Perrigo Company plc

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Good morning, ladies and gentlemen, and welcome to the Perigo Q1 2026 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 7th, 2026. I would now like to turn the conference over to Mr. Eric Jacobson, VP Global Investor Relations.

Good morning and good afternoon, everyone.

Welcome to Parago's first quarter 2026 earnings conference call. A copy of the release we issued this morning and the accompanying presentation for today's discussion are available within the investor section of the Parago.com website. Joining today's call are Pergo's President and CEO, Patrick Blockwith-Taylor, and CFO, Eduardo Bezerra. As a reminder, beginning this quarter, we are reporting segments aligned with our new commercial operating model. We have recast historical results under the new structure for comparability, as provided in our 8K filing, and this change had no impact on our consolidated financials or cash flows. Along with our new reporting segments, we have changed our main profitability measure to adjusted operating income. During this presentation, participants will make certain forward-looking statements. Please refer to the slides for information regarding these statements, which are subject to important risks and uncertainties. We will reference adjusted financial measures that are non-GAAP in nature. See the appendix to the earnings presentation for additional details and reconciliations of all non-GAAP to GAAP financial measures presented. Finally, Patrick's discussion will address only non-GAAP financial measures. Now to the agenda. We have several topics to cover today. First, Patrick will walk through the progress we are making with our 3S plan and how first quarter results compare to our expectations. He will then provide the market overview and explain how our growth initiatives are expected to drive improved results. After which, Eduardo will cover first quarter segment results, balance sheet and capital allocation, and close with further details of our 2026 outlook. With that, I'll turn it over to Patrick.

Thanks, Eric. Good morning, good afternoon, and thank you for joining today's call.

We are making steady progress in building a more focused, disciplined, and consistent paragraph. Challenging market environments impacted first quarter results. However, our 3S plan to stabilize, streamline, and strengthen the company is helping us navigate these conditions and positioning the company for long-term growth. The strategy is working, as clearly demonstrated by our market share gains even in what we have highlighted as a transition year. Given these factors, we are reaffirming our 2026 outlook. Consistent with our prior commentary, results are expected to be weighed to the second half, supported by clear quantifiable factors, including stabilizing category consumption, the lapping of prior year manufacturing volume headwinds, benefits from cost-saving initiatives, and delivery of our growth drivers. With those takeaways as a backdrop, I'll walk through how the 3S plan is driving positive change. Our stabilization efforts have turned share losses in U.S. store brand OTC into a 100 basis point improvement in volume share during the quarter, six of seven categories gaining share. To further dimensionalize our performance, we have gained 270 basis points of U.S. store brand OTC volume share in the first quarter alone. Key brands in Europe also improved, gaining 20 basis points of value share in a challenging consumption environment. We have also stabilized results in infant formula with improved service levels and supply reliability. To streamline our business, we completed the divestiture of the dermacosmetics business in April. an important milestone in further simplifying our operations and enabling debt reduction. Strategic reviews of our infant formula and oral care business are ongoing. Efficiencies are an important part of our streamlined pillar, and our operational enhancement program generated more than $7 million of cost savings in the quarter and is on track for approximately $60 to $80 million in savings every year. with an additional $20 to $40 million expected in 2027. To strengthen our business, we implemented a new category-led operating model and enhanced our commercial and category leadership, adding experienced talent with the capabilities and perspectives required for the next phase of Perigo's evolution. These changes reflect a fundamental shift in how we operate. A new structure aligns our decision-making investment priorities, and performance goals, enabling us to better leverage one of our most important competitive advantages, our scale. With more than 250 molecules, our deep retailer partnerships, a robust supply chain, and our extensive regulatory capability, Perigo is well positioned to be a leader in this category. And our new structure focuses our investments on fewer, bigger brands to target faster-growing categories where we have the greatest right to win. These changes are working, as demonstrated by our strong market share performance. However, many of the benefits from these initiatives are not yet fully realized and are being somewhat obscured by the headwinds that we expect to ease in the second half of the year. Among those headwinds are softer cough and cold incidents and retailer inventory to stocking. Those impacts, along with a 26-cent EPS headwind related to the carryover of prior year manufacturing volume headwinds, weighed on first quarter results. As indicated last quarter, prior year manufacturing volume headwinds are expected to result in an unfavorable all-in EPS impact of approximately 60 cents in 2026. Again, we believe those headwinds are largely transitory, resulting in 2026 itself being a transition year. As conditions evolve, consistent with our 3S plan, we are focused on driving improvement in the areas within our control, streamlining our cost base while strengthening our top-line growth. With that in mind, let's turn to the assumptions underlying our view of 2026 as a transition year, which largely played out as expected in the first quarter. Coming into the year, we anticipated market softness to carry over into the first half, followed by sequential improvement in the second half. In the first quarter, reduced cotton cold incidents and the impact of macroeconomic pressures, particularly in Europe, led to lower than expected consumption levels. we estimate soft, cough, and cold incidents was approximately a 3.5% headwind to core sales. In response to lower consumption, retailers in the US and Europe reduced inventory levels, hampering sales further, resulting in additional three points of core sales headwind. However, we, in line with other industry commentary, continue to expect sequential improvement in demand, led by stabilizing seasonal incidence of cough and cold. We also expect retailer inventory levels to positively adjust over time, in line with improved consumption. Our second assumption was our ability to build off our strong market share gains in 2025. We delivered on that expectation with solid market share performance in both store brand and branded products. Third, we expected to grow net sales through four key revenue building blocks, consumer-centric innovation, targeted geographic expansion, continued distribution gains, and amplified demand generation. We've made progress across each of these areas in the first quarter, reaffirming our confidence in second-half improvement. Turning to our financial results, the first quarter reflects category softness, partially offset by progress in our execution of the 3S plan. All net sales declined 8.3%, driven primarily by softer category consumption in the self-care segment due to reduced cough and cold incidents and retailer inventory destocking. These impacts accounted for nearly two-thirds of the net sales decline. These impacts were partially offset by share-driven gains in the specialty care segment particularly in the women's health category. All in, net sales declined 7.2 points, reflecting similar pressures, partially offset by improved in-performer performance. Adjusted core EPS at 40 cents was impacted by prior year manufacturing volume headwinds and lower net sales volumes, primarily within our self-care segment. Adjusted EPS results outperform our expectations, benefiting from the net recognition of recovery of a portion of previously paid tariffs, a lower effective tax rate, and benefits from our operational enhancement program. All in adjusted EPS for the quarter is 43 cents. Turning to the market environment, conditions remain challenging in the first quarter, as expected. In the U.S., the OTC market declined 4.1 points in value, 2.1 points in volume, largely consistent with four quarter levels. European markets turned more negative, declining 3.7% in value and 4.4% in volume. Trends in both the U.S. and Europe were driven primarily by softer consumption demand in the cough, cold, and pain categories within the self-care segment. That weakness appears transitory, driven largely by challenging year-over-year comparisons and lower than normal illness levels, as well as macroeconomic pressures, particularly in Europe. We expect the category to stabilize throughout the year as comparisons ease and more typical seasonal incidence patterns return in the second half of 2026.

To mitigate category pressures, we are focusing on areas within our control.

As I noted earlier, the U.S. Perigord grew volume share in six of seven OTC categories, and our store brand portfolio extended its streak to 12 consecutive periods of share improvement. Our priority brand gained value share in Europe, driven by strong performance from L01, up 200 basis points. Jungle Formula up 140 basis points and Physiomare up 50 basis points. Other areas of strength including the derma of Cold Soil and Oat Hill, which increased 180 and 40 basis points respectively. Importantly, as we enter the summer period, momentum is building across our seasonal brands in several key European markets. Homepage is strengthening into peak season with impressive share gains and sell-out trends supported by earlier activation and excellent in-store execution. For example, in Italy, Compete achieved market share growth of 550 basis points to 35%, while in France, it is growing well ahead of the category. Compete up 160 basis points and our share approaching 36%. This was led by focused investment, improved activation, stronger retailer execution, And this strong performance gives us confidence in our ability to drive growth as demand builds through the summer. As category demand normalizes, we expect the increasing earnings power enabled by this brand strength to become increasingly visible. As we've discussed, we are driving share gains by scaling up all capabilities consistently across the portfolio. Nicotine replacement therapy is an excellent illustration of our approach to 360-degree innovation. Our process now develops claims, formulations, and regulatory platforms once at the category level, then deploys them holistically across national brands and school brands, across formats, geographies, and price points. Importantly, this innovation expands the addressable market beyond traditional quitters to include vapers and dual users, allowing us to scale faster and unlock incremental demand without adding complexity. Store brand demand generation is another scalable differentiator for Perigo. We are the only large-scale store brand supplier bringing national brand demand generation capabilities to retailers, allowing us to partner with retailers and elevate conversations beyond just its human price. Retailers are drawn to this program because it builds awareness for their business, it reinforces the perception of quality and equivalence, and drives household penetration and improves retailer profits. Retailers, and more and more retailers, are asking us to expand these programs across even more OTC categories. Demand generation is highly impactful for Perigo. When we combine it with strong retail execution, we improve competitive takeaway and share gains. And these gains can be meaningful, with a one-point increase in U.S. store brand household penetration representing incremental sales of more than $100 million of store brand OTC at retail. Targeted geographic expansion allows us to extend our existing successful initiatives into new areas. By selectively expanding priority brands into new markets, we can drive incremental growth with lower risk. We achieve faster payback and higher returns. As a reminder, this is a long growth runway for Perigo, as today we only serve approximately 5% of global households. Together, these capabilities form a repeatable and scalable growth model. 360-degree innovation expands our opportunity set. Small brand demand generation converts that opportunity into sustained consumption. And totally geographic expansion amplifies the impact, allowing us to scale performance across categories and regions. This is translating into early but significant in-market gains. This really is the outcome of what we have been working towards over the past three years. A Perigo sustainable growth model based upon a more focused portfolio that better leverages our core strengths, better leverages our unique asset base, underpinned by a much more effective commercial operating model. In summary, results in the first quarter reflect a very challenging market, but also demonstrates the effectiveness of our strategies. As we move forward, we are focused on building a more focused, disciplined, and consistent business. By executing on our 3S plan, we expect to mitigate current category challenges and drive long-term growth. We are reaffirming our four-year 2026 guidance, which we expect to be weighted to the second half. That phasing is supported by clear, quantifiable factors already underway. Our strategy is working. We're seeing market share gains. We've achieved a more focused portfolio. We have a more effective and scalable commercial model. I recognize that quarter one revenue and adjusted EPS are being driven by external factors that will need to be carefully managed.

I'll now turn it over to Eduardo to walk through the financials in more detail. Thank you, Patrick. I appreciate everyone joining us today.

Before turning to the details of our first quarter financial performance, I want to provide an update on goodwill impairment. As we discussed last quarter, the reallocation of goodwill following our move to the new reporting units was expected to result in an additional non-cash impairment in the first quarter of 2026. And as expected, we recorded a non-cash goodwill impairment charge of $331 million based on our goodwill impairment test as of January 1st, 2026, which utilized the same underlying aggregate fair value of the business as the 2025 year-end goodwill test. This chart does not impact cash flows, liquidity, or the ability to execute our strategy. From this point on, my comments will focus on adjusted non-GAAP results, unless otherwise known. As Eric said, beginning this quarter, We're reporting segments aligned with our new commercial operating model. And our new reporting segments include self-care, specialty care, and infant support models. Turning to our results is starting with the top line. Coronet sales declined 8.3% year-over-year, driven by software consumption, for Maryland cough and cold, and retailer inventory distorting in the self-care sector. Higher specialty care net sales partially offset that weakness, driven by performance in our women's health category. On an organic basis, core net sales declined 11%. All in net sales declined 7.2%, reflecting the same factors impacting core results, in addition to modest contributions from infant formula and dermaposmetics business. Currency translation benefited both core and only net sales in the quarter. Looking at adjusted operating income by segment, self-care was the largest driver of decline due to lower net sales volumes, the carryover impact of prior year manufacturing volume headwinds, and unfavorable mix. These factors were partially offset by the net recognition of recovery of a portion of previously paid tariffs and favorable currency translation. Specialty care benefited from the lapping prior year OPU investments, as well as favorable foreign currency, which more than offset the carryover impact of prior year manufacturing volume headwinds. All in adjusted operating income was primarily driven by the same factors as core, along with an $18 million impact from infant formula due to the carryover of prior year manufacturing volume headlamps. These impacts were partially offset by operating income growth in all other segments. Turning to margins, drivers of both core and only margin changes were consistent with the segment results just discussed. Core adjusted gross margin declined 160 basis points to 39.2%. primarily due to lower sales volumes, manufacturing volume headwinds, and leaks. These pressures were partially offset by the net recognition of tariff recovery and favorable foreign exchange. All in, adjusted gross margin declined 340 basis points to 37.6% due to the same factors impacting core gross margin in addition to the manufacturing volume headwinds in infant formula we just mentioned. Core adjusted operating margin decreased 110 basis points to 12.8%, reflecting gross margin flow-through, partially mitigated by lower advertising promotion spend, benefits from the operational enhancement program we announced in Q4, and favorable curves. All-in adjusted operating margin decreased 240 basis points to 11.6%, due to the same factors as core operating margin, in addition to the impact from infant formula. First quarter core adjusted earnings per share was $0.40, coming in above our expectations, primarily to the net recognition of recovery of a portion of previously paid tariffs and a lower effective tax rate. All in adjusted diluted earnings per share declined $0.17 to $0.43, due to the impact of lower sales volumes and the carryover impact of prior year manufacturing volumes in US OTC and income formula. Turning to cash flow, first quarter 2026 cash from operating activities decreased $49 million to an outflow of $114 million due to lower earnings and higher working capital in line with our previous expectations. As a reminder, The first quarter is typically our highest cash usage period amongst the year. Capital expenditures total $14 million, and we returned $40 million to shareholders through these days. Turning to the balance sheet, cash and cash equivalents were $357 million, and total debt was $3.6 billion. During the quarter, we amended our $1 billion revolving credit facility, extending the maturity to 2031. Borrowings under the revolver were used to repay our $421 million term loan aid, extending our maturity profile with no significant maturities until 2029. We expect to continue to actively manage and optimize our maturity depth profile going forward. After quarter end, we completed the sale of our dermacosmetics business for upfront cash proceeds of approximately 306 million euros, which we expect to use to support debt reduction. We remain focused on our discipline capital allocation, balancing growth investments, deleveraging, and shareholder returns. Looking ahead, although category dynamics were softer than expected in the first quarter, our guidance incorporates a wide range of outcomes and gives us comfort in reaffirming our 2026 outlook. We're closely monitoring retailer inventory changes, particularly the destocking activity observed in the first quarter, which we believe is largely related to the current consumption environment. As consumption levels improve, we expect inventory trends to stabilize. We're also actively managing the inflationary pressures related to the geopolitical developments in the Middle East and their impact on consumers and our cost base. To mitigate the estimated incremental in-year impact of $10 million on our cost base, we have implemented sourcing and cost management initiatives, and we also evaluate pricing actions. As Patrick noted, We continue to expect results to be weighted to the second half of the year, with approximately 30% to 35% of core adjusted earnings per share in the first half, and 65% to 70% in the second half of 2026. This phasing is supported by clear, quantifiable drivers, the majority of which are concentrated in the back half. The single largest sales growth contributor in 2026 expected to be consumer-centric innovation. Approximately 60% of the benefits from innovation is expected in the second half, including the expansion of our complete portfolio and the introduction of neo-infant formula offerings. Several of our other 2026 drivers, including distribution gains amplified by demand generation activity with top retailers, targeted geographic expansion, and benefits from our operational enhancement program, are all expected to be back half-weighted. In addition, we anticipate lower interest expense in the second half as we apply the dermacosmetics proceeds towards debt reduction. In conjunction with those drivers, two of the most meaningful first half headwinds, the carryover impact of prior year manufacturing volume headwinds and a softer cough and cold season, are transitory. and expected to lap in the second half. As indicated last quarter, prior year manufacturing volume headwinds are expected to result in an unfavorable all-in earnings per share impact of approximately 60 cents EPS in 2026. We experienced roughly 26 cents of that impact in the first quarter. In summary, Our outlook is based on clear drivers supporting our second-half expectations. Many of each are already underway while acknowledging the dynamic microenvironment. As Patrick outlined, the 3S plan is writing tangible improvements, and we're confident that we're a position in Perigo to generate sustained growth of shareholder value over time. With that, I will turn the call back to Eric.

Thank you, Operator. We're now ready for questions.

And thank you.

We will now begin our question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset first before pressing any keys. One moment for our first question. And I see our first question is from Chris Scott with JP Morgan. Please go ahead.

Hi, this is Ethan on for Chris Schatz. Thanks for taking our questions. Just to start off, and you touched on this during the call, but as we think about the operating margin recovery for the core kind of non-infant formula business in the back half of this year and into 2027, can you help level set how much of this is driven by working through higher cost inventory in the near term? versus how much will require OTC volumes to rebound and normalize. And then my second question is just any updates you can offer on the infant formula strategic review and kind of latest thoughts on timing more broadly. Thank you.

Hi, this is Eduardo here.

Thank you for your question. So as we highlighted, you know, our operating margin, the first quarter, then as we provide our guidance, in the first half of the year would be significantly impacted by the carryover volume barriers that's impacting the first half. But also, you know, in the second half, we expect to see, you know, significant uptake on the market, right? So in terms of the recovery of consumption that we're watching very closely, given some of the dynamics going on. And so we expect margin improvement because of the different activities we have. So innovation, you know, continue the distribution gains that we have there, also amplify demand generation, as well as the opportunistic geographic expansion, and also the ramp up of the operational enhancement program that will benefit our OPEX and operating margin. So overall, you know, as we look into how we're going to see between the first half and the second half, we're going to see a very meaningful improvement on operating margin expansion because of these different factors. To your second question on the infant formula, right, so just giving a little bit of perspective, right, so the business as you saw today, you know, we had a very relatively good performance in the quarter. you know, with net sales growing about 2%, driven by higher contract manufacturing. And also, you know, the store brand and branded formula were a little bit impacted by prior year comparisons, right? So from a market standpoint, we're seeing consumption to being a store brand, you know, is likely improving versus what we had before. So the first thing to your specific question is, We're keeping track of the business. And remember, we anticipated that margins would be significantly impacted by the carryover of manufacturing variances. From the overall, you know, strategic review that we're carrying, you know, and that we started, so the review continues. We're working with our advisors to assess all available options that we talked before. between optimizing our network. And to that purpose, we've recently announced, you know, a rationalization of our capacity and one of our facilities that will help streamline the business and reduce our costs. But also we're looking to the other options in terms of partnership and investments. There's nothing, you know, more to share at this stage, and we continue with that, and we expect to provide further updates as we progress through the year.

Anything further, Chris? Your line is still open.

Nope. That's it. Thank you so much.

Thank you. Thank you. We have our next question from Susan Anderson with Canaccord Genuity. Hi. Good morning.

Thanks for taking my questions. It's nice to see the volume share gains in the store brand in the U.S. I guess maybe if you could give some color on what's driving that share gain. What are you doing differently with retailers than you were doing before? And then also, I think maybe you said it was across most categories, but if you could talk about, you know, which categories you're seeing those gains across the portfolio. Thanks.

Hi, Susan.

This is Patrick. What's driving those share gains? So we're winning more contracts. So as you know, in 2025, I think it was about $100 million of net contract wins. Some of those are rolling out now. So we're taking a greater share of store brand contract volume. That's number one. Number two is not only do we want a greater share, we want to grow store brand share of the overall category. This basically is where we start to drive equivalence and the value proposition within consumers Frankly, using brand building marketing capability that we apply to our national brands. That grows consumer awareness and it grows household penetration of the store brand. There's two critical things. You want a greater share of store brand and you want store brand to have greater share of the marketplace. That provides a double win for us. So that's really what's growing. In terms of the, I think I understood your question, of which categories are growing. We compete in seven OTC categories. And I think in the presentation deck, we actually outlined which are growing. So we're growing share in all of them, with the exception of skin, where there was some temporary supply disruption, but it's a very small business for us. The rest, which are the major categories, we're growing our share of So allergy is up 180 basis points. Pain, 110. Digestive health is up 30 basis points. And probably the standout performance is in nicotine replacement therapy. And I heard this referred to by a competitor. We're actually seeing a 540-point volume share growth this calendar year to date. So it's broad-based and it's substantial.

Okay, great. That sounds good. And then maybe if you could talk about how you're planning for cold cough in the back half of the year, I guess, should we expect that to finally return to growth, particularly as we kind of lap some easier compares from last year, calendar year, or are you, you know, kind of thinking about it being more flattish? And then, I guess, final question, just are you thinking about any pricing for the back half of the year, particularly as we're seeing maybe some more inflationary pressures now? Thanks.

Thank you. On cold, I've been trying to predict cold seasons for a quarter of a century, and I get it wrong as many times as I get it right. This was an abnormally uh weak cough cold season um both in the US and many countries throughout Europe and therefore in totality the the rational uh forecast is always to take an average season if we take an average season for 26 27 that's going to be materially stronger than the season we've just been through I think that's a an entirely logical outlook and forecast um and the the

Second part of your question was... Just on pricing, I guess.

Yeah. We are... So, firstly, the inflationary pressures that we've seen from the Middle East have been very moderate for us, and we just manage those through sort of normal operations. But we are starting to look at pricing, depending on what happens with other commodity prices, etc., So, yes, I would say we're in active consideration of that, both in the international branded business and our store branded business across both regions. Yes.

I think the important thing is just to add to that point, Susan, is, you know, in times of inflation, et cetera, you know, what we're going to be watching closely is the potential for pickup on store brand consumption, right? So, It's something that has been erratic over the past years, mainly because of the still strong, let's say, household wallet. Only the low-income consumers have been suffering the most, and usually they're the ones that tend to have a direct correlation with store brands. But if that starts to impact further, the trade-down could accelerate, and that's an opportunity that takes place, we're ready to take advantage of that.

Okay, great. Thanks so much. Good luck the rest of the year.

Thank you.

And we have our next question from Keith Devis with Jefferies.

Hey, good morning, guys. Thanks for the question. Maybe just zooming out a little bit and just returning back to the macro picture as it pertains to consumer health. I know you called out some expectations for the second half to be better just hoping you can add more context on you know exactly what's driving that i think we're seeing you know across branded and store brand consumption be um a little softer than anticipated for longer than we would have thought and so kind of just want to double click on what's embedded in your expectations for the second half to be better and you know is it maybe better visibility into the contract wins or you know, the destocking easing, but just kind of unpacking that a little bit, I think would be helpful. Thank you.

Yeah, thanks, Keith. So remember, as we highlighted during our guidance, right, so incorporate a wide range of outcomes there. So as you look into that piece, so there are four key areas that we are driving a lot of, you know, consumption opportunities. So From the innovation side, right, so we mentioned a little bit about compete portfolio as well as on the infant formula side, bringing new offerings, including one focused a lot on the key competitor in the market right now with an organic formulation. Continued distribution gains, so we continue to focus a lot on that in the marketplace with further competitive takeaways. and also the demand generation, right? So remember we talked last year, some of the examples like what we did on the life hacks and cough and cold and allergy. So we're seeing more and more, you know, retailers wanting to amplify that across their portfolio. And so we believe that's going to be a good opportunity to attract more consumers into our specific categories on store brand, as well as the geographical expansion on our priority variants. Right, so, but again, we acknowledge the recent developments, right, so we acknowledge some retail stocking that took place in the first quarter. We believe that this mainly related to the soft cough and cold, you know, that, you know, they wanted to be more pragmatic on managing their cash in that sense and adjusted their inventory levels, but that's something we need to track closely. And the other thing as well is to what extent, you know, the Middle East geopolitical situation could further evolve into inflation and how could that impact consumption in second half. So we still believe there will be a recovery because of the comparison last year was a significant decline, but we're watching that closely. I don't know, Patrick, anything you wanted to add as well?

Yeah, I think that's right. I mean, fundamentally, there's not been a big shift in in incidents across categories. Household penetration is quite stable. Often one, for us, one small segment in an area of pain that consumers are moving to alternate forms in pain from solid pill to creams, et cetera. So no radical change in incidents or household penetration. Plus, as we explained, the effects last year started to be seen in quarter two. So we're very soon lapping the beginning of that category contraction. And therefore, just as a function of the math, it just stabilizes itself. There hasn't been a dramatic extraction of value that we can see that's going to continue into the remainder of the year. So again, though, the critical point, this is always going to be quite an unpredictable range this year. So we constructed guidance with a broad range of outcomes. You've seen what our sales guidance is for the year. And you heard last quarter how much of our demand generation activity and cost saving activity is weighted into the second half. That helps insulate our outlook. So at the moment, we're confidently reaffirming our 26 guidance.

Okay, got it. Thank you. I'll pass it on.

Thank you.

We have our next question from Daniel Bolsey with Hedgeye.

Good morning. I was wondering if you could speak to the consumer's purchasing behavior in-store versus online for branded versus store-label products and self-care categories. Do you think there's a notable difference with your largest customers? Are they doing a good job of highlighting store-label alternatives in their searches? Because when I look at the largest retailers, There's quite a big difference between them when I search for Advil versus ibuprofen, for example.

Good question.

Some of our higher shares in store brand do tend to be on e-commerce, interestingly. I think collectively we can do a better job on store brand representation on e-commerce with some of our big traditional retailers. in terms of landing pages, as you've just said, but also on some of the advertisers. As you know, they're buyer equivalents, and they can be of much better value at a time when more and more consumers are seeking value. I think that execution can be stronger. But, so yeah, I think with traditional e-commerce players playing, doing it better, enjoy higher shares, actually seeing more and more competitive takeaway within that channel as well.

Yeah, and Daniel, just to give you an important example, like in women's health in OPL, right, in Q1, e-commerce grew like almost 30%. So, you know, that's an area where it's going very, very well. You know, so we're seeing, you know, a very good uptake, you know, while, you know, the sales on OPL were double-digit growth of plus 12%. So you see how you know, e-commerce is taking a very important piece of that growth. Great, thank you.

And then, can you share what the board's thoughts are on the dividend currently? Sorry, could you repeat that? Oh, yeah.

So, you know, as we talked the last quarter, we continue with our capital allocation plans, right, continue to invest into our base business as well as focusing a lot on debt reduction as well and keeping our shareholders return. So we're going to keep that same focus going forward and the board will continue to assess that on a quarterly basis. What's our position to make sure we optimize our capital allocation. And that they decided to keep that, and we're going to continue to have those discussions for the remaining of the year.

Thank you. And thank you.

There are no further questions at this time. I will now turn the call over to Patrick Lockwood-Taylor for closing remarks.

Thank you very much. And again, thank you everyone for joining me. So to close, I want to put this quarter into clear perspective. The work we've done over the past several years is driving meaningful change at Paribas. We are a more focused, disciplined, and consistent business, and that stronger foundation is enabling us to manage through a challenging environment more effectively than we could have done in the past. We are delivering on our promises. We completed the Dermacosmetic Divestiture and are applying those proceeds towards debt reductions. We are executing our cost-saving program in line with slightly ahead of expectation. We are simplifying our portfolio, strengthening our operations, including continued progress in infant formula. At the same time, we are delivering material share gains, reinforcing that our commercial strategy is working. But this is not a perfect quarter. Softer cost and cold demand, inventory destocking, and European consumption pressures weighed on us all. But importantly, our improved operating capabilities enabled us to mitigate those pressures and capitalize on opportunities where they emerged, as demonstrated by the fact that both EPS and our share gains were ahead of our expectation. As we have moved into the second quarter, we're also encouraged by the continued momentum in market share and in market execution that we're seeing across the portfolio. That progress gives us growing confidence as we move through the year and reinforces our conviction in our 2026 outlook and long-term trajectory. We remain focused on disciplined execution, controlling what we can, and building enduring value over time. Thank you very much for your continued interest and support.

Thank you, ladies and gentlemen. This concludes today's conference. We thank you for your participation. You may now disconnect.