Company: CHD
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0000950170-25-101235
Chunk: 5

Company: CHURCH & DWIGHT CO INC /DE/
Filing Date: 2025-08-01
Form: 10-Q
Item: Item 2
Chunk 5
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Global Economic Conditions and Trade Policies

We continue to experience increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty primarily due to rapid changes in U.S. trade policies including recent sweeping tariff increases, as well as retaliatory tariffs by foreign countries.  Additionally, U.S. consumers are increasingly worried about persistent inflation and looming tariffs, leading them to cut back on discretionary spending.  We believe that retailers are lowering their consumer-packaged goods inventories and making targeted decisions to build inventory of certain products in advance of additional tariffs.  We will continue to evaluate these evolving developments and have begun to take action to mitigate their impact on our business, including taking strategic actions for certain business lines (see Strategic Business Decisions), shifting production and relocating manufacturing operations, finding alternative sources of supply, most notably ceasing the import of substantially all Waterpik flossers and other products from China into the U.S., potential price increases, adjusting inventories, lobbying and seeking exemptions with respect to tariffs.  While the tariff situation remains fluid, we are focused on managing through these challenges.  From a gross risk perspective, we are currently projecting twelve-month run-rate gross tariff costs of approximately $60.0.  Over the next 12 months, we believe our tariff cost exposure can be reduced through additional supply chain efforts and surgical pricing.

Strategic Business Decisions

On May 1, 2025, we announced that we will be exiting the Flawless, Spinbrush and Waterpik showerhead businesses, which we intend to complete by early 2026.  These businesses generated approximately $170.0 of annual Net Sales in 2024.  We recorded a pre-tax charge of $51.0 in the second quarter of 2025 as a direct result of these actions, of which $30.4 was recorded in Cost of sales and $20.6 was recorded in SG&A.  The charge was primarily recorded in the Consumer Domestic segment and was comprised of non-cash charges related to impairments of intangible and fixed assets, as well as inventory reserves.

On August 1, 2025, we announced that we are performing a strategic review of our vitamin business.  This review includes potential actions to streamline our supply chain to strengthen the core business, joint venture or other partnership opportunities, and divestiture options.  We expect to reach a conclusion from this review by the end of 2025.