Church & Dwight's (CHD) Q1 results were affected by retailer destocking, slower category growth and tariffs, RBC Capital Markets said Friday in a research note.

The company reported Q1 adjusted earnings of $0.91 per diluted share, down from $0.96 a year earlier. Its net sales were also down to $1.47 billion from $1.50 billion in the same period previous year.

RBC said the destocking and slower category growth have caused greater downside for the company's domestic business. Domestic sales were down 3%, household dropped 3.8% and personal care segment slipped 2.2% year over year. In addition, the company's total organic growth took a hit of 300 basis points due to destocking, the bank noted.

Category growth slowed to 1.5% in Q1 with negative year-over-year category consumption in April, RBC said. Fourth-quarter 2024 category growth was at 2.5%.

The household and personal care products manufacturer is planning to take strategic actions for its Flawless, Spinbrush and Waterpik brands to mitigate the tariff impact. The actions could include shutting down or selling these businesses. "These decisions along with incremental productivity, reduce the gross tariff impact by over 80%," RBC noted.

The company has reduced its full-year 2025 adjusted EPS growth projection to between 0% and 2% from its previous expectation of 7% to 8%. Full-year organic sales growth is now forecast at 0% to 2%, compared with its previous range of between 3% and 4%. "While both sellside and buyside were expecting pressure to the guide, this was below both bars," RBC said.

Following the company's Q1 results and guidance cut, RBC said it lowered its 2025 top and bottom lines reflecting organic sales of 0.4%, compared with its previous expectations of 3.2%, and EPS to $3.46 from $3.69 on lower topline and gross margins due to tariffs.

The bank lowered its price target on the stock to $100 from $105, and reiterated sector perform rating.

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