Reynolds (REYN) Q3 2025: Tableware Volume Down 13% as Retail Share and Cost Initiatives Offset Mix Headwinds
Reynolds delivered broad-based retail share gains and executed pricing actions as tableware volumes fell and consumer pressure persisted. Cost discipline and supply chain improvements supported profit, while innovation and U.S.-centric manufacturing provided resilience amid promotional intensity and tariff volatility. Management raised full-year guidance, but flagged ongoing risks from private label competition and macro headwinds as category dynamics shift into 2026.
Summary
- Retail Share Momentum: Share gains in waste bags, foil, and store brand food bags outpaced category trends.
- Cost and Productivity Levers: Manufacturing and SG&A reductions helped offset volume and input pressures.
- Competitive Backdrop: Private label risk and consumer trade-down remain key watchpoints for 2026.
Performance Analysis
Reynolds posted revenue growth above expectations, with net revenues up more than 2% year-over-year and retail volume excluding farm products rising 1%. All four business units improved profitability, but consolidated adjusted EBITDA was slightly below the year-ago period, reflecting a mix of better operational execution and lingering category headwinds. Tableware volume fell 13%, with foam product declines accounting for roughly 80% of the drop, but profit in the segment increased about 10% as management tailored strategies to offset volume loss with cost actions and portfolio management.
Gross profit was down modestly versus last year, but improved sequentially as pricing and input costs became better aligned. SG&A expense was flat quarter-over-quarter and down $29 million year-to-date, demonstrating ongoing discipline in controllable costs. Promotional activity remained consistent with pre-pandemic levels, and innovation in key brands like Hefty and Reynolds Wrap underpinned retail outperformance. The business continues to benefit from its U.S.-centric manufacturing base, which provides supply chain reliability amid tariff and trade uncertainty.
- Tableware Volume Decline: 13% drop driven by foam exit and weaker discretionary demand, yet profit rose 10%.
- Retail Outperformance: Hefty waste bags and Presto food bags both gained share, with Hefty retail takeaways up 9% year-to-date.
- Pricing Actions: Aluminum foil price increases implemented as planned, narrowing price gaps to store brands and supporting volume.
Despite mixed category trends, Reynolds’ breadth of share gains and cost focus delivered improved results, positioning the company for a resilient holiday season amid persistent consumer and retail pressures.
Executive Commentary
"We achieved strong retail performance, gaining market share overall and in the vast majority of our categories. We demonstrated increased agility and effectiveness in managing profitability... We are making progress managing manufacturing, supply chain, and SG&A costs while continuing to drive our categories and gain market share."
Scott Huckins, President and Chief Executive Officer
"Third quarter net revenues were $931 million, an increase of more than 2% from $910 million in the year-ago period... Each of our business units grew EBITDA in the quarter and consolidated adjusted EBITDA was $168 million compared to $171 million in the year-ago period, reflecting improved results in all operating segments and the timing of corporate expenses in the prior year."
Nathan Lowe, Chief Financial Officer
Strategic Positioning
1. U.S.-Centric Manufacturing Advantage
Reynolds’ domestic manufacturing footprint remains a strategic asset as tariffs and supply chain uncertainty impact overseas suppliers. This enables the company to offer retailers greater reliability and cost competitiveness, particularly in private label and store brand categories where sourcing flexibility is increasingly valued.
2. Innovation and Brand Extension
Product innovation is driving category growth and differentiation, with new launches such as Reynolds Wrap Fun Foil and Hefty EcoSave compostable cutlery gaining traction. The Hefty Fabuloso scented waste bag line continues to resonate, especially with younger consumers, supporting premiumization and volume.
3. Revenue Growth Management (RGM) and Commercial Talent
New leadership in commercial and operations is accelerating the deployment of revenue growth management tools, optimizing promotional spend, and targeting share gaps at the customer and product level. This structured approach to pricing and promotion is helping Reynolds navigate heightened competitive intensity and maximize return on trade investment.
4. Operational Efficiency and Cost Discipline
Manufacturing productivity and SG&A reductions are central to Reynolds’ margin defense, with automation and lean principles being rolled out under a new Chief Operations Officer. Capital allocation remains focused on high-return projects, onshoring, and technology upgrades to sustain cost leadership and earnings resilience.
5. Balanced Consumer Portfolio
Reynolds’ “barbell” portfolio serves both brand-loyal, higher-income consumers and value-oriented, private label shoppers. Stability in sales mix between brands and store brands indicates that the company is effectively defending share across consumer segments despite macro pressure.
Key Considerations
Reynolds’ Q3 showcased disciplined execution and strategic adaptation in a volatile environment. The company’s ability to win share, manage costs, and invest in innovation while maintaining margin stability highlights strengths, but also exposes critical areas to monitor as category and consumer dynamics evolve.
Key Considerations:
- Promotional Environment: Waste and food bag categories are seeing increased promo activity, but Reynolds’ spend remains disciplined and in line with historical norms.
- Private Label Risk: Retailers may increase bidding for store brand business, creating both opportunity and risk for Reynolds as a leading U.S. supplier.
- Input Cost and Tariff Volatility: Ongoing commodity and tariff headwinds are being offset by pricing actions, but require constant monitoring and agile response.
- Tableware Stabilization: Foam headwinds are expected to lessen in 2026, but the segment’s discretionary nature warrants caution as consumer sentiment remains weak.
- Capital Allocation Discipline: $50 million voluntary debt repayment and targeted capex signal continued focus on balance sheet health and high-return investment.
Risks
Reynolds faces persistent macroeconomic headwinds, including inflation above the Fed’s target, cooling labor markets, and declining consumer sentiment. Category promotional intensity and retailer private label bidding may pressure margins. Tariff and commodity volatility, as well as ongoing foam declines in tableware, remain material risks that could impact future performance despite current cost and share gains.
Forward Outlook
For Q4 2025, Reynolds guided to:
- Net revenues down 1% to 5% versus Q4 2024
- Adjusted EBITDA of $208 million to $218 million
- Adjusted EPS of $0.56 to $0.60
For full-year 2025, management raised guidance:
- Net revenues flat to down 1% versus $3.7 billion in 2024
- Adjusted EBITDA of $655 million to $665 million
- Adjusted EPS of $1.60 to $1.64
Management highlighted:
- Retail volume expected to perform in line with or better than categories
- Pricing designed to fully recover commodity and tariff costs
- Early productivity gains from strategic initiatives flowing through P&L
Takeaways
Reynolds’ Q3 reflects broad-based share gains, effective cost management, and a resilient business model, even as discretionary categories and macro factors present headwinds. Strategic hires and operational investments are positioning the company for sustained earnings power, but competitive and input risks remain key watchpoints into 2026.
- Margin Defense: Cost reductions and pricing actions are helping offset volume and mix pressures, but continued vigilance is needed as promo and input volatility persist.
- Strategic Talent: New commercial and operational leaders are accelerating innovation and execution, supporting both top-line and margin goals.
- 2026 Watchpoints: Monitor foam headwind abatement, retailer private label dynamics, and the impact of tariff and commodity trends on gross margin trajectory.
Conclusion
Reynolds delivered on share and cost initiatives in Q3, supporting margin stability despite tableware and macro headwinds. Strategic execution and U.S.-centric supply chain provide resilience, but investors should watch for evolving retailer and consumer trends as the business heads into 2026.
Industry Read-Through
Reynolds’ results highlight the importance of domestic manufacturing and innovation in consumer staples as tariffs and supply chain volatility persist. The company’s experience with foam headwinds and promotional intensity offers a cautionary signal for peers in tableware, food storage, and value-tier consumer categories. Retailers’ increasing focus on private label and value will likely shape competitive dynamics across the sector, while disciplined capital allocation and cost management emerge as critical levers for margin defense in a challenged macro environment.