BellRing Brands reported weak second-quarter results and sharply reduced its profit outlook, blaming cautious consumer spending, promotional pressure, and cost inflation.
The company's second-quarter net sales grew only 1.8% year-on-year to $598.7m. However, operating profit fell 30.6% to $66m and net earnings declined 42.2% to $33.9m. An $11.3m pre-tax inventory-related charge for an ingredient that failed quality standards contributed to the margin pressure.
The real squeeze came from pricing and product mix. While sales volume rose 10.8% in the quarter, the company faced a 9% decline in price and mix, signaling that promotions drove growth rather than premium pricing. President and CEO Darcy Davenport said heightened consumer price sensitivity and "a sustained promotional environment" hurt the sales composition.
BellRing now expects full-year net sales to land between $2.32bn and $2.36bn, versus prior guidance of $2.41bn to $2.46bn. At the midpoint, that represents flat to 2% growth, well below the 4% to 6% previously forecast. The adjusted EBITDA guidance fell even more sharply, to $315m to $335m from $425m to $440m. The company cited incremental inflation on protein and freight costs as ongoing headwinds for the rest of the year.
The Premier Protein and Dymatize brand owner will also face leadership transition. Davenport, who is stepping down, said the company is searching for a successor to lead the sports-nutrition group through a "challenging" category environment.