Return-to-office will boost demand for personal care items

Edgewell Personal Care CEO Rod Little told CNBC on Tuesday he expects demand for the company’s care and grooming products to increase in the coming months, as the intensity of the coronavirus pandemic wanes.

“I would guess by the time we get to late spring, summer in our categories, you’re going to see more people back in the office. That’s more shaving, more daily grooming routines,” Little said in an interview on “Closing Bell.”

“And you’re going to see a lot of people getting out, going on vacation with leisure travel, which will drive sunscreen,” Little added. “We’re optimistic for the balance of the year.”

Edgewell — the parent firm of Banana Boat, Playtex and Schick — also should have an easier time meeting that demand, Little said. Late last year, the company’s production was limited as workers called out sick during the height of the Covid omicron wave. At the peak in December, Little estimated about 10% of Edgewell’s manufacturing workforce was out with Covid.

“But we’re beyond that now. The good news is, as I look at it today, the omicron outs are back to what I would call a normal rate, so I’m quite optimistic our ability to meet the demand going forward is going to be better,” Little said.

Little’s comments on CNBC came after Edgewell reported mixed first-quarter results before Tuesday’s market open. Revenue of $463 million missed Wall Street estimates of $465 million, according to Refinitiv, while per-share earnings of 42 cents topped forecasts by 1 cent.

Shares of Edgewell on Tuesday tumbled 13.2%, a steep decline that Little attributed to the company’s commentary on inflation. Management now expects 500 basis points of inflationary headwinds on the cost of goods sold, up from prior estimates of roughly 400 basis points. A basis point equals 0.01%.

Despite an uptick in inflationary pressures, Little said there is some good news for investors because it’s primarily related to increased materials costs. It is unlikely those are structural changes, he said.

Little said certain chemicals used in sun care products have jumped in price. However, he said previous spikes in other areas, such as resins, have already peaked. 

“Now it’s just, ‘How fast does it come back down?'” Little said. “So I think the new inflation up that we’ve seen, personally, is much more transitory in nature.”