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  Title	Newell Brands Balances Margin Gains Against Weak Sales
  ID	30520256
  External ID	newell-brands-balances-margin-gains-against-weak-sales
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  Published Date	Feb. 7, 2026, 6:09 p.m.
  Summary	Advertisement Advertisement Newell Brands Balances Margin Gains Against Weak Sales TipRanks Auto-Generated Newsdesk A+ A- Newell Brands Inc. ( (NWL) ) has held its Q4 earnings call. Read on for the ma
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  Content ID	37792514
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  Content	Advertisement Advertisement Newell Brands Balances Margin Gains Against Weak Sales TipRanks Auto-Generated Newsdesk A+ A- Newell Brands Inc. ( (NWL) ) has held its Q4 earnings call. Read on for the main highlights of the call. Claim 50% Off TipRanks Premium Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential Newell Brands Walks Tightrope Between Margin Gains and Sales Pressure in Earnings Call The latest earnings call from Newell Brands Inc. painted a mixed but improving picture: management highlighted tangible progress on margins, productivity, innovation and cash generation, even as top-line weakness, tariff headwinds and soft category demand continue to weigh on results. The tone was cautiously constructive—focused on execution and de-risking the business—but tempered by guidance that implies flat to slightly declining core sales and an ongoing drag from tariffs through 2026. Profitability Improves in Q4 as EBITDA and Cash Flow Strengthen Newell’s fourth quarter showed the clearest evidence that its restructuring and efficiency initiatives are gaining traction. Normalized gross margin expanded 70 basis points year over year to 33.9%, while normalized operating margin rose an impressive 160 basis points to 8.7%. This margin uplift translated into nearly 12% growth in normalized EBITDA to $241 million. Cash generation in the quarter was solid at roughly $160 million, signaling better discipline on working capital and costs despite a softer sales backdrop. For investors, Q4 underscored that the company’s profit structure is becoming more resilient, even as volumes remain under pressure. Full-Year Margins Hold Up Despite Tariff Pressures Across 2025, Newell managed to grow margins in the face of substantial tariff impacts, a key proof point for the turnaround narrative. Normalized gross margin for the year ticked up 10 basis points to 34.2%, and normalized operating margin expanded 20 basis points to 8.4%. Notably, this improvement came while the company was actually leaning into the business with higher brand support, including a 50 basis point increase in advertising and promotion (A&P). The ability to fund more marketing while still expanding margins suggests underlying cost work and pricing discipline are offsetting at least part of the external cost burden. Innovation Pipeline Builds Momentum with Clear Market Share Wins Management emphasized a strengthening innovation cycle as a core driver of future growth. Newell is planning more than 25 Tier 1 and Tier 2 product launches in 2026, which it described as the most robust slate since the Jarden acquisition—an important milestone for a company that has historically depended on strong brands and innovation. Recent launches are already paying off: a new Graco car seat helped drive Graco’s market share up 160 basis points for the full year and a notable 350 basis points in Q4, while the relaunch of Yankee Candle supported a 6% increase in U.S. core sales for the brand in the fourth quarter. These wins provide tangible evidence that Newell can still create consumer pull in key categories. Supply Chain and Sourcing De-Risked Away from China Newell has been aggressively reengineering its supply chain to reduce geopolitical and tariff exposure, and the call highlighted significant progress. The company has cut its sourcing from China to below 10% of total, down from roughly 35% several years ago. In the second half of 2025 alone, it secured about $40 million of incremental tariff-advantaged domestic manufacturing wins, which should offer more predictability and cost control over time. This strategic shift aims not only to mitigate current tariff pain but to structurally de-risk the supply chain, an important factor for long-term investors concerned about global trade volatility. Global Productivity Plan Targets Meaningful Overhead Savings To further buttress profitability, Newell unveiled a global productivity program expected to generate more than $75 million of year-over-year savings in 2026. A key element is lowering overhead as a percentage of sales by nearly 100 basis points. Management framed the effort as broad-based, aimed at simplifying operations and removing structural costs rather than just one-off cuts. If executed, the savings should create room to absorb ongoing tariff impacts, fund marketing and innovation, and still expand operating margins—another step in rebuilding earnings power. Marketing Spend Ramps Up to Support Brands and Distribution Rather than retrench in a soft demand environment, Newell is leaning into its brands. Advertising and promotion spend rose to 6.5% of sales in Q4, the highest level in almost a decade, and A&P has increased about 50 basis points over the last three years. The funds are being directed toward new product launches and strengthening distribution, including shelf resets and merchandising initiatives. While this heavier spend contributes to near-term earnings pressure, the company is clearly betting that brand investment is necessary to defend and grow share in challenged categories, supporting the longer-term top-line recovery it is targeting. Cash Flow Improves and 2026 Targets Call for Stronger Generation Cash generation is a bright spot in the story. Newell delivered $264 million in operating cash flow in 2025, and management guided to a sizable step-up in 2026, with operating cash flow expected in the $350 million to $400 million range—roughly 40% growth at the midpoint. The improvement is expected to be driven by mid-single-digit EBITDA growth, lower cash tariffs and reduced cash taxes. Stronger cash flow is central to the company’s efforts to reduce leverage, fund necessary capital spending and maintain flexibility, and will be closely watched by credit- and equity-focused investors alike. 2026 Financial Targets Emphasize Margin Expansion Over Top-Line Growth Newell’s 2026 financial framework underlines a conservative revenue outlook paired with a clear focus on profitability and deleveraging. The company expects net sales to be between down 1% and up 1%, with core sales ranging from down 2% to flat, reflecting continued category softness but an expectation of share gains. Normalized operating margin is guided to 8.6%–9.2%, implying about 50 basis points of expansion at the midpoint versus 2025, while normalized EPS is projected between $0.54 and $0.60. Capex is planned at $200 million, below the historical norm of roughly $250 million, which should support free cash flow generation. Management also expects to reduce net leverage by about half a turn, an important step toward regaining a capital structure more consistent with investment-grade standards. Sales Declines Underscore Persistent Top-Line Challenges Despite clear progress on margins and cash, Newell’s sales trends remain under pressure. Full-year 2025 net sales fell 5% to $7.2 billion, with core sales down 4.6%. In Q4, net sales declined 2.7% and core sales were down 4.1%. These declines reflect both category softness and company-specific headwinds, including distribution shifts, promotional pressures and the disruptive effects of multiple pricing rounds tied to tariffs. The top-line picture is a reminder that Newell’s turnaround is still in its early innings and that structural growth, not just cost cuts, will ultimately determine the sustainability of the recovery. Tariff Headwinds Continue to Weigh on Earnings Power Tariffs remain one of the largest external drags on Newell’s results and outlook. In 2025, total gross cash tariff impact was $174 million, with a $114 million hit to the P&L. For 2026, the company models gross cash tariffs of about $130 million and a total gross P&L impact of roughly $150 million. Management estimates this will represent around a $0.30 EPS headwind in 2026, actually about $0.07 worse than in 2025, with the impact ramping over the course of the year. A temporary China tariff alone accounted for approximately $0.05 of EPS downside in 2025. Despite sourcing shifts and cost actions, tariffs remain a formidable obstacle to margin and EPS expansion. Full-Year EPS and EBITDA Under Pressure Despite Cost Work The combination of tariffs, weaker volumes and elevated brand investment showed up in full-year earnings. Normalized EPS fell to $0.57 in 2025 from $0.68 in 2024, while normalized EBITDA slipped to $882 million from $900 million, a decline of $18 million. The modest EBITDA downtick, even as sales declined more meaningfully, reflects some success in reshaping the cost base, but underscores that external pressures are outpacing offsetting initiatives for now. Management is banking on productivity gains, innovation and tariff de-risking to bend this curve more decisively in 2026 and beyond. Soft Q1 Outlook Reflects Category Weakness and Tariff Annualization Near-term, Newell signaled that the first quarter of 2026 will be a particularly tough comparison. The company expects Q1 net sales to decline roughly 5% to 3%, with core sales down 7% to 5%. Normalized operating margin is forecast in the 2.5%–3.5% range, and normalized EPS is expected to be negative, between a loss of $0.12 and $0.08 per share. Management cited seasonality, the annualization of tariffs and elevated A&P as key drivers of this pressure. For investors, Q1 looks like a “reset” quarter in which the company absorbs a heavy dose of external costs and continued demand softness before benefits from productivity, innovation and distribution resets become more visible later in the year. Home & Commercial, Especially Kitchen, Underperforms The Home & Commercial segment—particularly the Kitchen category—was singled out as the most challenged area of the portfolio in 2025. Kitchen faced soft consumer demand, some distribution losses and intense promotional activity, even as the company tried to calibrate pricing and promotions more selectively. This dynamic highlights how discretionary categories tied to home and kitchen remain under pressure as consumers trade down or delay purchases. Newell’s ability to stabilize and reinvigorate this segment will be a key determinant of future growth and mix quality. Leverage Still Elevated Despite Expected Deleveraging Path Balance sheet risk remains a key overhang. Newell ended 2025 with a net leverage ratio of about 5.1x, still above levels typically associated with investment-grade credit. While the company is guiding to a roughly 0.5x reduction in 2026, leverage north of 5x leaves limited margin for error if the macro backdrop or category trends deteriorate further. The improved cash flow outlook and controlled capex are designed to address this, but investors will want to see consistent execution on debt reduction as a central pillar of the turnaround strategy. Tariff-Led Retail Shifts Delay Turnaround Benefits Management noted that multiple rounds of pricing actions and retailer shifts—from direct import models to more domestic fulfillment—created significant disruption in 2025, muddling the pace of the turnaround. These changes, combined with shelf resets and distribution adjustments, pushed some expected benefits into later periods, with a particular skew to the second quarter of 2026. The message to investors is that there is embedded upside from these moves, but the timing is lumpy, and the near-term flow-through, especially in Q1, will be limited as the system digests the transitions. Guidance Highlights Margin Focus, Cash Generation and Gradual Deleveraging Newell’s 2026 guidance underscores a strategy centered on defending and expanding margins, boosting cash flow and slowly bringing leverage down, while acknowledging muted top-line conditions. The company expects full-year net sales to range from down 1% to up 1%, with core sales between down 2% and flat, assuming around a 2% decline in its categories but with the company outperforming those markets. Normalized operating margin is guided to 8.6%–9.2%, with normalized gross margin roughly flat and EPS in the $0.54–$0.60 range, despite an estimated $0.30 EPS drag from tariffs. Management is counting on its productivity program to deliver over $75 million of savings and to lower overheads by about 100 basis points, even as A&P is maintained at an elevated level to support brands. Operating cash flow is targeted at $350 million to $400 million, capex at $200 million, and net leverage is expected to decline by around half a turn. Q1, however, is explicitly framed as a headwind quarter, with declining sales, compressed margins and negative EPS before conditions improve later in the year. In sum, Newell Brands’ earnings call presented a company that is clearly making structural progress on margins, innovation and cash flow, but still wrestling with soft demand, high tariffs and a leveraged balance sheet. Management’s plan leans on productivity, supply-chain de-risking and brand investment to drive gradual improvement through 2026, yet the near-term outlook—especially the weak Q1 guidance and flat to slightly negative core sales for the year—keeps the story balanced between recovery potential and ongoing risk. For investors, the next 12–18 months will be about watching whether margin gains and cash generation can outpace the persistent macro and tariff headwinds and begin to unlock more durable earnings growth. Trending Articles: Why CoreWeave Stock Dropped 31% – Insider Sales, Lawsuit, Nvidia’s $2B Bet MSFT vs. AMZN vs. GOOGL: Which Is the Top ‘Strong Buy’ Hyperscaler Post Earnings? Five More Affordable Vehicles to Follow: Ford Stock (NYSE:F) Notches Up as Production Grows Disclaimer & Disclosure Report an Issue Continue Reading Looking for investment ideas? Subscribe to our Smart Investor newsletter for weekly expert stock picks! Get real-time notifications on news & analysis, curated for your stock watchlist. Download the TipRanks app today! 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