Newell Brands delivered the quarter turnaround believers wanted on the top line, but not on the bottom line. Normalized EPS of $0.20 matched the consensus exactly, a 0.0% surprise, while revenue of $1.873 billion beat the $1.85 billion estimate by 1.2%. Earnings grew 17.6% year over year on revenue growth of 3.7%. Sales momentum is improving. Core sales rose 3.3%, ahead of the company's own 2% to 3% guide, following core growth of 2.3% in the second quarter and a 3.5% decline in the first. Management also raised its full-year sales outlook for the third straight time. Yet the normalized EPS range was only narrowed, to $0.74 to $0.76, with the midpoint unchanged. That is the central tension: Newell is selling more, but inflation is absorbing the benefit before it reaches earnings.
The quality of the quarter needs some unpacking. On a GAAP basis, Newell swung to a net loss of $81 million, or $0.19 per share, from a $0.05 profit a year ago. The main cause was a $101 million non-cash impairment of an indefinite-lived tradename in Home & Commercial Solutions, alongside a $19 million pension settlement charge and a $16 million debt-extinguishment loss. Normalized results were cleaner. Normalized gross margin expanded 70 basis points to 35.2%, and normalized operating margin rose to 9.8% from 8.9%, as higher sales and productivity outran inflation. Below the operating line, however, interest expense rose to $86 million and the normalized tax rate was just 9.5%, so the $0.20 print is not the product of a heavily taxed earnings base. Inventories climbed by roughly $320 million year to date, which is also worth watching.
The growth itself was broader than at any point in years. U.S. and international sales grew together for the first time since the second quarter of 2022. Home & Commercial core sales rose 6.0%, with Kitchen, Home Fragrance and Commercial all growing for the first time in five years, and the segment's normalized margin improved to 8.5% from 6.8%. Writing grew mid-single digits on its best back-to-school point-of-sale performance in three years, lifting Learning & Development's normalized margin to 22.7%. Management stressed that growth was volume-driven, with pricing contributing roughly nothing. The weak spots were real, though. Outdoor & Recreation fell back into a 6.4% core decline after growing in the second quarter, Baby was flat after a double-digit first half, and EMEA and APAC remain soft.
The risk ledger centers on costs and cash. Management raised its 2026 inflation estimate again, to $220 million, up from $100 million at the start of the year and $200 million last quarter, and expects roughly $150 million more in 2027. Modest price increases are planned for early 2027, which brings elasticity risk. The full-year operating margin outlook of 10.0% to 10.4% includes a one-time tariff refund of about $100 million; excluding it, the margin is closer to 8.8%, and reported margin will decline in 2027 as that refund laps. Operating cash flow guidance was cut to about $150 million from roughly $400 million. Management attributed the cut to the classification of pension-termination flows and about $165 million less receivables factoring, and said underlying cash generation is still near $400 million. On the positive side, net leverage fell to 4.5x from 5.4x in the first quarter, maturities were pushed out to 2031, Moody's moved its outlook to stable, and an early 2027 framework calls for positive core growth, a margin gain of more than 50 basis points excluding the refund, and operating cash flow above $400 million.
The market setup is more complicated than the in-line print implies. Shares opened at $6.60 after the July report, briefly reached a 52-week high of $7.13, then slid 23% to $5.08 heading into this release. The stock set its inter-earnings low on the eve of the report and sits only about 4% above that level and roughly 5% above its 200-day moving average. Investor sentiment improved meaningfully, from -0.21 to essentially neutral at -0.003, so skepticism has eased without turning into enthusiasm. The Earnings Whispers trend readings are mixed, with momentum positive while AVWAP remains negative after the post-July selloff.
The bottom line is that Newell's revenue story is now credible: growth is accelerating, it is broad-based and volume-led, and guidance keeps moving higher. The earnings story has not caught up. Rising inflation, the coming loss of the tariff refund, and noisy cash-flow reporting mean higher sales are not yet producing higher EPS expectations. Until pricing and productivity convert that top-line momentum into earnings growth, bears have legitimate ammunition. Still, the deleveraging progress and the 2027 framework give the turnaround a sturdier foundation than the stock's 23% slide suggests.