Celsius Holdings heads into its third-quarter report with an unusual problem for a company still growing sales at a double-digit clip: its namesake brand is shrinking, and management has already told investors not to expect a fix this quarter. The report, due before the market opens on November 5, matters less as a test of whether Celsius can grow and more as a test of whether the damage to brand Celsius has stopped spreading, and whether Alani Nu can keep carrying the portfolio while it does.
Wall Street expects earnings of $0.34 a share on revenue of about $805.8 million. That revenue figure would represent roughly 11% growth from the year-ago quarter, but it also sits slightly below the $817.9 million reported last quarter, which tells you analysts are not baking in any sequential rebound. Profit expectations are weaker still. The consensus implies a 19% drop from the $0.42 earned a year earlier, extending a pattern in which revenue grows while earnings power erodes. The company has not offered formal numeric guidance against which to measure that bar, so management's qualitative commentary from the last call is doing most of the work.
That commentary was sobering. Brand Celsius net sales fell 12% on a reported basis in the second quarter, with scanner data down about 2%, and management said the third quarter should look a lot like the second. The CEO conceded that the company's SKU rationalization cut too deeply, leaving points of distribution down roughly 7%, and pushed a return to growth to the exit of 2026 and into 2027. A result in line with that warning would merely confirm the stall. Validation of the recovery story would require signs that distribution losses have bottomed, that the scanner-to-reported gap is narrowing rather than requiring another elaborate bridge, and that shelf resets are finally delivering the gains promised earlier in the year. A worse decline than the second quarter would challenge the credibility of the 2027 timeline itself.
Alani is the offsetting force, but it is cooling quickly. Reported growth slid from 60% in the first quarter to 21% in the second, even as retail sales rose 56% and the brand passed $1 billion in first-half retail sales. Club softness and unfavorable channel mix explain part of that gap, and the fourth quarter brings a difficult comparison against last year's Witches Brew pipeline fill. Commentary on early orders for this year's Witches Brew, billed as the brand's largest limited release ever, could shape expectations for the holiday quarter as much as the third-quarter numbers do.
Margins are the other swing factor. Gross margin has drifted from 51.3% a year ago to about 48%, and management guided to the high 40s through this quarter because of elevated aluminum and diesel costs. The long-promised low-50s target keeps slipping, so any evidence that the second North Carolina production line, now ramping, or the new revenue growth management program is beginning to help would be welcome. SG&A discipline, which brought expenses down to 29% of revenue last quarter, needs to hold to keep adjusted EBITDA from falling further. Buyback pace also deserves attention after the company spent roughly $100 million last quarter.
The market has been forgiving lately. Shares have gained 8.4% since the last report while the S&P 500 was flat, yet at $28.16 the stock remains well below its 200-day moving average of $34.73 and closer to the bottom of its post-earnings range of $23.56 to $36.15. Sentiment remains firmly bearish and essentially unchanged from last quarter, suggesting a low bar but little conviction. The central question is simple: does this quarter show brand Celsius stabilizing as management described, or does the decline deepen enough to push the recovery story further into the future?