Energizer's Q1 2025: Contradictions in Consumer Behavior, Tariff Exposure, and Margin Outlook

These are the key contradictions discussed in Energizer Holdings' latest 2025 Q1 earnings call, specifically including: Distribution Gains and Consumer Behavior, Tariff Exposure, and Input Cost and Margin Trends:



Strong Organic Growth and Margin Improvement:
- Energizer Holdings achieved organic net sales growth of nearly 4% in Q1 fiscal 2025, with adjusted gross margin expanding by 50 basis points.
- The growth was driven by strategic initiatives, distribution gains, and consumer shifts towards value-seeking behavior.

Category Performance and Market Trends:
- The battery category showed positive volume trends, with value trends also improving, leading to a convergence of volume and value.
- Growth in the auto category was supported by international expansion and digital economy growth, despite an earlier shift in holiday orders.

Project Momentum Savings and Investment:
- Project Momentum generated nearly $20 million in savings in Q1 and is expected to result in $60 million for the year.
- Savings from Project Momentum are being reinvested towards consistent ongoing growth in distribution, innovation, and other strategic areas.

Outlook and Investment Strategy:
- Energizer raised its full-year organic sales guidance to be up 2% to 3%, with adjusted earnings per share and EBITDA guidance maintained.
- Investments in pricing and promotional activities, as well as digital transformation initiatives, are expected to impact gross margins but drive future growth.

Tariffs and Competitive Landscape:
- Tariffs from China, Mexico, and other regions only account for a small portion of Energizer's COGS, but potential impacts on competitors are being monitored.
- Depending on tariff dynamics, there could be opportunities for Energizer to gain market share due to changes in pricing and retailer reactions to competitors' production locations.