HNST - NASDAQ

Ladies and gentlemen, thank you for standing by, and welcome to The Honest Company's Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Ms. Elizabeth Bouquard, Senior Director, Investor Relations at The Honest Company. Please go ahead.

Good afternoon, everyone. Thank you for joining our second quarter 2025 conference call. Joining me today are Carla Vernon, our Chief Executive Officer, and Curtiss Bruce, our Chief Financial Officer. Before we start, I would like to remind you that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release issued today as well as our SEC filings for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events, except as required by law. Also, during this call, we will discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non- GAAP to GAAP measures in the Financial Results section of today's earnings release. A live broadcast of this call is also available on the Investor Relations section of our website at investors.honest.com. And with that, I'll turn the call over to Carla.

Thanks, Elizabeth. Good afternoon, everyone, and thank you for joining us today. As I begin today's remarks, I'd like to take a moment to welcome our new Chief Financial Officer, Curtiss Bruce. As he joins our executive team, Curtiss continues to advance our journey by incorporating a broad set of experiences and best practices from some of the most respected and beloved brands in the consumer products sector. Prior to joining Honest, Curtiss was the Senior Vice President of FP&A and Investor Relations at Hain Celestial and spent time at the Kellogg Company as the business unit CFO for specialty channels, followed by a CFO role on the [ RXBar ] team. These experiences of running small purpose-driven brands are complemented by his time at Keurig Dr Pepper and Kraft Heinz, where he was in both financial leadership roles and general management roles. At Honest, Curtiss has already gained a deep understanding of our culture and our growth strategy, and I am so pleased that he provides strong insight and leadership discipline to drive the ongoing progress of our transformation and growth journey. Welcome, Curtiss. We are so delighted to have your leadership at Honest. Along with welcoming Curtiss, I am pleased to share our results for the second quarter of 2025. For today's call, there are 3 messages I want to share with you. First, we remain consistent in delivering solid results that were in line with our expectations. We delivered our second consecutive quarter of positive net income, along with expanded gross margin, resulting in our highest gross margin as a public company. Second, our path forward continues to be driven by our team's relentless focus on executing our transformation pillars of brand maximization, margin enhancement and operating discipline, along with our 3-pronged tariff mitigation strategy. And third, as we look toward the second half of the year, we are reaffirming our full year 2025 financial outlook. For the second quarter of 2025, we continue to strengthen our business model and in-market performance. We delivered revenue of $93 million, and our gross margin grew 210 basis points to 40%. Additionally, we delivered positive net income of $4 million, an increase of $8 million year-over-year for our second consecutive quarter of positive net income. With an adjusted EBITDA margin of 8%, this is now our seventh consecutive quarter of positive adjusted EBITDA. As we look at our performance year-to-date, our revenue grew 6% and our net income increased by $13 million as compared to last year. Despite the evolving macroeconomic landscape that has presented new challenges for consumers, according to Circana MULO+ tracked channel data, Honest consumption grew 6% for the quarter, which is down slightly from the first quarter consumption growth of 8%. With this mid-single-digit consumption growth across our categories for the quarter, there are many indications that the Honest portfolio of products remains strong relative to our comparative categories, which grew 2% in the same period. Our consumption growth was driven by unit growth of 8%, along with increased velocities, which were up 21% in the quarter. These increased velocities provide a strong indication that our marketing and shelf expansion strategies are working. Further underscoring the strength of the Honest brand is the consumption growth of 26% in the quarter at our largest digital retailer. As online shopping continues to grow, Honest, which was born digital-first and built for omnichannel, remains well positioned to meet consumers where they shop. Another indication of the strength of the Honest brand is the unique role our products play in meeting the sensitive skin needs of our community with every item in our personal care and baby collection made to deliver on the promise of our rigorous Honest standard of clean. According to the National Institute of Health, sensitive skin affects 71% of adults. And forecasts from KBV research show that sensitive skin care products are expected to be an $80 billion market by 2030. Additionally, the presence of skin allergies in children has nearly doubled since 1997. These insights support what we are seeing with the strength of our own line of sensitive skin and fragrance-free products. For example, our collection of fragrance-free baby personal care items grew consumption by 65% in the quarter. This is why our Honest standard remains a core guiding principle for our entire product portfolio. Our guidelines exceed the regulatory requirements dictated by both the EU and the U.S. regulations. At Honest, our no list is a list of more than 3,500 ingredients and materials of concern that we do not formulate with or design into our products. These high standards are also evidenced by the increased loyalty to the Honest brand. According to Numerator household panel data, we are seeing growth on 3 key loyalty metrics. First, our buy rate of $50.54 was up over 600 basis points versus the prior year, meaning our community is spending more dollars on Honest products this year. Second, our repeat rate of 32% increased 94 basis points versus the prior year. This indicates, on average, our community is buying more Honest items and coming back to the Honest brand more often. While this is happening, we can also see that more households have become interested in our products as our Honest household penetration of 7.2% increased 77 basis points year-over-year. While these metrics are encouraging, we also saw low double-digit consumption declines on our diaper business as expected this quarter. This was driven by an assortment simplification at our largest brick-and- mortar retailer, which we expect to continue until these distribution changes are lapped. However, these declines have been more than offset by consumption growth across other key segments. In particular, distribution and velocity growth is driving strength in both our wipes business with consumption up 35% year-over-year versus the growth of the category, which is up 2%. And our Baby Personal Care collection is the #1 natural baby personal care brand in the U.S. with consumption growth up 10% in the quarter, outpacing the modest growth of the category, which was up 1%. And now I'd like to spotlight 2 parts of our portfolio that exemplify the progress we've made on our brand maximization pillar, which is focused on driving scale, loyalty and top line growth of the Honest brand. First is our new and improved line of clean conscious diapers, which launched this year with marketing support beginning in July. And second, I will share the progress we've made on building broad-based availability by diversifying our retail and channel presence, including our entry into higher productivity store aisles. Let's begin with our new and improved clean conscious diaper. This greatly improved diaper began shipping in the second quarter of this year. Through extensive technical development, our team of diaper engineers designed our best diaper ever. Our new diapers are designed with an enhanced absorbent core and comfort dry technology for up to 100% leak protection to keep babies dry and comfortable. With stretchier, softer fasteners, a plant-based liner and our most breathable outer layer yet, we are continuing our commitment to care for babies' most sensitive skin needs. And according to a recent article in Forbes Magazine, where they put more than 20 different diapers to the test, Honest diapers did their job at containing leaks while being the cutest diaper of all the diapers they tested. The launch campaign, which went live in July, features full surround marketing across digital, streaming and traditional media. And because we are a digital and social media era brand, this diaper campaign also includes strategic and engaging partnerships with trusted advocates and influential voices on social media. Our new and best Honest Diaper ever is now 100% of the Honest Diaper inventory shipping across all retail channels. With these improvements, our Honest babies have our best diaper yet, keeping them comfortable, dry and stylish wherever they go. Another bright spot in our brand maximization strategy is the expansion of the Honest brand beyond the baby aisle. Our flushable wipes found outside of the baby aisle are enabling us to expand Honest with a broader set of shoppers. According to Numerator, the household products aisle where consumers shop for a broad array of everyday essentials has twice as many purchasing households as the baby aisle. Beyond brick-and-mortar, our community is used to discovering Honest products through digital-first experiences. So, it was not unusual for us to launch our elegantly designed and septic-friendly flushable wipes online. The initial items performed well from the start with 2 of our offerings now among the top 6 fastest-growing items in the flushable wipes category at our largest digital retailer. This early success is now being complemented with an expansion of our flushable wipes into brick-and-mortar retailers. That growth is also allowing us to expand Honest across a broader set of leading regional and national grocery retailers, specialty channels and drug stores. With the launch of flushable wipes, we are now seeing Honest overall distribution growth, up 11% in the quarter across these channels. In a moment, I will turn it over to Curtiss to share our additional transformation pillars and financial results. But first, let me reiterate an important perspective we shared at our last earnings call regarding tariffs. Our Honest team has been very thoughtful about our framework for managing tariffs. As we shared last quarter, our process for managing tariffs has been honed over a number of years. We are guided by the 3 prongs of our tariff mitigation strategy. First, building an annual plan that is agile in the face of tariffs and that thoughtfully adjust our spending or pricing as necessary. Second, implementing an inventory management strategy to delay or minimize tariff impact; and third, working closely with our internal teams and external partners to drive additional cost savings. This discipline regarding tariffs is evident in our results to date. To conclude my remarks, I'm proud that our teams have navigated the dynamic economic landscape through disciplined execution of our transformation pillars. As a result, for the second quarter of this year, we were able to deliver profitable revenue growth, net income of $4 million and our seventh consecutive quarter of positive adjusted EBITDA with no debt outstanding. And as we look ahead, our teams will remain focused on driving shareholder value while continuing to build the scale and power of the Honest brand. And now I will turn it over to Curtiss to share the financial results of our second quarter.

Thank you, Carla, and welcome, everyone. Let me start by saying how excited I am to be on the call with you today. I joined Honest 2 months ago because I strongly believed in The Honest Company's growth potential, the significant opportunity to advance our transformation pillars and the ability to build upon the company's strengthened financial foundation. And now after 2 months here, I'm even more convinced that the opportunities ahead are substantial. I'm excited to leverage the best practices and skills I have learned from my past experience working across emerging businesses as well as some of the most iconic brands in CPG. As I work with the team to execute the transformation pillars, I will be intently focused on building the operating processes and discipline that will improve efficiency in the short-term and create the infrastructure to effectively scale. Now let me dive deeper into the second quarter results. In the quarter, we delivered revenue of $93 million, up 0.4%, driven by 2 key factors: First, in the quarter, we had an increase in retail revenue driven by strong performance in our wipes portfolio, partially offset by a decline in honest.com revenue. Second, as a reminder of what was shared on our last earnings call, our relatively flat revenue growth versus last year was due to timing of shipments. In Q1, shipments paced ahead of consumption by 5 percentage points, and we saw that reverse in the second quarter, where our shipments paced behind consumption by roughly 6 percentage points. On a June year-to-date basis, consumption and shipments are moving roughly in line together. Our gross margin in the second quarter was 40.4%, up 210 basis points versus last year. This gross margin is a record for The Honest Company as a public company and a reflection of the team's disciplined execution of our transformation pillar of margin enhancement. Our gross margin expansion was primarily driven by a change in inventory reserves and a mix of higher-margin products and channels, including shifting away from our honest.com business, partially offset by the impact of tariffs. Although we had an intentional inventory build as part of our mitigation plan to delay the impact of tariffs into the second half of the year, the second quarter did have some tariff impacts as we sold through inventory on a few SKUs faster than our forecast. And now turning to operating expenses. Operating expenses decreased $5 million compared to the prior year quarter and decreased 530 basis points as a percentage of revenue. This decrease in operating expenses was largely attributed to a decrease in SG&A expenses of $6 million compared to last year, primarily driven by lower stock-based compensation and reduced legal expenses. This was partially offset by an increase in marketing expenses of $1 million to support key events with our retail partners. We also delivered our second consecutive quarter of positive net income. The combination of gross margin expansion of 210 basis points and lower operating expenses of $5 million led to positive net income of $4 million, an $8 million year-on-year improvement. We remain committed to sustained net income growth over the long term. Adjusted EBITDA for the second quarter was $8 million, flat to last year due to higher net income, coupled with lower year-on- year add-backs. Adjusted EBITDA margin was 8.2% and represents our seventh consecutive quarter of positive adjusted EBITDA. Through our transformation pillar of operating discipline, which underscores our focus on building a culture of operational and executional excellence, we maintained a healthy balance sheet, ending the quarter with $72 million in cash and no debt outstanding. Our cash position continues to benefit from a capital-light business model and greater flexibility, which allows us to invest in the business. Overall, our second quarter financial results and the execution of our transformation pillars give us continued confidence in our 2025 financial outlook. For the first half of the year, we achieved revenue growth of 6% while improving the profitability of our cost structure. As we look to the second half of the year, we are reaffirming our full year 2025 financial outlook for revenue and adjusted EBITDA. We expect the underlying momentum in our business to continue. However, as Carla stated earlier, the macroeconomic environment has presented new challenges for consumers. For our second half revenue outlook, we will be lapping 2 large customer- specific promotional events with our 2 largest brick-and-mortar retailers that will not repeat this year. Also, while the second half of the year will continue to be impacted by the diaper assortment simplification at our largest brick-and-mortar retailer, we will be investing in the rollout of our new and improved diaper and optimized assortment in other channels. Additionally, new distribution coming in the second half of the year in both new and existing aisles should help offset these impacts. Finally, the second half of the year is where our apparel portfolio becomes a larger part of our mix, driven by increases related to our award-winning Fam Jams. Our second half adjusted EBITDA outlook reflects increased marketing spend, primarily to support our new diaper launch and to continue building consumer loyalty to the Honest brand in this dynamic macroeconomic environment. We have also updated our tariff outlook based on the policy information we are currently aware of and recognizing that we realize tariff impacts sooner than originally anticipated. As you know, we have a comprehensive 3-pronged tariff mitigation approach and strong experienced leaders in place to manage these tariffs, both in the short and long-term. We continue to be prudent and take necessary actions over time to continue to drive margin performance. We now expect roughly $8 million of gross tariff exposure in 2025. In conclusion, our reaffirmed full year financial outlook includes net revenue growth of 4% to 6% year-over-year and adjusted EBITDA to be in the range of $27 million to $30 million. We also recognize there is uncertainty with broader consumer sentiment and potential changes in shopping behavior that our outlook may not include. In closing, thank you for joining our call today. I am energized by my first 60 days at Honest, and I have strengthened belief in the opportunities to execute our transformation pillars and drive shareholder value. I look forward to working with our exceptional team and thank them for their work in delivering our Q2 results. Now I will turn the call back to the operator.

[Operator Instructions] Our first question comes from the line of Aaron Grey with Alliance Global Partners.

So, first question for me is just regarding the guide, right? So, the EBITDA guide implies 2H will be down versus 1H at the midpoint despite sales being up in 2H versus 1H and part of that's due to apparel. You gave some good color commentary in terms of increased marketing; tariff impact is going to come sooner than expected. I think you said $8 million, so now about a 2-point impact. I think you said 1.5 impact on the last call. So, I certainly appreciate that color. I guess my question would be embedded in that guide, the increased marketing you have with the new diapers, do you expect that to potentially accelerate some sales growth there in the diaper category? Is that potential upside or also embedded in the guide? Just want to give some more color on whether or not that's embedded in the puts and takes.

Yes. Thank you very much for the question. This is Curtiss. So let me take a few minutes here to unpack and provide just some more clarity on the guide here. Let me start with the fact that, number one, we're very proud of the results that we have year-to-date, especially considering the economic environment that we're currently operating. So let me start with the revenue. Our revenue in the second half is really going to be impacted by the Q3 lapping of the consumer events that I talked about in the prepared remarks and also from the diaper headwind from the lost distribution that we also talked about in the prepared remarks. So Q3, that -- the impact of those 2 things will have an impact on the top line that will be similar to the growth rate that we had in Q2. We expect that our growth rate in Q4 will pick up as we gain the new distribution that we talked about in the prepared remarks as well. So let me answer the second part of your question about the tariffs. So, tariffs, again, it's a very dynamic environment. As you are well aware, the policy continues to change, and we get new news very frequently. We said back in Q1 that 1.5 points of net impact on a full year basis was incremental to our original plan, and we expected most of that to occur in Q4. We now expect $8 million of gross impact on the full year is included in the guide. We saw impact of tariffs in Q2. In Q2, we saw 1 to 2 percentage points of impact related to tariffs. We expect that to step up in Q3 to 3 to 4 percentage points of impact and then Q4 will moderate back down. Over those 3 quarters, again, it will be $8 million of tariff impact that's embedded in the P&L and embedded in the guide. Finally, let me address EBITDA. The lower revenue outlook in Q3 with the higher tariffs that I just talked about in Q3 and the investment in the diaper, which will largely be in Q3, we expect to have positive EBITDA in Q3, but below prior year. We are committed to our full year guidance. We're excited about the new distribution coming in Q4, and we expect a strong finish. And again, I'll just reaffirm that our guide on EBITDA is $27 million to $30 million on the full year. I hope that answers all of your questions.

No, it does. That's really helpful, Curtiss. Appreciate that. Second question for me, just regarding the diaper launch. Maybe can you speak to some of the initiatives that you have in marketing and how you're trying to highlight some of the changes that you have there?

Sure. Aaron, it's Carla. Lovely to talk to you today. Thank you for that question. So, as I was able to share in the remarks, the improvements to this diaper are very meaningful, and we are really pleased that 100% of the diaper that is shipping now is all the new and improved diaper. We have been watching that diaper as it's making its way onto retail shelves. Our teams, in fact, have a new practice. Anytime any of us are anywhere around the country, we do a store visit, send back snapshots. We are really watching that change take place on the store shelves. That's important because, as you know, I feel strongly that the #1 most important marketing effort we can do against any of our products is to have excellent strong packaging that very clearly communicates the key product benefits. So, as we rolled out this diaper, we rolled out new and improved packaging that we quantitatively and qualitatively tested on the physical store shelves at 2 of our largest brick-and-mortar retailers to know that it would be effective at the set-in telling consumers what they want to hear. So, that packaging is out, features the 5-point leak protection, the softer, stretchier tabs, the more absorbent core communicated there. Additionally, we are surrounding this launch with marketing that largely began in the middle of July. As you know, it's important before we put the marketing efforts in the market to make sure that the product will be available both online and on store shelves. So that's why we wanted to sequence it in that way. That product marketing includes a full surround of both in-store levers and direct levers with retailers as well as a very broad-based upper funnel marketing campaign. We have a new TV spot that we debuted that's also in streaming media that features the diaper and really sort of amplifies the technology so people can visualize it. As you know, we're also a strong social media company. So, we have a lot of influencer marketing partnerships. So, we are working that sort of angle to make sure we've got new media and classic media. And then I think one of the last things I would point out is we're so proud of these reviews we've gotten in Forbes Magazine that when they put our diaper to test with 20 -- more than 20 other diapers, we were among the top 5 diapers that they highlighted in that test, saying that not only does the diaper work, but it's the cutest diaper. And you know what, babies, go look cute. We're excited, but we're going to be really watching this roll out as it goes, Aaron, and that support is going to continue to build and strengthen through the year.

And our next question comes from the line of Anna Glaessgen with B. Riley Securities.

I'd love to dig in a little bit deeper on the gross margin, getting to above 40%, I think, was a key positive in the quarter. I understand we're layering on incremental tariff headwinds in the back half, so not pulling forward that 40%. But I would love to understand a little bit more the power of that channel shift that you talked about in supporting that 210-basis point improvement in the quarter as we look to understand the structural margin opportunity as we shift away from the dot-com business.

Yes. Thank you for the question, Anna. We're really excited about the gross margin performance in Q2, especially as you noted -- and I noted in the prepared remarks, that is the highest gross margin that we've had as a public company. And so, we're definitely excited about reaching that benchmark. When you think about the drivers of the margin performance, and I did highlight the impact of the tariffs, what was partially offsetting that tariff impact is really our mix benefit from both channels and products. And so, we continue to be focused on our transformation pillar of margin enhancement. And as you know, one of those key focus areas has been the channel mix shift and us deemphasizing honest.com. And so, we saw some of that benefit in Q2. We expect to see that benefit continue as we continue to move forward and focus on margin improvement.

And then shifting to the commentary you gave on apparel, exciting launch there. I guess, could you give some perspective on how big that business is today and longer-term, where you think the contribution could be?

Yes. What I'll tell you is that we're excited about the contribution that business will make in the second half of the year, as we talked about in the prepared remarks. Fam Jam is one of the big highlights of that business. Award-winning is really the way we refer to it here. But we're excited about the second half. As I alluded to in the original remarks, we're going to have a strong Q4 driven by distribution and the performance of apparel, and we're excited to be on our guidance for the year.

And our next question comes from the line of Owen Rickert with Northland Capital Markets.

Are there any specific retail partners where you're seeing some room for incremental shelf space improvement or new category placement? It does sound like whites are making some progress on that front, but any other product categories to call out as well?

Yes, absolutely. Owen, good to hear from you. First of all, I would say that as we turn back and just always look back at our investor presentation, the most important foundational principles of our growth strategy is this notion that we have lots of room to grow across stores, doors, aisles, shelves and even our presence as we show up on the variety and types of shelves. To date, we are still in what we think is less than 50% of all of the relevant stores and doors that we could be in when we compare our business to our competitive peer group and the distribution that they have available. We -- as I noted, we did grow 11% in the quarter against what we call the food, specialty and drug channel. I'll use some examples to highlight that so that you all know a little bit more specifically what we're talking about. That's a mix of national retailers like your Whole Foods and your Sprouts where we've seen distribution gains even in the quarter and in the year. So, at Whole Foods, we've launched 9 new SKUs, especially built in building out our baby personal care set in Whole Foods stores with our 18-ounce larger size of our sensitive skin items, some of our Gable Top refills that have really shown strong incrementality. And at Sprouts, we are now the only diaper brand carried at Sprouts. So that is obviously an important channel for us, and we know our consumers very much value our Sensitive Skin and fragrance-free benefits in channels like that. But we are also seeing growth. Our brand has the ability to play in both those specialty channels and to a mass audience. So, for example, at HEB, you are already seeing that our flushable wipes have gained distribution and are now on shelves at HEB retailers. So, we gained -- although we already had 90 SKUs at HEB, HEB added 6 new SKUs for us this year, including building us out into these higher productivity aisles beyond the baby aisle where there's greater foot traffic. We've seen gains at other places like drug channel and Publix. So, we feel that there's room to grow as we continue to build out our size strategy, as we continue to deepen our portfolio of fragrance-free and sensitive skin items and really incrementally as we continue to build outside of the baby aisle. Lastly, I think one other important notable place to talk about is Target, which has, as you know, it's been our oldest and longest- standing brick-and-mortar retail partner. They are a great partner to us. And Target is still finding places and ways to grow the Honest brand, including the fact that we just got added to the travel and trial set in all Target stores with our spray hand sanitization as well as with some of our portable pattern play wipes. So, as you can see, Owen, we're just continuing to still knock it down, and it's going to be a real building block strategy. One of the reasons I have great confidence in it is several quarters ago, I told you that we restructured our organization to, in fact, also put more leadership talent against this distribution strategy. So, we have the items, we have the team, and we have the strategy against it. And we know that our retail partners are very pleased at the fact that our items drive their category growth as you can see, whereas we outpace the growth of our competitive categories.

And our next question comes from the line of Dana Telsey with Telsey Advisory Group.

Can you hear me? Okay. Nice to see the continued progress. As you think about the profitability improvements that you've seen in the face of this uncertainty of this tariff world, by category, how do you think of pricing and especially in light of the new partnerships and distribution that you have, is there any differences? And with that, how do you think of the level of promotions that's out there in the marketplace now and what you're anticipating going forward?

Dana, I'm going to give that a start. Curtiss, if I miss anything, do please let me know. I really do appreciate that nuance, Dana, because the Honest portfolio is so different in that way from so many other of our peer companies in that we take one brand, and we work it across different aisles and across different demographics. We love that because that gives us a very efficient way to say, wherever you find an Honest product, it is delivering against the Honest Standard of Clean, the Honest No List, and it is delivering these products that people know that they can trust. But the products do play out differently across categories. What I can say is this. You've seen that the loyalty measures for Honest are up on all counts. We are having higher buy rates for our products. We are having higher household penetration and greater frequency. So that tells me that not only is our marketing strategy working and our expanded shelf visibility working, but it is telling me that we've got products people want. So that gives us confidence. At the same time, Dana, thus far, we have been watching the CPG categories that we compete in. And we are not seeing any price -- evidence of price advances yet in market, especially when we focus on the largest players in the category. And that's a very important dynamic for us to keep our eye on very closely. As Curtiss and I both said, pricing does remain one of the levers that we will consider as we execute our commitment to expand the bottom-line profitability faster than the top line, but we do want to be really thoughtful about it, and it does work differently in our different categories.

Got it. And then when you think about your largest customer and order trends, has there been a difference in order trends? And how are you thinking about the back half of the calendar year in regards to holiday spending or how you're planning differently this year from last year?

I guess I'll start out by saying I thought Curtiss did an excellent job of saying that for the first half of the year, we really do see -- when we look at it collectively, our shipments and our consumption numbers were in line for the first half of the year. Now that played out differently in the quarters, and I think that we've explained that very well. When I look customer by customer, it's important to say we're actually seeing in somewhat a tale of 2 cities. So, there are some different dynamics. We've talked about the fact that these diaper trends we're seeing at Target will continue to play out for us until we lap these distribution declines against these gendered prints. Remember, that was a strategy that we knew that was going to be a change that Target would execute as they got away from these gender-specific prints. So, we're going to have to take those distribution declines across the year as we lap that, but those are also already in. And then when we look at the remaining market, Dana, our volume -- or excuse me, our consumption is up 21% in rest of market. And I think that's really evidence of the strength of the other categories that we have been continuing to build and grow into for example, business up 35% nationally, our Baby Personal Care business up 10% nationally and our Sensitive Skin business up 65% in our Sensitive Skin Baby Personal Care business. So, we are feeling very confident about our ability to continue to drive that loyalty and that continued performance across our categories.

[Operator Instructions] And I'm showing no further questions. So, with that, I'll hand the call back over to CEO, Carla Vernon, for any closing remarks.

I want to thank everybody so much for joining us for our second quarter call fiscal 2025. I also want to really thank and welcome Curtiss to the team, and we look forward to speaking with you next quarter. Thank you.