Church & Dwight Earnings: Sales and Profits Jump, but Competitive Pressure Is Heating Up

Church & Dwight chalked up solid second-quarter results even as it faced an onslaught of competition amid a languishing consumer spending environment. Organic sales shot up 4.7%, reflecting a 3.5% benefit from higher volumes and 1.2% from increased prices and favorable mix, while also boasting a 150-basis-point expansion in the adjusted gross margin to 45.4%. We think some of this performance is a result of its business mix, as 40% of its sales stem from valued-priced fare that caters to a cash-constrained consumer. But not all businesses are shining, as vitamin, mineral, and supplement sales dropped nearly 10%. Management continues to convey commitment to the aisle, but it's possible Church could ultimately throw in the towel, offloading this once high-flying business (similar to wide-moat Clorox), a potentially prudent course.