We Surmise Competitive and Inflationary Issues Could Derail Church & Dwight’s Trajectory

Throughout the pandemic, social distancing and COVID-19-related pantry stocking led to impressive sales growth for Church & Dwight, at a mid-single-digit clip each quarter on an organic basis. But we expect industry promotional activity to ramp up as the supply/demand imbalance is rectified. Further, we think near-term volumes could be constrained as consumers opt to trade down or out of the categories in which Church plays in response to escalating prices at the shelf. This underpins our expectations for sales growth to revert to the firm's historical low- to mid-single-digit rate.