Edgewell Personal Care (EPC) Q4 2026 earnings review
Edgewell sales recover across regions, but factory overhaul costs mount
Edgewell Personal Care, the maker of Schick razors and Banana Boat sunscreen, returned to sales growth across both North America and international markets while factory restructuring pushed full-year GAAP earnings into a loss. Fourth-quarter constant-currency sales rose 3%, and profit per share excluding one-offs jumped by half to $0.78 as gross margin bounced back from a depressed year-ago period. Chief executive Rod Little said the company delivered its initial adjusted outlook, and he set a fiscal 2027 plan for 1% to 3% constant-currency sales growth.
| Constant-currency sales (Q4) | +3.1% +0.3% for full-year FY26 |
|---|---|
| Profit per share, excluding one-offs (Q4) | $0.78 +50% from a year ago ($1.93 for FY26) |
| GAAP profit per share (FY26) | $(0.05) missed $0.00–$0.20 outlook on $102M restructuring |
| FY27 profit per share outlook (excl. one-offs) | $1.85–$2.15 middle of the range: $2.00 (+3.6%) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because a credible fiscal 2027 operating plan is balanced by a full-year gross margin miss and another heavy round of restructuring charges. The good news: the 2027 plan increases profit per share excluding one-offs to $2.00 at the middle of the range by cutting overhead 0.9 percentage points, enough to absorb the roll-off of feminine care transition fees. The bad news: full-year gross margin excluding one-offs still shrank 0.1 percentage points despite two earlier outlook cuts, and restructuring charges topped $100 million with $55 million more planned next year.
The question now is whether Edgewell's multi-year factory consolidation can lift gross margin without easy year-ago comparisons or recurring cost overruns. Optimists see the 0.6-point gross margin and 0.9-point overhead improvements planned for fiscal 2027 as the payoff from closing duplicate plants; skeptics note the company started fiscal 2026 with the exact same 0.6-point gross margin target and finished negative while store-brand razor supply shortages lingered. First-quarter gross margin and Wet Shave profit will provide the first clean test.
🐂 Bull Case
North America and International Sales Both Grew
Edgewell Personal Care, the maker of Schick razors and Banana Boat sunscreen, spent the first half of the year fighting falling sales in its home market and supply bottlenecks abroad. In the fourth quarter, chief executive Rod Little pointed to "a return to growth in International and stronger performance across our focus brands" as constant-currency sales rose 3.1%.
- North America constant-currency sales: up 3.3%, following 3.0% growth in the third quarter
- International constant-currency sales: up 3.0%, rebounding from a 1.4% drop in the third quarter
- Sun and Skin Care constant-currency sales: up 6.5% to $158.3 million, led by men's and women's grooming products
- Wet Shave constant-currency sales: up 1.6% to $325.8 million, turning positive after falling 2.2% over the first nine months
This matters because the company no longer relies on one region to carry the other. Grooming products and wider retail shelf space lifted North America for a second straight quarter, while international markets recovered from third-quarter shipping delays. For fiscal 2027, the company plans for 1.0% to 3.0% constant-currency sales growth.
What to watch: North America constant-currency sales growth in the first quarter of fiscal 2027. A third straight positive quarter outside the peak summer season would show the commercial turnaround is durable.
2027 Plan Replaces Fading Fees With Margin Gains
When Edgewell sold its feminine care business in February 2026, it began collecting Transition Services Agreement (TSA) income — fees for running back-office services for the buyer. Those fees brought in $21.5 million in fiscal 2026 and helped keep full-year profit per share, excluding one-offs, at $1.93 even as operating profit shrank.
That support fades in fiscal 2027, as the company expects net other income to drop from $24.9 million (excluding one-offs) to about $13 million, a drag of about $0.19 per share by our math. Even so, the fiscal 2027 outlook calls for profit per share, excluding one-offs, of $1.85 to $2.15, up 3.6% at the middle of the range.
Core operations carry that increase. The plan calls for operating margin, excluding one-offs, to rise 0.7 percentage points to 8.8%, as a 0.6-point gross margin gain and a 0.9-point cut in overhead expenses more than cover 0.8 points of extra advertising spend. What to watch: overhead expenses as a share of sales in the first half of fiscal 2027, which will show if the company is removing leftover feminine care corporate costs on schedule.
🐻 Bear Case
Gross Margin Missed Full-Year Plan Despite Q4 Rebound
"While significant cost and competitive headwinds persist, we believe the broader transformation of our operating model is creating greater capacity to invest and supporting more consistent growth and margin expansion," Little said. Management had lowered its full-year gross margin target twice during fiscal 2026, from a 0.6-point gain down to 0.2 points.
In the fourth quarter, gross margin excluding one-offs rose 5.1 percentage points to 45.7%, while advertising spend rose 1.8 points to 11.6% of sales and overhead fell 1.3 points to 20.6%. The company credited the gross margin jump to "productivity savings, favorable volume absorption, favorable currency, and the lapping of transitory costs in the prior year period".
Despite that fourth-quarter jump against an easy year-ago comparison, full-year gross margin excluding one-offs still fell 0.1 percentage points to 43.4%, missing the reduced 0.2-point increase target. Core inflation and tariffs cost 2.5 percentage points for the year and unfavorable product mix cost 0.6 points, outweighing 2.3 points of factory savings. What to watch: first-quarter gross margin excluding one-offs, which will test whether factory savings can beat inflation without an easy comparison.
Restructuring Topped $100 Million as Supply Delays Lingered
Edgewell excludes restructuring charges from its headline profit metrics, treating them as one-time items. Yet those charges have grown every year, and in fiscal 2026 the company raised its restructuring estimate three times before still overshooting it in the fourth quarter.
- Fiscal 2026 pre-tax restructuring and related charges: $101.8 million, up from $50.7 million in fiscal 2025 and above the $92 million August outlook
- Mexico and Wet Shave factory consolidation: $80.0 million of fiscal 2026 charges, plus $21.8 million for global operating-model changes
- Fiscal 2026 GAAP profit per share from continuing operations: a loss of $0.05, missing the $0.00 to $0.20 outlook
- Fiscal 2027 planned pre-tax restructuring charges: about $55 million for "further consolidation of Wet Shave operations" and corporate simplification
By our math, pre-tax restructuring across fiscal 2025 through fiscal 2027 will total $207.5 million. Meanwhile, the factory moves are still disrupting production: fourth-quarter Wet Shave sales were held back by "temporary supply constraints in North America and certain international markets" in store-brand razors, and full-year Wet Shave segment profit fell 17.9% in constant currency.
What to watch: Wet Shave constant-currency segment profit and quarterly restructuring charges in fiscal 2027. If charges exceed the $55 million plan or store-brand supply shortages continue, the factory overhaul is taking longer than planned.
Risks This Quarter Didn't Answer
Several standing business and balance-sheet risks received no detailed update in the fourth-quarter earnings release because it falls in a seasonally quiet period for sunscreen and omits retail market-share data.
- U.S. razor promotions and market share: the release noted that "significant cost and competitive headwinds persist" without giving updated U.S. razor market share; the conference call will show whether promotional discounting increased.
- Sun Care demand and reformulation: North America Sun Care and Skin Care sales fell in the fourth quarter, and the company booked $4.4 million of sunscreen reformulation costs in fiscal 2026 with another $4 million planned for fiscal 2027; second-quarter orders will give the next real read on the 2027 summer season.
- 2028 debt refinancing: year-end net debt stood at 3.4 times adjusted EBITDA, and the release gave no update on plans to refinance debt maturing in fiscal 2028.
💲 Other KPIs
Cash generated from operations fell by more than half from $118.4 million in fiscal 2025. The company said one-time tax, working capital and deal fees from selling the feminine care unit caused the drop. By our math, unadjusted free cash flow was negative $6.0 million for the year, and Edgewell did not report its full-year adjusted free cash flow figure.
Total debt minus cash fell 23.5% from $1,187.1 million a year ago after the personal care group used $338.9 million from the feminine care sale to pay down its credit line and build cash to $375.6 million. Net debt to adjusted EBITDA improved to 3.4 times from 4.0 times in the second quarter and 3.7 times in the third.
Goods held in stock rose 2.7% from $433.8 million a year ago, moving in line with the 3.0% fourth-quarter sales increase. Inventories fell slightly from $450.1 million in the second quarter, showing that factory moves have not caused a major stockpiling buildup.
🔮 Guidance
New. The plan calls for 2.0% constant-currency sales growth at the middle of the range, stepping up from 0.3% in fiscal 2026 but below the fourth quarter's 3.1% pace. Management expects continued brand investment and international recovery to drive the increase.
New. The middle of the range is 1.4% growth, compared with 1.8% in fiscal 2026. Foreign currency swings are expected to reduce reported sales growth by 0.6 percentage points, reversing a 1.5-point currency boost in fiscal 2026.
New. At the $2.00 middle of the range, profit per share excluding one-offs grows 3.6% from $1.93 in fiscal 2026. That growth comes despite losing about $12 million of other income as feminine care transition fees wind down.
New. The outlook puts GAAP profit per share at $1.05 at the middle of the range, reversing fiscal 2026's $0.05 loss per share. The $0.95 per share gap between GAAP and adjusted profit comes mainly from $55 million of planned pre-tax restructuring charges ($1.17 per share before tax).
New. The plan has operating margin excluding one-offs rising 0.7 percentage points to about 8.8%, recovering the 0.7-point drop in fiscal 2026. That combines 0.6 points of gross margin expansion and 0.9 points of lower overhead expenses, minus 0.8 points of higher advertising spend.
New. Management plans for gross margin excluding one-offs to expand by 0.6 percentage points to 44.0%, after slipping 0.1 points in fiscal 2026. The company began fiscal 2026 forecasting this exact same 0.6-point expansion before cutting the target twice and finishing negative.
New. At the $260 million middle of the range, cash operating profit excluding one-offs rises 2.2% from $254.5 million in fiscal 2026, compared with 6.2% growth in the year just ended.
New. The plan targets $110 million at the middle of the range, up from the $80 million to $110 million range guided for fiscal 2026. Capital expenditures are planned at 2.75% to 3.25% of net sales, down slightly from the 3.0% to 3.5% target in fiscal 2026.
New. Expected to fall by about half from $26.7 million ($24.9 million excluding one-offs) in fiscal 2026 as the 12-month transition services contract with the feminine care buyer expires in early 2027.
New. Debt interest expense is planned at about $67 million, down from $68.9 million in fiscal 2026. The effective tax rate excluding one-offs is expected to rise to about 24% from 23.0% in fiscal 2026.
❓ Key Questions
What was fiscal 2026 adjusted free cash flow?
Management guided fiscal 2026 adjusted free cash flow of $80 million to $110 million all year and guided $100 million to $120 million for fiscal 2027, but the release only reported unadjusted operating cash flow of $49.6 million (negative $6.0 million of unadjusted free cash flow).
Is the Mexico factory consolidation now complete?
Previous filings targeted completing the Mexico facility consolidation by the fourth quarter of fiscal 2026. The release recorded $80 million of fiscal 2026 charges for Mexico and Wet Shave consolidation and guided $55 million more for fiscal 2027, without confirming if Mexico is done.
When will store-brand razor supply shortages end?
Wet Shave store-brand sales were held back by supply constraints in North America and international markets for a second straight quarter during factory moves. Investors need to know when production catches up with demand.
Did U.S. fourth-quarter gross margin include more tariff refunds?
In the third quarter, a $5.3 million tariff refund lifted gross margin by nearly a full percentage point without being excluded as a one-off. The fourth-quarter release did not state whether any additional tariff refunds helped the 5.1-point gross margin jump.