[CL] Colgate-Palmolive: Q3 2026 Earnings Preview on North America Volume and Gross Margin

Colgate-Palmolive, the global share leader in toothpaste and manual toothbrushes and the owner of Hill's Pet Nutrition, is scheduled to report on 2026-10-30 for the third quarter 2026, the three months ended September 30, 2026[1]. Heading into the Colgate-Palmolive Q3 2026 earnings, the latest disclosed quarter is the second quarter of 2026, when net sales rose 4.9% to $5.361 billion and organic sales grew 2.4%, with volume contributing 0.8 percentage points and pricing 1.6 points[2]. Gross margin rose 140 basis points to 61.5%, GAAP EPS fell 5% to $0.86, and Base Business EPS, which excludes restructuring and other items, rose 8% to $0.99[3]. The company gives no quarterly guidance; on July 31 it kept its full-year ranges of 2% to 6% net sales growth and 1% to 4% organic growth, raised its gross margin outlook from down to roughly flat, and raised its Base Business EPS growth outlook from low- to mid-single digits to mid-single digits[4]. Analyst forecasts compiled by Drillr put third-quarter consensus EPS at $0.929 (13 analysts, range $0.899 to $0.949) and consensus revenue at $5.339 billion (10 analysts)[5]; for comparison, the prior-year quarter delivered EPS of $0.91 and revenue of $5.131 billion[1].

Three things matter most in the third-quarter report. The first is whether North America stops declining: second-quarter North American organic sales fell 3.0% on a 3.9% volume decline, and management attributed part of that to retailer inventory cuts, saying U.S. consumption grew about 1% while shipments fell about 3%[6]; if volume declines narrow while net pricing stays positive, the destocking explanation gains weight, and if not, lost market share becomes more likely. The second is whether gross margin holds as costs peak: the second-quarter improvement included tariff refunds, the CFO said third-quarter costs were largely locked in and in line with prior guidance, and the CEO said further refunds were unlikely[7], so the basis points of raw material drag and productivity savings in the third quarter will test whether a roughly flat gross margin and a higher advertising ratio can both be delivered. The third is whether Hill's can win back volume: Hill's second-quarter organic growth of 2.1% came almost entirely from 3.9% pricing, while organic volume fell 1.8%[2] and the private label exit still cost 200 basis points[8]; whether organic volume improves as that drag fades will decide whether this relatively high-margin business can hold its growth before pricing slows.

Company Background and Business Structure

Colgate-Palmolive is a global household products and pet nutrition company with a history of more than two hundred years, selling in more than 200 countries and territories. Founded in 1806 and headquartered in New York, it had about 33,600 employees at the end of 2025, more than 84% of them outside the United States[9]. Oral care is the largest category, with brands including Colgate, Darlie, elmex, meridol, hello and Tom's of Maine, plus professional products sold to dentists; personal care includes Palmolive, Protex, Softsoap, Irish Spring, Speed Stick and the skin health brands EltaMD, Filorga and PCA SKIN. In 2025, oral care, personal care and home care accounted for 44%, 17% and 16% of worldwide net sales[10], and pet nutrition for 23%, with Hill's selling mainly under Science Diet for everyday nutrition, Prescription Diet for therapeutic diets, and the Australian fresh food brand Prime100[11].

The company reports two product segments, and the household products segment is about three and a half times the size of Hill's. Worldwide net sales were $20.382 billion in 2025, with $15.769 billion from Oral, Personal and Home Care and $4.613 billion from Hill's Pet Nutrition[12]. Starting in the first quarter of 2026, the company combined its former Europe and Africa/Eurasia divisions (excluding Russia and Belarus) and the skin health business previously reported in North America into a Europe, Middle East and Africa division; on that basis, second-quarter sales were 17% North America, 26% Latin America, 21% Europe, Middle East and Africa, 14% Asia Pacific and 22% Hill's[2]. Second-quarter operating profit was $192 million in North America (21.6% margin), $418 million in Latin America (30.4%), $263 million in Europe, Middle East and Africa (23.4%), $209 million in Asia Pacific (26.7%) and $269 million at Hill's (22.5%)[13], while corporate expenses included $129 million of charges under the Strategic Growth and Productivity Program (SGPP)[14].

Customer concentration is moderate, but large U.S. retailers directly affect North American shipments. Household products are sold to retailers, wholesalers and distributors, while pet food goes through pet specialty retailers, veterinarians and eCommerce; Walmart and its affiliates accounted for about 11% of net sales in 2025, and no other customer exceeded 10%[15]. Geographically, about two-thirds of net sales come from outside the United States, and about 45% come from emerging markets such as Latin America, Asia excluding Japan, Africa/Eurasia and Central Europe[16], which makes currency moves and emerging-market pricing power important drivers of reported revenue.

The company relies mainly on its own plants, buys raw and packaging materials from multiple outside suppliers, and runs with negative working capital. Key commodities include resins, essential oils, tropical oils, pulp, tallow, corn, poultry and soybeans, all subject to market price swings[17]. Working capital was negative 7.0% of net sales at the end of 2025, and that year the company acquired Care TopCo, the parent of Australian fresh pet food brand Prime100, for about $301 million[18].

Financial History and Current Position

Revenue growth in fiscal 2025 came almost entirely from pricing, while volume slipped. Worldwide net sales rose 1.4% from $20.101 billion in 2024 to $20.382 billion in 2025, with net pricing adding 2.1 percentage points, volume subtracting 0.4 points and foreign exchange subtracting 0.3 points; organic sales also grew 1.4%[12]. Gross margin fell from 60.5% to 60.1%, as raw and packaging material costs cut 420 basis points, partly offset by 260 basis points of productivity savings, 80 basis points of pricing and 30 basis points of favorable mix[19]; advertising was 13.3% of net sales for the year, slightly below 13.5% in 2024[20].

GAAP profit in 2025 was sharply reduced by impairment and litigation charges, while operating profit excluding those items was essentially flat. Because of weaker-than-expected performance in markets including China, the company recorded goodwill and intangible asset impairments in the fourth quarter on its skin health business, mainly Filorga[21]; together with ERISA litigation charges, GAAP operating profit fell from $4.268 billion to $3.306 billion, a 16.2% margin, while Base Business operating profit was $4.347 billion against $4.353 billion a year earlier[22]. Net income attributable to the company was $2.132 billion, or $2.63 per diluted share, and Base Business EPS rose 3% to $3.69[23]. Operating cash flow rose 2% to $4.198 billion, with capital expenditures of $564 million[18], and the company paid $1.823 billion in dividends ($2.06 per share) and repurchased about $1.210 billion of stock[24].

Revenue accelerated in the first quarter of 2026, but gross margin and North American margins came under pressure at the same time. First-quarter net sales rose 8.4% to $5.324 billion, organic sales grew 2.9% (including a 0.6-point drag from lower private label pet food sales), gross margin fell 20 basis points to 60.6%, GAAP EPS fell 6% to $0.80, Base Business EPS rose 7% to $0.97, and operating cash flow was $747 million[25]. In the same quarter, North American operating profit fell 28% to $141 million, and its margin dropped 590 basis points to 15.8%[26].

The latest position, as of June 2026, shows margins and cash flow improving, but the gap between GAAP and Base Business results remains wide. Second-quarter net sales grew 4.9%, with foreign exchange adding 2.4 percentage points[2]; Base Business operating profit was $1.145 billion, a 21.4% margin and up 10 basis points, while reported operating profit was $1.016 billion, a 19.0% margin and down 210 basis points[13]. First-half operating cash flow was $1.742 billion, capital expenditures were $266 million, and free cash flow before dividends was $1.476 billion versus $1.252 billion a year earlier[27]; at the end of June, debt less cash and marketable securities was $6.404 billion, and working capital was negative 5.9% of net sales[28].

Operating Model

Colgate's revenue is volume times net price across regions and categories, multiplied by currency, and shipments can diverge from consumer demand in the short run. Household products are frequent, low-ticket replenishment purchases, and revenue is recognized at shipment, so retailer inventory changes can push shipments well away from consumption within a quarter; in the second quarter, U.S. consumption grew about 1% while shipments fell about 3%[6]. Net price is list price less promotions, coupons and trade discounts, and the company uses revenue growth management (RGM) to adjust price tiers and pack sizes; Hill's relies on veterinarian recommendations and therapeutic diets and has stronger pricing power[11]. Currency has a large effect on reported revenue: in the second quarter, foreign exchange added 2.4 percentage points company-wide and 8.4 points in Latin America[2].

Gross margin is the first gate for profit at this company, and it is set by the race between raw material costs and productivity savings. Gross margin runs around 60% and is driven mainly by raw and packaging costs such as resins, oils, pulp and agricultural products[17], which reach cost of sales with a lag of roughly one quarter; on the first-quarter call, management assumed oil averaging about $110 for the rest of the year and roughly $300 million of extra raw material and logistics costs, two-thirds raw materials and one-third logistics[29]. The second-quarter gross margin change breaks down into +280 basis points from productivity savings, +60 from pricing, +20 from mix and −220 from raw and packaging materials, a figure that already includes tariffs and tariff refunds[30].

Advertising is the largest discretionary expense, and it carries gross margin changes through to Base Business operating profit and EPS. Excluding SGPP charges, selling, general and administrative expenses were 39.6% of second-quarter net sales, up 120 basis points, entirely because of a higher advertising ratio[31]. SGPP charges totaled $300 million in the first half[14]; they are included in GAAP results but excluded from Base Business, which is the main reason second-quarter GAAP EPS of $0.86 sat below Base Business EPS of $0.99[3]. The company raised its estimate of cumulative pretax SGPP charges from $200 million to $300 million to $350 million to $550 million[32], while most of the $200 million to $300 million annual savings target falls in 2027 and 2028[33], so the charges come first and the savings arrive later.

Cash flow comes from net income, depreciation and amortization and negative working capital, and it is used mainly for dividends and buybacks. Depreciation and amortization were about $311 million in the first half of 2026[27], and working capital has stayed negative, at minus 5.9% of net sales at the end of June, with receivables and inventory covered by payables[28]. Free cash flow equals operating cash flow minus capital expenditures, which were $564 million in 2025[18]; most SGPP charges are cash costs that will flow out through 2028[32], and that cash does not hit Base Business profit but does compete with dividends and buybacks.

Industry and Competitive Position

Colgate leads global oral care, but its toothpaste share is slipping in most regions. In 2025, its global toothpaste share was 41.3%, down 0.4 share points from 2024, and its manual toothbrush share was 32.4%, up 0.4 points[34]; in the first half of 2026, toothpaste share was 41.3%, up 0.2 points year over year, and manual toothbrush share was 32.7%, up 0.6 points, but toothpaste share rose only in Europe, Middle East and Africa and fell in North America, Latin America and Asia Pacific[35]. The company also leads the global liquid hand soap category[10].

Competitive pressure in household products comes from multinational rivals, local brands, retailer private labels and new eCommerce brands. In its annual report, the company states that some competitors may have greater resources or be more agile, that retailer private label brands compete in certain categories, that eCommerce and AI have lowered the barrier for new direct-to-consumer brands, and that large retailers hold more bargaining power and first-party consumer data[36]. The annual report also anticipates that the category softness seen in 2025 will continue into 2026 and that consumers may switch to private label or to the company's lower-priced products[37]. Hill's moat rests on veterinarian recommendations and therapeutic diets, but the CEO said on the second-quarter call that the pet category is roughly flat right now[38].

The company's growth and profit depend heavily on emerging markets, while North America is the only region clearly holding it back. In the second quarter, Latin American organic sales grew 5.3%, led by Mexico, Brazil and Argentina[39], Asia Pacific grew 5.2%, and North America fell 3.0%[2]; Latin America's 30.4% operating margin is the highest of any division[13]. The available comparison has limits: the company's market share data do not fully cover eCommerce and club stores, and the materials used here contain no competitor financials for the same period that can be checked line by line, so the competitive assessment rests mainly on the company's own share and segment data.

Core Debates

Colgate's North American organic sales fell 3.0% in the second quarter on a 3.9% volume decline, and management blamed part of it on retailer destocking. Can North America stabilize in the third quarter and show that this was an inventory problem rather than lost market share?

North America is Colgate's largest single developed-market region and the only one that has kept shrinking since 2025, so it decides whether the profit recovery can last. North America accounts for about one-fifth of company revenue, and in 2025 its organic sales fell 1.6%, with volume down 1.4% and net pricing down 0.2%[40]. In the first quarter of 2026, raw materials and tariffs cut the North American operating margin by 590 basis points to 15.8%[26], and productivity savings restored it to 21.6% in the second quarter even as revenue kept falling[41]; if the decline reflects lost share, the company will need to spend more on advertising and price to win it back, and the margin recovery will be hard to sustain.

The second-quarter data support the destocking explanation but also leave signs of share loss. North American net sales were $891 million, down 3.0%, with volume down 3.9% and net pricing up 0.9%, and the decline was concentrated in U.S. toothpaste, bar soap and body wash[41]. The CEO said May's softness mainly reflected peak gasoline prices, that U.S. consumption grew about 1% while shipments fell about 3% because some retailers cut inventory, and that the company had identified price gaps against competitors at certain retailers and in certain categories[6]. Year to date, Colgate's toothpaste share fell in North America while its manual toothbrush share rose[35]; the North American operating margin was 21.6%, up 120 basis points, with gross profit adding 320 basis points and higher advertising lifting the SG&A ratio by 260 basis points[41].

The alternative explanation is that both consumption and share are slipping, and that retailer inventory cuts reflect retailers' judgment about how well Colgate products are selling. On that view, the price gaps show that competitors are promoting more aggressively, and the company's plan to make targeted price adjustments itself suggests the problem goes beyond inventory. The financial chain runs as follows: consumer demand (shaped by oil prices and consumer confidence) and retailer inventory decisions set North American shipment volume, price gaps and promotions against competitors set net price, and the two multiply into North American net sales; lower volume weakens fixed-cost absorption, heavier advertising and price adjustments compress margins, and productivity savings only partly offset them. On the second-quarter call, management said North American performance should improve modestly from quarter to quarter in the second half[42], but that is a directional view the data have not yet confirmed.

In the third-quarter report, the key checks are whether North American organic growth beats −3.0%, whether the volume decline narrows from −3.9%, whether net pricing stays positive, and how management describes the gap between U.S. shipments and consumption. For reference, first-quarter North American organic growth was −2.2%, volume −3.2% and net pricing +1.0%[43]. Whether the North American operating margin holds flat year over year despite heavier advertising, and whether U.S. toothpaste share stops falling, are also relevant evidence. If third-quarter North American volume is worse than −3.9% and management no longer cites destocking, or net pricing turns negative without volume improving, or the North American operating margin falls more than 100 basis points year over year, the destocking explanation will be weakened.

Colgate's gross margin rose 140 basis points in the second quarter, helped in part by tariff refunds, and the company raised its full-year gross margin outlook to roughly flat. With raw material and tariff costs peaking in the second half and refunds no longer expected, can productivity savings still support gross margin and the stepped-up advertising?

Colgate's profit model uses productivity savings and pricing to offset raw material inflation and then reinvests the extra gross profit in advertising, so gross margin decides whether advertising and profit can both grow. In 2025, raw material costs cut gross margin by 420 basis points, and gross margin fell 50 basis points excluding 2024 restructuring charges[19], while Base Business operating profit was essentially flat[22]. For 2026, the company has committed at once to a roughly flat gross margin, higher advertising in dollars and as a share of sales, and mid-single-digit Base Business EPS growth[4], and all three depend on absorbing second-half costs.

Part of the second-quarter improvement came from one-time tariff refunds, and second-half cost pressure is heavier. Second-quarter gross margin was 61.5%, up 140 basis points, made up of +280 basis points from productivity savings, +60 from pricing, +20 from mix and −220 from raw and packaging materials including tariffs and tariff refunds[30]. First-quarter gross margin was 60.6%, with a 350 basis point raw material drag and 230 basis points of productivity savings[44], and at that time the company cut its full-year gross margin outlook from up to down[45]. By the second quarter, the CFO said third-quarter costs were largely locked in and in line with prior guidance, that the fourth quarter might come in a little below earlier assumptions with oil in the $90 range, but that second-half raw material and tariff costs would still exceed the second quarter's; the CEO said no meaningful further tariff refunds were anticipated and that cost of goods and tariffs should peak in the back half of the year[7].

First-half gross margin gives the second half room for a small decline, but heavier advertising is consuming that cushion. First-half gross margin was 61.0%, up 60 basis points, so a roughly flat full year would allow a small year-over-year decline in the second half. Second-quarter advertising was 14.5% of net sales versus 13.3% a year earlier[31], and advertising dollars rose 15%[46], leaving the Base Business operating margin up only 10 basis points at 21.4%[13]. The alternative explanation is that the second-quarter improvement came mainly from tariff refunds and timing, so once refunds disappear and costs peak in the second half, productivity savings will not cover them and the company will have to choose between gross margin and advertising. The financial chain runs from oil, resin and agricultural prices and tariffs into raw and packaging costs and cost of sales with a lag of about one quarter, offset by productivity savings and SGPP, pricing and mix to produce gross margin; heavier advertising then raises the SG&A ratio and ultimately sets the Base Business operating margin and EPS.

In the third-quarter report, the key checks are the year-over-year change in gross margin and whether the company keeps its roughly flat full-year outlook. Direct tests include the raw and packaging drag in basis points once no tariff refunds offset it, whether productivity savings stay above the 2025 level of 260 basis points, whether the advertising ratio keeps rising year over year, and whether the Base Business operating margin and full-year EPS outlook hold. If third-quarter gross margin falls more than 100 basis points year over year, or the raw material drag exceeds 350 basis points, or the company cuts advertising to protect margins, the view that productivity savings can carry the business through the cost peak will be overturned.

Colgate's Hill's Pet Nutrition grew organic sales 2.1% in the second quarter almost entirely through 3.9% pricing, while organic volume still fell 1.8% and the exit from private label still cost 200 basis points. As that drag fades, can Hill's bring volume back before pricing slows?

Hill's is one of Colgate's higher-margin businesses, yet its growth leans more and more on pricing, and its volume trend decides where company growth lands within the guided range. Hill's accounts for about 23% of company revenue, and in 2025 its operating profit rose 10% to $1.064 billion, with a 23.1% margin, up 160 basis points[47]. The company has exited low-margin private label pet food manufacturing in exchange for a better mix, but that has kept Hill's reported volume under pressure; the pet category as a whole has stalled[38], and if pricing slows before volume recovers, growth will slide toward the low end of the company's guided range.

The structure of Hill's second-quarter growth shows that pricing is still the main engine and branded volume has not yet recovered. Hill's net sales were $1.195 billion, up 3.4%, with pricing +3.9%, currency +0.6% and reported volume −1.2%, of which Prime100 contributed 0.6 points of volume[48]; excluding Prime100, organic volume was −1.8% and organic growth was +2.1%[2], including a 200 basis point drag from lower private label sales[8]. The CEO said Hill's grew about 4% excluding private label, well above a roughly flat pet category, that the therapeutic business kept growing, that he believed the category had bottomed out but would wait to see, and that the U.S. fresh food business would build slowly[38].

Margins and the trend of recent quarters show that the gross profit from pricing is being absorbed by advertising. Hill's second-quarter operating profit was $269 million, a 22.5% margin and down 40 basis points[13]; gross margin rose 240 basis points, but higher advertising pushed up the expense ratio and offset that gain, and raw material costs dragged Hill's gross margin by 290 basis points[48]. In the first quarter, Hill's organic growth was also 2.1%, with pricing of +3.8% and a 23.4% margin[49], and for full-year 2025 organic growth was 1.2%, pricing +3.0% and the private label drag 320 basis points[47]. The alternative explanation is that growth excluding private label comes mainly from pricing, that branded volume itself has not recovered, and that the pet category bottoming out is only management's judgment; once pricing falls back to around the 3% of 2025, organic growth could drop to around 1%. The financial chain runs as follows: pet ownership and owners' willingness to spend drive Science Diet everyday food volume, veterinarian recommendations and therapeutic diet penetration drive Prescription Diet volume, price and mix, the private label exit removes low-margin volume quarter by quarter, pricing plus organic volume yields Hill's net sales, mix improvement and productivity offset raw material inflation, and heavier advertising compresses margins.

In the third-quarter report, the key checks are whether Hill's organic growth is at least 2.1%, whether the private label drag falls below 150 basis points, whether pricing stays above 3.0%, and whether organic volume beats −1.8%. Management's description of the divergence between therapeutic diets and Science Diet dog food, and whether the Hill's operating margin holds flat year over year despite heavier advertising, will also show the quality of growth. If third-quarter Hill's organic growth falls below 1.1%, or organic volume is worse than −2.5%, or the operating margin falls more than 100 basis points year over year, the view that mix upgrades can substitute for volume will be weakened.

Risks and Falsifiers

Emerging-market currencies and hyperinflation are the first risk, affecting reported revenue and the highest-margin region. About 45% of company sales come from emerging markets[16], and currency devaluation in markets such as Argentina, Nigeria and Turkey reduces reported revenue and forces continued price increases, which can weaken local volume. The exposure sits in reported net sales and Latin American operating profit: in the second quarter, currency added 2.4 percentage points company-wide and 8.4 points in Latin America[2], and Latin American operating profit was $418 million at a 30.4% margin[13]. If third-quarter Latin American organic growth stays above 4% with positive volume, and currency does not swing to a significant negative effect on company-wide reported revenue, the risk has not materialized; the second-quarter baseline is Latin American organic growth of 5.3% with volume up 2.6%[39].

Restructuring and portfolio changes keep GAAP and Base Business profit apart and also consume cash. The board approved the SGPP on July 31, 2025[50], and estimated cumulative pretax charges have since grown from $200 million to $300 million to $350 million to $550 million[51], while the 2025 impairment on the Filorga skin health business showed that returns on acquired brands fell short[21]. The exposure sits in GAAP operating profit and EPS: second-quarter SGPP charges were $129 million[14], leaving GAAP EPS of $0.86 below Base Business EPS of $0.99, and restructuring cash payments run through operating cash flow. If third-quarter SGPP charges are no higher than the second quarter's and the company keeps its cumulative charge range and its $200 million to $300 million annual savings target[33], the restructuring is still proceeding to plan.

Share loss in North America is the risk tied most directly to the core debates, because it would pressure North American revenue and margins at the same time. If competitors keep pricing and promoting more aggressively while retailers keep cutting inventory, the company will need to trade price investment and more advertising for share[36]. The exposed lines are North American segment net sales and operating profit, which were $891 million and $192 million in the second quarter[41], and Walmart accounts for about 11% of company net sales, so large retailers' inventory and shelf decisions directly affect shipments[15]. If third-quarter North American volume is better than −3.0%, net pricing is not negative and the operating margin is flat or higher year over year, this risk will be falsified.

A later-than-expected cost peak would force the company to choose between advertising and profit. The Middle East conflict has already affected oil, resin and agricultural prices as well as logistics and consumer sentiment[52], tariff refunds are no longer coming, and if productivity savings fall short, gross margin will decline. The exposure sits in cost of sales and gross margin, with 2025 cost of sales of about $8.131 billion[19]; at second-quarter net sales of $5.361 billion, each additional 100 basis points of raw material drag would cost about $54 million of gross profit per quarter. If the third-quarter raw material drag is no more than 300 basis points, gross margin falls no more than 60 basis points year over year and the company keeps its full-year gross margin outlook, this risk has not materialized.

A stalled pet category and diminishing returns from price increases could pull Hill's growth down to around 1%. If pet ownership declines and owners trade down to cheaper brands, Science Diet volume will keep falling, and once pricing slows, Hill's will lose its main source of growth[38]. The exposed lines are Hill's net sales and operating profit, which were $4.613 billion and $1.064 billion in 2025[47], and raw material costs already dragged Hill's gross margin by 290 basis points in the second quarter[48]. If third-quarter Hill's pricing is at least 3.0%, organic volume beats −1.8% and the operating margin is flat or higher year over year, this risk will be falsified.

What to Watch Next

• North America, destocking or share loss: second-quarter organic sales were −3.0%, volume −3.9% and net pricing +0.9%. Watch whether the volume decline narrows and pricing stays positive; volume worse than −3.9% without a destocking explanation, or negative pricing without better volume, would weaken the destocking case.
• North America margin and share: the second-quarter operating margin was 21.6% (up 120 basis points) and year-to-date toothpaste share fell. Watch whether the margin holds flat despite heavier advertising and whether toothpaste share stops falling; a margin decline of more than 100 basis points would be a negative signal.
• Gross margin through the cost peak: second-quarter gross margin was 61.5% (up 140 basis points) with a −220 basis point raw material drag that included tariff refunds. Watch the drag without refunds and whether the roughly flat full-year outlook holds; a gross margin decline of more than 100 basis points or a drag above 350 basis points would falsify the current view.
• Savings, advertising and Base Business margin: savings were +280 basis points, advertising 14.5% of sales and the Base Business operating margin 21.4%. Watch whether savings stay above 260 basis points and the advertising ratio keeps rising; cutting advertising to protect margins would falsify the current view.
• Hill's volume recovery: organic growth was +2.1%, pricing +3.9%, organic volume −1.8% and the private label drag 200 basis points. Watch whether the drag falls below 150 basis points and pricing stays above 3.0%; organic growth below 1.1% or organic volume worse than −2.5% would falsify the current view.
• Hill's margin: the second-quarter operating margin was 22.5% (down 40 basis points). Watch the split between therapeutic diets and Science Diet and whether the margin holds flat; a decline of more than 100 basis points would falsify the current view.

Conclusion

Three forces drive Colgate-Palmolive: pricing and volume in emerging markets, shipments and share in North America, and whether productivity savings can outrun raw material costs and leave room for advertising. The company is financially solid, with second-quarter Base Business EPS up 8%, gross margin up 140 basis points to 61.5%, first-half free cash flow before dividends of $1.476 billion, above the prior year[27], and a full-year Base Business EPS outlook already raised to mid-single-digit growth[4]. Those results rest mainly on pricing and productivity savings, though, while North American volume fell 3.9% and Hill's organic volume fell 1.8%. Management said on the second-quarter call that second-half growth would lean more on volume than the first half did[53], so the central unresolved relationship is whether, in a second half with no tariff refunds and peak costs, the company can keep raising advertising and bring volume back without giving up gross margin.

Since the second-quarter results, only two independent interpretations could be checked against their original text, and they point the same way on North America and volume but differ on whether the pressure will ease. In an August 28 article for TIKR, Rexielyn Diaz argued that Colgate's growth is driven mainly by pricing rather than volume, that North America is the clearest weak spot, and that shipments falling faster than consumption show retailers working down inventory faster than demand is slowing, so the gap could close in coming quarters if consumption holds steady[54]. That view supports the destocking explanation in the North America debate, but the article's figures of a 0.4% company-wide volume decline and roughly 1% lower consumption do not match the disclosed second-quarter volume of +0.9% (organic +0.8%)[2] or the CEO's statement that consumption grew about 1%, so it can only serve as a directional read. In an October 14 article for Simply Wall St, Sasha Jovanovic described Colgate as a slow-growing staples business that leans on pricing, mix and cost control, argued that Hill's shift from private label to higher-priced branded nutrition could help earnings stay resilient, and warned that weak U.S. oral care and pet food categories could keep restraining volume and leave earnings sensitive to higher advertising and input costs[55]. Both articles see volume as the weakest link right now; the difference is that TIKR leans toward treating North American pressure as an inventory issue that will gradually ease, while Simply Wall St stresses the persistence of category weakness, which maps directly onto the tension among the North America, gross margin and Hill's debates. These are outside interpretations, not facts, and they do not amount to a majority view.

In the third-quarter report, the current understanding that growth comes from pricing, profit comes from productivity and volume is recovering would be strengthened if North American volume declines narrow while net pricing stays positive, productivity savings still cover the raw material drag without tariff refunds, Hill's organic volume improves as the private label drag fades, and the company keeps its full-year gross margin and EPS outlook. Conversely, if North American volume keeps worsening and the company stops citing destocking, gross margin falls more than 100 basis points year over year, the company cuts advertising to protect profit, or Hill's organic growth drops below 1.1%, that would show pricing and productivity can no longer mask the volume problem, and the understanding would need to be reassessed.

Sources

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[2] CL 8-K filed 2026-07-31 · 2Q26 sales growth by division · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

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[4] CL 8-K filed 2026-07-31 · full year 2026 guidance · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[5] Drillr analyst_financial_estimates (updated 2026-10-16) · CL quarter ending 2026-09-30 · 2026-10-16 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[6] CL Q2 2026 earnings call 2026-07-31 · CEO on U.S. shipments, consumption and price gaps · 2026-07-31 · earnings-call · https://www.investing.com/news/transcripts/earnings-call-transcript-colgatepalmolive-tops-q2-2026-eps-view-as-sales-meet-forecasts-93CH-4828573

[7] CL Q2 2026 earnings call 2026-07-31 · CFO and CEO on gross margin guidance and second-half costs · 2026-07-31 · earnings-call · https://www.investing.com/news/transcripts/earnings-call-transcript-colgatepalmolive-tops-q2-2026-eps-view-as-sales-meet-forecasts-93CH-4828573

[8] CL 10-Q filed 2026-07-31 · 2Q26 Hill's private label impact · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[9] CL 10-K filed 2026-02-23 · employees and geographic footprint · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[10] CL 10-K filed 2026-02-23 · business description and category mix · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[11] CL 10-K filed 2026-02-23 · Hill's brands and share of sales · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[12] CL 10-K filed 2026-02-23 · 2025 net sales and segment growth · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[13] CL 8-K filed 2026-07-31 · 2Q26 operating profit by division · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[14] CL 8-K filed 2026-07-31 · 2Q26 SGPP charges in Corporate · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[15] CL 10-K filed 2026-02-23 · customers, distribution and raw materials · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[16] CL 10-K filed 2026-02-23 · emerging markets and Walmart concentration · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[17] CL 10-K filed 2026-02-23 · raw and packaging material commodities · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[18] CL 10-K filed 2026-02-23 · 2025 operating cash flow and capital expenditures · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[19] CL 10-K filed 2026-02-23 · 2025 gross margin bridge · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[20] CL 10-K filed 2026-02-23 · 2025 advertising and overhead · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[21] CL 10-K filed 2026-02-23 · skin health goodwill and intangible impairment · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[22] CL 10-K filed 2026-02-23 · 2025 operating profit and Base Business margin · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[23] CL 10-K filed 2026-02-23 · 2025 net income and EPS · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[24] CL 10-K filed 2026-02-23 · 2025 dividends and share repurchases · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[25] CL 8-K filed 2026-05-01 · 1Q26 results highlights · 2026-05-01 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000022/q12026pressreleasetables.htm

[26] CL 10-Q filed 2026-05-01 · 1Q26 North America segment · 2026-05-01 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000023/cl-20260331.htm

[27] CL 8-K filed 2026-07-31 · 2Q26 cash flow and free cash flow · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[28] CL 8-K filed 2026-07-31 · 2Q26 balance sheet and net debt · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[29] CL Q1 2026 earnings call 2026-05-01 · Drillr call summary: cost inflation and oil assumption · 2026-05-01 · earnings-call · https://gateway.drillr.ai/mcp/private

[30] CL 10-Q filed 2026-07-31 · 2Q26 gross margin bridge · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[31] CL 10-Q filed 2026-07-31 · 2Q26 advertising and SG&A · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[32] CL 8-K filed 2026-05-01 · SGPP expansion and savings · 2026-05-01 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000022/q12026pressreleasetables.htm

[33] CL Q1 2026 earnings call 2026-05-01 · Drillr call summary: SGPP savings timing and North America reset · 2026-05-01 · earnings-call · https://gateway.drillr.ai/mcp/private

[34] CL 10-K filed 2026-02-23 · 2025 market shares · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[35] CL 10-Q filed 2026-07-31 · 2Q26 market shares · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[36] CL 10-K filed 2026-02-23 · competition and private label · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[37] CL 10-K filed 2026-02-23 · outlook: category softness and trade-down · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[38] CL Q2 2026 earnings call 2026-07-31 · CEO on Hill's ex-private label growth and pet category · 2026-07-31 · earnings-call · https://www.investing.com/news/transcripts/earnings-call-transcript-colgatepalmolive-tops-q2-2026-eps-view-as-sales-meet-forecasts-93CH-4828573

[39] CL 10-Q filed 2026-07-31 · 2Q26 Latin America segment · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[40] CL 10-K filed 2026-02-23 · 2025 North America segment · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[41] CL 10-Q filed 2026-07-31 · 2Q26 North America segment · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[42] CL Q2 2026 earnings call 2026-07-31 · Drillr call summary: guidance and U.S. outlook · 2026-07-31 · earnings-call · https://gateway.drillr.ai/mcp/private

[43] CL 8-K filed 2026-05-01 · 1Q26 sales growth by division · 2026-05-01 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000022/q12026pressreleasetables.htm

[44] CL 10-Q filed 2026-05-01 · 1Q26 gross margin bridge · 2026-05-01 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000023/cl-20260331.htm

[45] CL 8-K filed 2026-05-01 · 1Q26 guidance update · 2026-05-01 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000022/q12026pressreleasetables.htm

[46] CL 8-K filed 2026-07-31 · CEO comment on advertising and volume · 2026-07-31 · 8-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm

[47] CL 10-K filed 2026-02-23 · 2025 Hill's Pet Nutrition segment · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[48] CL 10-Q filed 2026-07-31 · 2Q26 Hill's Pet Nutrition segment · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[49] CL 10-Q filed 2026-05-01 · 1Q26 Hill's Pet Nutrition segment · 2026-05-01 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000023/cl-20260331.htm

[50] CL 10-K filed 2026-02-23 · Strategic Growth and Productivity Program approval · 2026-02-23 · 10-K · https://www.sec.gov/Archives/edgar/data/21665/000002166526000006/cl-20251231.htm

[51] CL 10-Q filed 2026-07-31 · SGPP estimated charges · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[52] CL 10-Q filed 2026-07-31 · outlook: Middle East conflict, commodities and consumers · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/21665/000002166526000042/cl-20260630.htm

[53] CL Q2 2026 earnings call 2026-07-31 · CEO on organic guidance and second-half volume · 2026-07-31 · earnings-call · https://www.investing.com/news/transcripts/earnings-call-transcript-colgatepalmolive-tops-q2-2026-eps-view-as-sales-meet-forecasts-93CH-4828573

[54] TIKR 2026-08-28 · Colgate-Palmolive Stock: North America Volumes Fall 3.9% Even as EPS Beats · 2026-08-28 · TIKR · https://www.tikr.com/blog/colgate-palmolive-stock-north-america-volumes-fall-3-9-even-as-eps-beats

[55] Simply Wall St via Yahoo Finance 2026-10-14 · How Investors Are Reacting To Colgate-Palmolive (CL) Shifting Hill's Toward Premium Branded Pet Nutrition · 2026-10-14 · Simply Wall St(经 Yahoo Finance 转载) · https://finance.yahoo.com/markets/stocks/articles/investors-reacting-colgate-palmolive-cl-201845350.html