The quarter cleared the published bar on both sales and adjusted earnings. Net sales reached $1.77 billion, about 7% above the published consensus of roughly $1.65 billion, while adjusted EPS of $1.26 exceeded the published $1.09 expectation by about 16%. Growth was broad rather than coming from a single product line: international sales rose 36.6%, Cooking and Beverage rose 36.5%, and Beauty and Home Environment rose 65.3%.
| Metric | Q2 2026 | Q2 2025 | Expectation / prior outlook |
|---|---|---|---|
| Net sales | $1.765B | $1.445B | Published consensus: ~$1.65B (Statements of Income) |
| Adjusted diluted EPS | $1.26 | $0.97 | Published consensus: ~$1.09 (Adjusted Net Income reconciliation) |
| GAAP diluted EPS | $0.92 | $0.98 | Down 6.1% year over year (Statements of Income) |
| Adjusted EBITDA | $264.9M | $223.4M | Up 18.6%; margin 15.0% vs. 15.5% (Adjusted EBITDA reconciliation) |
| FY26 adjusted EPS outlook | $6.45–$6.55 | — | Prior company outlook: $6.00–$6.10 (Fiscal 2026 Outlook) |
| FY26 adjusted EBITDA outlook | $1.357B–$1.369B | — | Prior company outlook: $1.290B–$1.300B (Fiscal 2026 Outlook) |
The more consequential surprise is the guidance reset. The adjusted-EPS midpoint rose $0.45 from the prior outlook, and adjusted-EBITDA midpoint rose $68 million. That materially improves the full-year earnings setup already implied by the prior guidance, not merely the reported quarter. The filing attributes the increase to stronger underlying operations *and* tariff refunds, so the upgrade is not entirely a clean demand-driven improvement (Fiscal 2026 Outlook).
The tariff refund is real upside, but its accounting limits how much should be treated as recurring earnings power. The company says U.S. Customs accepted $247.1 million of refund claims, expected to reduce Q3 cost of sales and create a receivable. Roughly half relates to 2025 tariff costs and will help GAAP results and cash flow but be excluded from adjusted 2026 metrics; the portion tied to 2026 costs is included in the revised adjusted outlook, alongside planned reinvestment. In other words, the raised outlook is supported by a favorable recovery of prior costs, but management also intends to spend part of that benefit against retail activity, media, technology/AI, and continuing tariff and input-cost pressure (Fiscal 2026 Outlook).
Underlying demand was strong, but profitability did not fully keep pace with sales. Sales grew 22.2%, whereas adjusted EBITDA grew 18.6% and its margin declined 50 basis points. Gross margin fell to 48.7% from 49.0%, with tariffs, foreign exchange, and retailer activations cited as pressures. Operating income rose only 6.4%, and GAAP net income fell 7.0%, partly reflecting a swing from foreign-exchange gains last year to losses this year and sharply higher share-based compensation. The beat therefore comes with clear evidence that growth is currently more expensive to support (Gross Profit and Margin discussion; Statements of Income; Adjusted EBITDA reconciliation).
Cash generation adds support to the stronger outlook. Six-month operating cash flow swung to $275.5 million positive from a $63.9 million outflow a year earlier, despite a $141.3 million inventory investment. Cash ended essentially flat at $779.8 million, while the company repurchased $119.2 million of shares and continued scheduled debt repayment (Cash Flow statement; Balance Sheet).
Read the original 8-K on SEC EDGAR ↗