Avery Dennison’s second quarter results largely reflected the effects of shifting trade policy and segment-specific demand fluctuations, as the company navigated a complex economic backdrop. While revenue was flat year over year and missed Wall Street’s expectations, earnings per share came in slightly ahead of consensus. Management pointed to resilient execution in the Materials Group, where enhanced product mix and operational productivity supported margins, even as volume growth remained modest. CEO Deon Stander explained that “changes in trade policy throughout the quarter had both direct and indirect impacts on our business,” particularly in apparel and general retail categories. Meanwhile, growth in high-value categories, especially in graphics and reflective solutions, partially offset declines in base business lines.
Is now the time to buy AVY? Find out in our full research report (it’s free).
Avery Dennison (AVY) Q2 CY2025 Highlights:
- Revenue: $2.22 billion vs analyst estimates of $2.24 billion (flat year on year, 0.9% miss)
- Adjusted EPS: $2.42 vs analyst expectations of $2.43 (in line)
- Adjusted EBITDA: $367.5 million vs analyst estimates of $362.2 million (16.6% margin, 1.5% beat)
- Adjusted EPS guidance for Q3 CY2025 is $2.32 at the midpoint, below analyst estimates of $2.42
- Operating Margin: 12.9%, up from 11.7% in the same quarter last year
- Organic Revenue was flat year on year (7.1% in the same quarter last year)
- Market Capitalization: $13.63 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Avery Dennison’s Q2 Earnings Call
- John Patrick McNulty (BMO Capital Markets) asked about pent-up demand in apparel and the profitability of potential rebounds. CEO Deon Stander responded that apparel demand remains cautious due to tariff uncertainty, but non-apparel categories like food and logistics are tracking to expectations.
- Ghansham Panjabi (Baird) inquired about RFID volume trends and drivers of anticipated fourth quarter earnings improvement. Stander reiterated that Intelligent Labels should see growth in the second half, and CFO Greg Lovins pointed to seasonality and cost savings as key factors for Q4 earnings progression.
- George Leon Staphos (Bank of America) questioned order trends in Vietnam following tariff changes and July apparel volumes. Stander explained that some volume shifted from China to Vietnam, but overall apparel orders remained flat year-to-date with continued customer recalibration.
- Matthew Burke Roberts (Raymond James) focused on free cash flow, share repurchases, and the potential for M&A if Intelligent Labels growth remains slow. Lovins emphasized a disciplined capital allocation approach and readiness to pursue M&A in high-value categories as needed.
- Anthony James Pettinari (Citi) asked for more details on Intelligent Labels’ innovation and competitive dynamics. Stander described ongoing product and network innovations, including recyclable tags and loss detection features for apparel, and stated that Avery Dennison’s market share is expected to grow.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will closely monitor (1) whether Intelligent Labels can accelerate growth beyond apparel, particularly in food and logistics; (2) the pace of recovery in apparel and general retail demand amid ongoing trade and inflation headwinds; and (3) execution of productivity initiatives and product innovation to sustain margins. Progress on the rollout of pilot programs and customer adoption in high-value categories will be additional indicators of strategic traction.
Avery Dennison currently trades at $174.50, down from $179.02 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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