Core sales declined 4.4% in Q2, slightly below operating plan but within guidance, with first half 2025 core sales down 3.4%, an improvement from prior periods.
Net interest expense increased by $4 million to $82 million versus prior year.
Net leverage ratio was 5.5x in Q2, slightly above prior year, with expected year-end leverage ratio of about 4.5x.
Net sales declined 4.8% due to unfavorable foreign exchange and business exits.
Newell Brands reported Q2 2025 normalized operating margin of 10.7%, up 10 basis points year-over-year, driven by an 80 basis point increase in normalized gross margin to 35.6%, the highest in 4 years.
Normalized earnings per share were $0.24, at the top end of guidance despite a higher-than-expected tax rate of 19.2%.
Normalized operating margin expanded by 10 basis points to 10.7%, with A&P levels as a percentage of sales comparable to last year but overheads increased as a percentage of sales.
Operating cash flow was a $271 million outflow versus a $64 million inflow in prior year, impacted by seasonal factors and proactive inventory purchases ahead of tariff increases.
Core operating profit increased 2% to $646 million, with ex-special EPS up 7% year-over-year to $1.44; reported EPS was $1.33.
Digital sales grew 18% this quarter, pushing the digital mix to a record 57%, with KFC's digital sales growing 22% and Taco Bell U.S. digital orders at 41%.
Franchise and property expenses increased by $16 million, driven by global franchise convention spend and lapping prior year bad debt recoveries.
G&A expenses ex-special increased 7% year-over-year to $274 million, including incentive compensation lapses; reported G&A was $302 million including $28 million special expenses.
Gross new unit openings totaled 871 with 386 net new units, led by KFC (566 gross openings), Pizza Hut (254), and Taco Bell (50).
Total restaurant level margins were 16.3%, down approximately 150 basis points year-over-year due to commodity cost laps and margin impact from newly acquired U.K. stores.
Yum! Brands delivered 4% system sales growth in Q2, driven by 3% unit growth and 2% same-store sales growth despite a tough consumer environment.
Dafinchi