Acco Brands NYSE: ACCO said second-quarter sales increased 5% from a year earlier, exceeding the company’s outlook, as strength in its Americas business, the recently acquired EPOS business and favorable foreign exchange more than offset weaker demand in several international and technology-peripheral markets.
President and Chief Executive Officer Tom Tedford said the company’s first-half performance reflected its multiyear cost-reduction program, commercial initiatives and strategic growth efforts. Based on those results, Acco raised its full-year outlook for reported sales and adjusted earnings per share, while retaining a cautious view of demand in the second half.
Sales Growth Led by Americas and EPOS
Reported second-quarter sales rose 5%, while comparable sales declined 2%, according to Executive Vice President and Chief Financial Officer Deb O’Connor. The difference reflected contributions from the EPOS acquisition and favorable currency movements.
In the Americas segment, sales rose 6% and comparable sales increased 2%. The company cited strong North American back-to-school placements and growth in Mexico, particularly in learning and creative products. Those gains were partly offset by softer conditions in Brazil, core office products and technology peripherals.
Tedford said early back-to-school indicators have been favorable. “Our sell-in was strong,” he said, adding that early sell-through was in line with or better than the company’s plan and that its brands were gaining share in the initial weeks of the season. He said channel inventory positions were in good shape and that Acco exited the prior back-to-school season “fairly clean across most retailers.”
O’Connor said Acco now expects sales of back-to-school products to rise by the mid-single digits for the full season. Americas adjusted operating income was $56 million, up about $13 million from the prior year, while the segment’s adjusted operating margin improved 380 basis points to 21.2%. The company attributed the improvement to stronger volume and cost savings.
International sales increased 4% on a reported basis but declined about 9% on a comparable basis. Growth from EPOS and foreign exchange was offset by weaker demand in Europe, the Middle East and Africa, as well as Australia. Sales also were affected by a planned systems upgrade at the company’s largest European distribution center, which disrupted deliveries. Tedford said the upgrade was completed and performance improved in June.
Technology Peripheral Demand Remains Soft
Acco said technology-peripheral demand was weak in the quarter, citing cautious end-user spending, higher hardware costs, constrained memory-chip availability, a soft console-gaming market and a shift in enterprise spending toward artificial intelligence. The company expects those trends to continue during the second half.
Computer accessory categories were affected by lower global PC shipments, Tedford said. He added that accessories tend to move alongside hardware deployments, meaning weaker PC demand has affected accessory attach rates.
Enterprise demand, including categories supported by the Kensington brand, slowed significantly during the second quarter, according to Tedford. While the company’s sales pipeline remains “robust,” he said deal close rates have slowed as businesses absorb higher hardware expenses and allocate budgets toward AI-related initiatives.
Gaming accessory comparisons were also difficult because the prior-year period included an initial load-in of products tied to the Nintendo Switch 2 launch. Tedford said Acco remains optimistic about its PowerA brand and expects the planned fourth-quarter release of Grand Theft Auto VI to support sales momentum in gaming-accessory categories.
EPOS Integration on Track
The company said EPOS sales exceeded its expectations during the quarter. Acco continues to expect approximately $80 million in EPOS sales during 2026 and $15 million in cost synergies within 18 months of the acquisition’s closing date. O’Connor said EPOS carries a higher gross-profit rate than Acco’s consolidated average but is expected to be neutral to adjusted EPS for the year.
Tedford said integration efforts have initially focused on preserving the acquired business, including IT infrastructure and synergy planning. He said the company is now beginning to evaluate growth opportunities across the EPOS portfolio.
EPOS primarily serves enterprise customers and offers audio products with certifications for platforms including Microsoft Teams and Google Meet, Tedford said. He contrasted it with Acco’s LucidSound brand, which is owned by Acco, primarily retail-focused and geared toward gaming consumers.
Acco also said it sees an attractive acquisition pipeline and may be positioned to pursue another transaction relatively soon as internal EPOS integration work approaches completion. Tedford did not provide details on potential deals.
Margins, Cash Flow and Updated Outlook
Second-quarter adjusted gross profit increased 6% to $138 million, and adjusted gross margin expanded 20 basis points to 33.1%, primarily because of cost savings. Adjusted selling, general and administrative expense rose to $89 million entirely due to the EPOS acquisition, O’Connor said. Adjusted operating income was $48 million, benefiting from cost savings but partly offset by fixed-cost deleveraging from organic volume declines.
Acco remains on track to achieve $100 million in targeted cost reductions this year. However, O’Connor said the company expects lower gross-profit and operating-income margins for the full year compared with the prior year as inflationary costs rise and pricing actions lag those increases.
The company said it submitted claims for $20 million in Phase II tariff refunds that it expects to receive in 2026, plus an additional $5 million claim expected in 2027. Neither actual results nor guidance includes any benefit from the claims.
- Full-year reported sales are now expected to increase 2% to 5%.
- Full-year adjusted EPS is forecast at $0.87 to $0.91.
- Third-quarter reported sales are expected to range from a 1% decline to 2% growth.
- Third-quarter adjusted EPS is projected at $0.17 to $0.21.
- Full-year free cash flow is expected to be $75 million to $85 million, including $24 million of restructuring payments and $15 million of capital expenditures.
Year-to-date free-cash-flow outflow was $39 million, in line with the prior year and the company’s plan. Acco ended the quarter with about $205 million available under its revolver and a consolidated leverage ratio of 4.3 times. The company expects year-end leverage of 3.7 times to 3.9 times and said it has no debt maturities until 2029.
About Acco Brands (NYSE:ACCO)
Acco Brands Corporation is a global provider of branded office and school supplies, serving consumers, educational institutions and commercial customers. Headquartered in Lake Zurich, Illinois, the company designs, manufactures and distributes a wide range of products that enhance productivity and organization in work and learning environments.
The company's portfolio includes staplers, hole punches, binding and laminating systems, writing tools, binders, folders and desktop accessories under well-known names such as ACCO, Swingline, GBC, Kensington, Mead and Five Star.
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