Home and security products company Fortune Brands (NYSE:FBIN) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 3% year on year to $1.20 billion. Its GAAP profit of $0.83 per share was 12.9% below analysts’ consensus estimates.
Is now the time to buy FBIN? Find out in our full research report (it’s free).
Fortune Brands (FBIN) Q2 CY2025 Highlights:
- Revenue: $1.20 billion vs analyst estimates of $1.20 billion (3% year-on-year decline, in line)
- EPS (GAAP): $0.83 vs analyst expectations of $0.95 (12.9% miss)
- Adjusted EBITDA: $250.3 million vs analyst estimates of $241.1 million (20.8% margin, 3.8% beat)
- EPS (GAAP) guidance for the full year is $3.85 at the midpoint, beating analyst estimates by 7.8%
- Operating Margin: 14.3%, down from 16.1% in the same quarter last year
- Organic Revenue fell 2.8% year on year vs analyst estimates of 3.8% declines (94.5 basis point beat)
- Market Capitalization: $6.87 billion
StockStory’s Take
Fortune Brands’ second quarter performance was marked by a positive market reaction, as investors responded to the company’s share gains in its core water and outdoors segments despite softer overall sales. Management attributed these results to targeted actions, such as strengthening relationships with national builders in the water business and refreshing product assortments in retail channels. CEO Nicholas Fink highlighted ongoing investments in digital capabilities and operational efficiency, stating, “We have made significant progress on our multiyear transformation into a highly aligned and efficient growth company.” The quarter also saw early benefits from cost control initiatives and a renewed focus on brand positioning, even as the macroeconomic environment remained uncertain.
Looking ahead, Fortune Brands is guiding for a year shaped by strategic pricing, supply chain improvements, and continued investment in digital and luxury offerings. Management emphasized plans to fully offset the impact of tariffs through a combination of targeted price adjustments and operational efficiencies. CFO Jonathan Baksht noted, “We remain thoughtfully optimistic as we have good line of sight about our ability to address what is in our control.” The company expects to drive growth through new product launches, expanded digital partnerships, and a more agile organizational structure, while monitoring consumer demand trends and adapting quickly to evolving market conditions.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to decisive cost management, strong brand investments, and accelerating digital initiatives, while navigating tariff headwinds and mixed consumer demand.
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Water segment share gains: The Moen and House of Rohl brands outperformed their markets, winning new business with national builders and expanding retail and e-commerce offerings. Management cited a study showing 70% of professional customers would change their shopping habits without Moen, underlining brand loyalty as a competitive advantage.
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Digital business momentum: The digital division reached around 5 million active users, with 220,000 device activations in the quarter. Fortune Brands is piloting a subscription model for its Flow water monitoring devices, aiming to create a recurring revenue stream and broaden customer adoption.
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Outdoors category repositioning: The introduction of a new brand collective for outdoors, along with a successful aisle reset in retail, led to accelerated growth and share gains in storm and screen doors. Vertically integrated North American supply chains are expected to be a differentiator as tariffs increase on imported goods.
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Security segment refresh: A major brand campaign for Master Lock resulted in a 60% increase in website traffic and is expected to support future sales growth. The business also benefited from new leadership and a shift in go-to-market strategy, with improved results in the back-to-school season and a focus on e-commerce and commercial channels.
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Tariff mitigation strategy: The company is addressing tariff impacts through supply chain shifts, strategic pricing, and operational efficiencies. Management reported progress in reducing reliance on China and expects to fully offset tariff costs in both 2025 and 2026.
Drivers of Future Performance
Management expects growth to be driven by digital expansion, product innovation, and operational agility, while navigating tariff-related headwinds and cautious consumer demand.
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Digital and subscription growth: The pilot of a subscription model for connected water devices is expected to boost recurring revenue and deepen customer engagement. Management sees further upside from expanded insurance partnerships and the launch of new smart home products.
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Tariff and supply chain adaptation: Fortune Brands plans to continue regionalizing its supply chain, reducing exposure to China, and leveraging U.S. manufacturing. Strategic pricing actions are being targeted by channel and product, as the company balances margin preservation with competitive positioning.
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Consumer demand and market mix: The company anticipates ongoing volatility in U.S. housing-related markets. Management is prioritizing idiosyncratic growth platforms—like luxury and connected products—less tied to macro cycles, while monitoring channel inventory dynamics and adjusting promotional strategies as needed.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be watching (1) the adoption and conversion rates of the new digital subscription model, (2) the impact of tariff mitigation efforts on margins and pricing power, and (3) the scale and success of product launches in both luxury and connected home categories. Execution on supply chain regionalization and further growth in insurance channel partnerships will also be key indicators of strategic progress.
Fortune Brands currently trades at $57.29, up from $54.76 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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