impacts, and integration of supply chain changes.

• Tariff and cost headwinds: Higher tariffs and related manufacturing costs are expected to continue depressing margins in the near term. Management’s guidance assumes these pressures persist throughout next year, with mitigation efforts such as domestic production credits and pricing actions only gradually providing relief.
• Consumer demand stabilization: The company predicts consumer behavior will normalize as households cycle through inventory and channel preferences stabilize. Management expects modest improvement in category demand after a challenging first quarter, with growth in international and e-commerce channels partially offsetting sluggish U.S. retail performance.
• Operational transition benefits: As supply chain realignment and APS business integration are completed, management anticipates increased efficiency and cost savings will support margin recovery by the second half of the year. Project Momentum’s continued execution is expected to underpin targeted low double-digit adjusted earnings growth in the latter part of the year.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace of category demand stabilization as consumer sentiment and purchasing patterns evolve, (2) the execution and impact of supply chain and network realignment, particularly how quickly operational efficiencies materialize, and (3) sustained momentum in e-commerce and international markets. Additionally, progress in Project Momentum’s cost savings and the realization of domestic production credits will be important milestones.

Energizer currently trades at $19.63, down from $23.85 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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