Perrigo Narrows Sales Decline as Volumes Recover
Infant Formula sales rose 23.1% as store-brand growth and shipment timing lifted results.
Perrigo Company plc (PRGO), the consumer self-care products maker, narrowed its year-over-year sales decline in the second quarter as volume trends improved, though weaker pricing and gross margins continued to weigh on results.
The quarter marked a sequential turn from the start of the year. Core organic sales contracted 3.5%, compared with an 11.0% decline in the first quarter, as the volume-and-mix decline eased to 2.4% from 11.0%. Pricing shifted to a 0.7% decline after contributing 0.2% growth in the prior quarter.
All In net sales fell 3.2% from a year earlier to $1.023 billion, an improvement from the first quarter’s 7.2% decline. Core net sales fell 3.1% to $907 million, compared with an 8.3% drop in the prior period. All In adjusted earnings were $0.50 a share, down 12.3% from a year earlier but up from $0.43 in the first quarter.
The sales recovery came with continued pressure on profitability. Core adjusted gross margin declined to 37.0% from 39.2% sequentially, and its year-over-year contraction widened to 250 basis points as lower volumes, U.S. over-the-counter manufacturing under-absorption and unfavorable mix weighed on results. Cost controls helped lift the Core adjusted operating margin to 13.0% from 12.8% in the first quarter.
Infant Formula generated $101 million in sales and $4 million in operating income, reversing a $12 million operating loss as contract-shipment timing, store-brand growth and productivity supported the business. Self Care sales declined 3.7% to $577 million as softer U.S. and European consumption, retailer inventory reductions and manufacturing under-absorption offset market-share gains. Specialty Care sales fell 2.8%, reversing first-quarter growth as Skin Health weakness and higher promotional spending outweighed continued gains for Opill and ellaOne.
Reported earnings swung to $0.63 a share from break-even a year earlier, primarily because Perrigo recorded a $129.4 million gain from the completed Dermacosmetics sale. The company applied nearly all of the roughly $359 million in proceeds to debt reduction and added Oral Care to the strategic-review portfolio alongside Infant Formula.
Perrigo reaffirmed its full-year 2026 outlook, which calls for a stronger second half. The company continues to expect about $0.60 a share of pressure from manufacturing under-absorption for the year after recognizing $0.44 through the first half, leaving the projected improvement dependent on better factory utilization and sustained volume recovery.