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ACCO Brands Corporation (NYSE:ACCO) reported a significant revenue decline in its first quarter of 2025, as weak global demand and tariff challenges impacted results. The office products manufacturer shared these results during its May 2, 2025 earnings conference call.
Executive Summary
ACCO Brands reported Q1 2025 net sales of $317.4 million, down 11.6% year-over-year, with comparable sales declining 8%. Despite the revenue challenges, the company managed to improve its gross margin by 60 basis points to 31.4% while reducing SG&A expenses by 1.6% to $92.7 million.
The company posted an adjusted loss per share of $0.02, compared to earnings of $0.03 in the same period last year, though this was better than management’s expectations. Free cash flow was $3 million, significantly down from $26 million in Q1 2024.
As shown in the following financial results table:
Quarterly Performance Highlights
ACCO’s first quarter performance reflected ongoing challenges in the global business environment. The company noted that demand was impacted by weak consumer and business spending globally, with adverse foreign exchange further reducing sales by 3%.
There were some bright spots, however. Computer accessories grew due to a large B2B contract, and Brazil returned to volume growth in notebooks. The company’s cost reduction program delivered $7 million in savings during the quarter, contributing to the gross margin improvement.
The margin reconciliation slide illustrates how cost savings helped offset volume declines:
Segment Performance
Both the Americas and International segments experienced similar sales declines in the quarter. ACCO Brands Americas reported sales of $173.9 million, down 11.8% year-over-year, with comparable sales down 8.3%. The segment’s adjusted operating income was $10.0 million, representing a margin of 5.8%, down 40 basis points from the prior year.
ACCO Brands International posted sales of $143.5 million, down 11.3%, with comparable sales declining 8.4%. Adjusted operating income for this segment was $9.6 million, with a margin of 6.7%, down 380 basis points year-over-year.
The following segment breakdown provides more detail:
Tariff Impact and Mitigation Strategies
A significant focus during the presentation was the impact of tariffs, particularly on gaming and certain computer/office products. The company outlined its balanced approach to production over the last five years, employing a "China plus one" strategy to optimize costs and minimize risks.
ACCO is implementing several initiatives to mitigate tariff impacts, including price increases, increased U.S.-based production, expanded SKU rationalization, and reinforcing the value of their production to customers.
As illustrated in the tariff commentary slide:
Cost Reduction Program Progress
ACCO’s multi-year cost reduction program, targeting at least $100 million in savings, has delivered $32 million since inception, including $7 million in Q1 2025. The company remains on track to achieve $40 million in pre-tariff savings this year through lower headcount, reduced discretionary spending, and footprint rationalization.
The program has already yielded over $25 million in cost savings for full year 2024, with additional benefits from a rationalized global footprint, streamlined management structure, and consolidated supply chain improvements.
The cost reduction program details are shown here:
Capital Structure and Allocation
ACCO maintained its focus on debt reduction, with net debt of $801.9 million as of March 31, 2025, down $35 million year-over-year. The company’s total gross debt stood at $937 million with a weighted average interest rate of 4.43%, and no debt maturities until 2029.
The company’s historical net debt reduction is illustrated in this chart:
Despite challenging market conditions, ACCO continued to return capital to shareholders, repurchasing $15 million in stock during Q1 and declaring a quarterly dividend of $0.075 per share on April 25th. The company also closed on a small, strategic acquisition during the quarter.
The capital allocation strategy is summarized here:
Outlook and Guidance
Looking ahead to Q2 2025, ACCO expects reported net sales of $386 to $403 million, representing a decline of 8% to 12% year-over-year. The company projects adjusted earnings per share of $0.28 to $0.32 for the quarter.
Management noted that Q2 sales will be impacted by consumer decisions related to the U.S. tariff situation, shifts in back-to-school purchasing patterns, and a cautious view of near-term demand implications.
The Q2 2025 outlook is detailed in this slide:
Brand Portfolio and Product Diversification
ACCO emphasized its diversified portfolio of iconic brands, with 12 brands accounting for 75% of net sales. The company maintains #1 or #2 market positions across various product categories and regions.
The company’s product portfolio spans three main categories: Tech Accessories (19% of 2024 net sales), Learning & Creative Products (29%), and Business Essentials (52%).
The following slide showcases ACCO’s collection of leading brands:
And this slide illustrates the company’s diversified product categories:
Despite the challenging start to 2025, ACCO Brands continues to focus on cost reduction, margin improvement, and strategic capital allocation to navigate the current market environment. The company’s diversified brand portfolio and global presence provide some resilience, though weak consumer and business spending, along with tariff complexities, remain significant headwinds in the near term.
Full presentation:
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