Spectrum Brands Holdings Inc. (SPB Quick QuoteSPB - Free Report) has reported dismal third-quarter fiscal 2025 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. While the company’s earnings improved year over year, sales declined.

SPB reported adjusted earnings of $1.24 per share, increasing 9.7% from the year-ago quarter and missing the Zacks Consensus Estimate of $1.25. The earnings improvement was primarily driven by lower interest expenses, reduced tax liabilities and a lower share count. However, these gains were partially offset by a decline in operating and investment income.

Spectrum Brands' net sales declined 10.2% year over year to $699.6 million and missed the Zacks Consensus Estimate of $739 million. Organic sales also dropped 11.1%, excluding the $6.8-million impact of favorable foreign exchange rates. The decline was primarily led by temporary shipment pauses to select retailers amid pricing negotiations, tariff-related supply constraints, and softness in the Global Pet Care and Home & Personal Care categories. Additionally, unfavorable weather affected the timing of replenishment orders in the Home & Garden segment.

The gross profit declined 12.8% year over year to $264.1 million due to lower sales volume, an unfavorable product mix, inflationary pressures and the impacts of higher tariffs. This was partially offset by benefits from pricing, ongoing cost-improvement initiatives, operational efficiencies and favorable currency rates. Meanwhile, the gross margin contracted 110 bps year over year to 37.8%.

Adjusted EBITDA from continuing operations decreased 27.9% year over year to $76.6 million due to lower operating income and reduced investment income. The adjusted EBITDA margin contracted 270 bps year over year to 10.9%.

Shares of this Zacks Rank #3 (Hold) company have lost 17.4% in the past three months compared with the industry’s decline of 0.8%.

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Spectrum Brands’ Segmental Performance

Sales in the Home & Personal Care segment dipped 10.8% year over year to $255.2 million, while organic net sales declined 11.4%. Net sales in the Home Appliance category declined in the mid-single digits, while the Personal Care business saw a double-digit drop. Weaker consumer sentiment in the United States and EMEA weighed on overall demand, compounded by temporary shipment pauses during tariff-related pricing negotiations and ongoing supply constraints, particularly in the United States.

EMEA organic net sales fell in the low-double digits, led by continued softness in the Personal Care category. In North America, net sales declined in the low 20% range, with Personal Care experiencing steeper declines than Home Appliances. In contrast, LATAM delivered a bright spot, with organic net sales rising in the low-double digits, supported by double-digit organic growth across both business lines.

The segment's adjusted EBITDA of $7 million was down 40.7% year over year due to lower volumes, an unfavorable product mix, incremental tariffs and ongoing inflationary pressures. These headwinds were partially offset by strategic pricing actions, reduced brand-focused investments amid tariff-related supply disruptions and pricing negotiations, lower distribution costs, and favorable currency impacts. Meanwhile, the adjusted EBITDA margin contracted 140 bps to 2.7%.

The Global Pet Care segment's sales declined 9.6% year over year, with organic net sales down 11.4% after excluding unfavorable foreign currency impacts. Both the Companion Animal and Aquatics segments reported low-double-digit declines in net sales. In the Companion Animal business, North American sales were pressured by temporary shipment halts amid tariff-related pricing negotiations, supply constraints stemming from a pause in Chinese sourcing, and broader category softness.

Global Aquatics demand remained weak, with sales declining across all regions. In North America, Aquatics sales were impacted by tariff-driven pricing discussions and supply limitations, though partially offset by new distribution gains in the Pet Specialty channel.

The segment's adjusted EBITDA of $44 million dropped 22.4% from the year-ago quarter. The decline was due to reduced sales volume, adverse mix and inflation, and lower brand-focused investments, trade spend, and unfavorable mix, somewhat offset by operational productivity improvements, lower brand-focused investments and favorable currency. The adjusted EBITDA margin contracted 290 bps to 17.2%.

The Home & Garden segment's sales declined 10.3% year over year to $189.2 million due to unfavorable seasonal weather. Sales declined in the low-single digits in the Controls category, and in the double-digits each in Household Pest, Repellents and Cleaning.

The segment's adjusted EBITDA fell 10.9% year over year to $38.6 million, while the adjusted EBITDA margin contracted 10 bps to 20.4%. Adjusted EBITDA decreased due to lower sales volumes, increased brand-building investments, a negative product mix and inflationary pressures. These impacts were partially offset by productivity-improvement initiatives, other favorable cost variances, and lower trade spend.

Spectrum Brands’ Other Financials

As of June 29, 2025, SPB had a cash balance of $122 million. It had an outstanding debt of $681.1 million, including $103 million of borrowings on the revolver, $496.1 million of senior unsecured notes and $82 million of finance leases. The company had a total liquidity of $510.5 million, comprising the undrawn capacity on its cash flow revolver of $388.5 million. It exited the quarter with a net debt of $559.1 million.

In the third quarter of fiscal 2025, SPB repurchased 0.9 million shares for $54.4 million. The company repurchased 17.1 million shares since the close of HHI, totaling $1.3 billion, resulting in 24.4 million shares outstanding.

SPB’s Outlook

Spectrum Brands has suspended its fiscal 2025 earnings framework due to heightened uncertainty stemming from global trade conditions, evolving tariff policies and the resulting softening in global consumer demand. However, the company reaffirmed its target of generating a free cash flow of $160 million in fiscal 2025. Despite the near-term challenges, the company remains committed to its long-term financial strategy and continues to target a net leverage ratio of 2.0-2.5 times.

Key Picks

We have highlighted three better-ranked stocks, namely, Central Garden & Pet Company (CENT Quick QuoteCENT - Free Report) , Wolverine World Wide Inc. (WWW Quick QuoteWWW - Free Report) and Ralph Lauren Corporation (RL Quick QuoteRL - Free Report) .

Central Garden produces and distributes various products for the lawn and garden, and pet supplies markets in the United States. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CENT’s current financial-year EPS indicates growth of 17.8% from the year-ago reported figures. Central Garden has a trailing four-quarter earnings surprise of 209.3%, on average.

Wolverine World Wide is engaged in the designing, manufacturing and distribution of a wide variety of casual as well as active apparel and footwear. WWW currently sports a Zacks Rank #1. 

The Zacks Consensus Estimate for Wolverine World Wide’s current fiscal year’s sales and earnings indicates growth of 4.6% and 20.9%, respectively, from the year-ago actuals. WWW delivered a trailing four-quarter average earnings surprise of 39.1%.

Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia, and internationally. RL carries a Zacks Rank of 2 (Buy) at present.

The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS indicates increases of 4.1% and 13.1%, respectively, from the year-ago reported levels. RL has a trailing four-quarter negative earnings surprise of 9%, on average.