Why Energizer Stock Plunged Today
Key Points
Weakening consumer demand dented Energizer's sales.
Rising costs further undermined the company's profitability.
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Shares of Energizer Holdings (NYSE: ENR) declined by more than 18% on Tuesday after the battery producer's profits fell short of investors' expectations.
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Tariff-related costs took a bite out of Energizer's earnings
Energizer's net sales rose by 3.4% year over year to $832.8 million in its fiscal fourth quarter ended Sept. 30. The battery maker's sales were boosted by its acquisition of Advanced Power Solutions in May, which helped to bolster its manufacturing network in Europe.
However, Energizer's organic net sales, which exclude the impact of acquisitions, decreased by 2.2%. Softening consumer sales trends in North America contributed to the shortfall.
Tariffs also took a toll. Energizer's adjusted gross margin declined by 3.7 percentage points to 38.5%, due in part to higher input and distribution costs.
Energizer's adjusted earnings, in turn, fell 18% to $72.8 million. Despite the impact of stock buybacks, the company's adjusted earnings per share still dropped by 14% to $1.05. That was significantly below Wall Street's estimates, which had called for per-share profits of $1.16, according to Yahoo! Finance.
Turnaround momentum is building
Looking ahead to fiscal 2026, management projects adjusted earnings per share of $3.30 to $3.60, compared to $3.52 in fiscal 2025.
"As we begin fiscal 2026, we are operating through a period of transition, with the first quarter more heavily affected by temporary tariff costs and mitigation efforts," CEO Mark LaVigne said in a press release.
To offset these challenges, Energizer is doubling down on its Project Momentum cost-reduction initiatives, which management believes will help to protect the company's profit margins and reinvigorate growth.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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