Consumer has been 'remarkably resilient,' Edgewell CEO says
Sales for Edgewell Personal Care (EPC) — the owner of the Schick shaving brand and Banana Boat sunscreen —may have dipped in its fiscal fourth quarter, but the wellness anticipates strengthened demand going forward into 2024.
Edgewell Personal Care CEO Rod Little joins Yahoo Finance to discuss the trajectory of consumer spending the wellness brand is anticipating, especially amid events such as the resumption of student loan payments.
Broad-based growth, the consumer's been healthy," Little says. "From here, I think there's a question, and maybe there's a concern on where the consumer goes from here, but it's been remarkably resilient to this point."
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Video Transcript
SEANA SMITH: Let's take a step back and talk about the macro environment. Right now, for your company, consumer facing company, obviously, very reliant on spending trends, what are you seeing? How challenging is the macro environment?
ROD LITTLE: Yeah, good morning. Good to be here. The macro environment for us right now, to this point, the year we just finished, has been good. We've seen a resilient consumer, and our quarter 4, just finished in our fiscal year, grew at the same rate the past 52-week trends have been. And so we've seen that low to mid single digits, depending on the category of growth. And we've seen it very consistently across the world. We've had good growth here in the US in our categories, and as well as Europe and in Asia, we've seen growth in the category.
So broad-based growth. The consumer has been healthy. From here, I think there's a question, and maybe there's a concern of where the consumer goes from here. But it's been remarkably resilient to this point.
SEANA SMITH: Rod, where do you see the consumer going from here?
ROD LITTLE: Yeah, I'm not a great predictor. I read a lot. I see the views of--
SEANA SMITH: Well, maybe some of the trends that you're noticing just in terms of what people are spending on within your business.
ROD LITTLE: Yeah, the one thing that does concern me is, we've had some excess income in the market, right? And that's come out in terms of the savings rates and what people had a year ago. There's just less excess there. And I think with student loan repayments coming back on, there's just net less from the consumer, at least domestically here in the US. And so, the thing I look at is, for us, is, shift to private label or shift into lower price point products within our portfolio.
And we supply private label. We're the private label leader in shaving, for example, here domestically in the US. And we've got brands at value oriented price points, all the way up to the higher end of the pricing ladder. And we've not seen any meaningful shift to this point from consumers trading down in our categories, whether it be shaving or sun and skincare. But that would be the first thing we'd watch is, would we start to see consumers shift down into that private label area? But we're not seeing that.
BRAD SMITH: You mentioned student loan resumption and payment resumption there. To what end are you modeling for that in your forecasts right now? And I mean, is it real that we're going to see people say to themselves, hey, I got to repay these student loans now, so I can't shave this week, or I can't put on-- I can't put on that suntan lotion.
ROD LITTLE: Yeah, I think, Brad, it's just it could be one of many things that impact the consumer, right? It's not just a singular event, I don't think, but that's one that could provide a little bit less disposable income throughout the week. But as I look at it and I look at our products, as the consumer gets pinched, they're either going to trade down or use products less often.
And so, for us, we've modeled a range of sales growth of 2% to 4%, a midpoint of 3. If we get similar consumer behavior that we've had the last year or the last six months, we'll be more in that 3 range. If the consumer does start to trade down or become impacted and then have consumption drop, that probably puts us more in the 2% range. And then, obviously, if we execute well and the consumer is really healthy, then we're up north of 3, into that 4% range. That's how we've thought about bracketing our guidance range for the year ahead.
