Colgate North America sales shrink as shoppers buy less

The News

Colgate-Palmolive sold 3.7% less by volume in North America in the third quarter as it raised prices there 2.2%. North America was the only one of its five divisions to shrink.

Organic sales in North America fell 1.6%, while the whole company grew 3.6%.
“North America is where we are seeing the most pressure, but a little bit of improvement as we exited the quarter,” said CEO Noel Wallace on the call.

The details

Volume has fallen more than 3% in North America in every quarter this year, including the first two, when Colgate raised prices only about 1%. Volume fell about as much on those small increases as on the 2.2% one, which points to weak demand beyond the higher prices.

Volume fell 3.2% in the first quarter and 3.9% in the second.
North America net sales were $905 million in the third quarter, down from $922 million a year earlier.

This time Colgate said retailers kept their stock of its products steady, which ties the drop to what shoppers bought. Wallace said US categories are still weak, with growth at the premium end.

“No, we did not see any meaningful inventory destocking in the quarter,” Wallace said.
“Categories maybe improved a bit as we exited the quarter, but still relatively sluggish,” he said of the US.
“The growth is certainly at the top end of the premium segment, and that’s where we need to get our portfolio right,” he said.

At the same time, Colgate’s finished goods inventory has grown $127 million since December. It held $1.6 billion of finished product at the end of September, while its raw materials fell. The figures cover the whole company.

Finished goods were $1,606 million on Sept 30, up from $1,479 million on Dec 31, in the 10-Q.
Raw materials and supplies fell to $583 million from $632 million.
Total inventory rose $150 million, to $2,182 million.

The next cost push comes in the fourth quarter, which Colgate expects to be its peak for tariffs, logistics and commodities. Wallace also said list price increases are back on the table.

“Logistics costs have increased, they remain elevated, and our guidance for Q4 has the highest logistics cost quarter,” said Stan Sutula, Colgate’s CFO.
“Q4 will be probably the highest level of commodity inflation on a year-on-year basis,” Sutula said. Wallace said tariffs “would peak in the fourth quarter.”
“If we don’t have that necessarily and we see a lot of cost inflation, we’ll take list price increases,” Wallace said.

Worth noting

Colgate planned to exit private label pet food during 2025, and it is still finishing the job. Lower private label pet food sales took 0.2 point off Colgate’s organic growth in the third quarter. Colgate first announced the wind-down at Hill’s Pet Nutrition in early 2025. Asked about Hill’s, Wallace said, “I’m nothing but delighted to say this is the last quarter we have to talk about private label.”

Colgate’s restructuring includes its supply chain, and most of the cost is people. The program, set to run through 2028, will cost $350 million to $550 million, with 70% to 80% of it in employee costs such as severance. Colgate has booked $346 million so far, $300 million of it for employees.

My notes

With no destocking, Colgate’s 3.7% drop is a straight read on North American household buying. When a big supplier’s shipments fall and retailers did not trim stock, the shelf is moving less product. Wallace’s “improved a bit” exiting the quarter is the first sign that may ease.