Shares in Reckitt Benckiser (LON:RKT) slumped after the consumer health and hygiene giant delivered a Q3 sales miss and lowered its FY26 revenue outlook.
The FTSE 100 company pinned the sales downgrade on a challenging consumer environment and manufacturing constraints in North America, which impacted its ability to fully meet ‘strong’ consumer demand for Lysol.
On the positive side of the ledger, Reckitt returned Europe to growth in Q3 with like-for-like sales up 0.8% thanks to price increases. And the firm expects its H2 adjusted operating margin will be ‘much stronger’ than H1’s 23.6% thanks to cost savings and a more favourable sales mix.
Lysol-driven sales miss
The Dettol-to-Durex maker delivered core Reckitt like-for-like sales growth of 3.3% for Q3, below the 3.6% analysts had forecast.
‘North America was below our expectations,’ conceded CEO Kris Licht. ‘While consumer demand for Lysol remains strong, temporary manufacturing constraints limited our ability to fully meet demand.’
| Q3 FY26 – Net Revenue | £m | Like-for-like sales growth |
| Emerging Markets | 1,174 | +8% |
| Europe | 867 | +0.8% |
| North America | 649 | -1.3% |
| Core Reckitt | 2,690 | +3.3% |
Source: Reckitt Benckiser, Q3 results
Like-for-likes in North America fell 1.3% in Q3 due to the aforementioned manufacturing constraints and later-than-expected orders from retailers. But the good news is these manufacturing challenges are being resolved, and Reckitt expects both Lysol and North America to rebound in Q4.
Elsewhere, Emerging Markets generated positive like-for-like revenue growth of 8%, albeit a tad below analyst expectations of a 9.1% increase as China delivered a rare quarter of single-digit growth.
Good momentum
For FY26, the Slough-based company lowered its core Reckitt like-for-like sales growth guidance to a range of 3.5% to 4.5%, down from 4% to 5% previously.
‘This reflects the Lysol disruption and category slowdown in China VMS in Q3 and positive demand for our seasonal cold & flu brands in early Q4,’ explained Licht. ‘We enter Q4 with good momentum, continue to execute our strategy and invest behind our brands and capabilities.’
Today’s sell-off looks an overreaction to a modest sales miss from Reckitt, largely attributable to Lysol issues that are being resolved. One quarter doesn’t make a trend and with the overall direction of travel positive, patient portfolio builders might consider opening a position.
The group’s leading Powerbrands – including Dettol, Durex, Gaviscon and Finish – are in growth. Furthermore, the firm reiterated medium-term guidance for core Reckitt to consistently deliver 4% to 5% like-for-like revenue growth.
Meanwhile, Reckitt’s Fuel for Growth programme is reducing fixed costs, driving efficiency and freeing up capital for reinvestment.
Crucially, shares in this high-quality compounder look cheap versus their history and offer an attractive 4.5% dividend yield.
