Volume Tumbles in No-Moat Church & Dwight's Q1 on Pronounced Price Hikes; Shares Rich

Supply chain disruptions and rising costs affected no-moat Church & Dwight in the first quarter. Organic sales edged up 2.7% as higher prices (up 8%) were partially offset by contracting volume (down around 5%). A portion of this pullback is a byproduct of inadequate supply; fill rates improved to the mid- to high 80s of late but still lag the high 90s that characterized the business in the past. However, we think this could also reflect consumers trading down or out of the categories in which Church plays. We don’t anticipate these pressures will subside, as prices at the shelf continue to climb and government benefits decrease. In this context, Church suggested its value products (40% of its mix) have been winning relative to its premium fare.