Haleon plc (NYSE:HLN) Q2 2025 Earnings Call Transcript

Haleon plc (NYSE:HLN) Q2 2025 Earnings Call Transcript July 31, 2025

Jo Russell: Good morning, everyone, and welcome to Haleon’s Half Year 2025 Results Q&A Conference Call. I’m Jo Russell, Head of Investor Relations, and I’m joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements including those that refer to our estimates, plans and expectations. Please refer to this morning’s announcement and the company’s U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements. We have posted today’s presentation on the website this morning, along with a video running through the results in detail. So hopefully, you’ve all had the chance to see that ahead of this call. And with that, let’s open the call for Q&A, and I’ll hand back to the operator.

Operator: [Operator Instructions] Our first question comes from Guillaume Delmas from UBS.

Guillaume Gerard Vincent Delmas: So two questions for me, please. The first one on North America because in Q2, both EMEA, LatAm and APAC were well within your medium-term 4% to 6% organic sales growth guidance but North America was a clear outlier with a, I think, nearly 2% organic sales growth decline. So could you maybe help us unpack this performance in North America in Q2? And in particular, do you think it was primarily down to temporarily lower category growth? Is it down to significant discrepancy between sell-in and sell-out? Or are you also seeing some share erosion? And I guess last question on this. Would you expect North America to return to growth and ultimately back to the 4% to 6% range over the coming quarters or it may take a bit longer as the challenges persist?

And then my second question is on A&P, increased significantly in the first half. I think it was up 130 basis points. A question here is in which areas are you disproportionately reinvesting? Do you feel you get some great returns on this incremental spend? And I guess, looking ahead, what should we expect for A&P spend as in was the first half a bit of a one-off? Or should we expect another marked step-up in H2 and beyond?

Brian James McNamara: Thanks, Guillaume. Appreciate the questions. Let me take the first one on North America, and I’ll pass it to Dawn for the second question. And maybe just as I get into North America, we do feel good about EMEA, LatAm and APAC and also feel good about the back half in both those areas. Also feel great about the organic profit growth driven by the gross margin, 160 basis points, and the strong cash flow. But there’s no doubt that North America has been a challenge. And maybe if you step back, I think there’s two market dynamics and then let me touch on our own performance. I mean, first, there’s no doubt that there’s a challenging consumer environment, and consumer confidence is at a low, and I think our categories are more resilient than most in that context.

Q&A Session

But we are impacted in certain categories and smoking cessation is definitely one of them. I talked about it in the past. This is $30 to $40 price point range. So we are seeing trade down in that category. Outside of that, we’re not seeing a trade down overall in the business. And that has been a drag on growth. I think the second thing is we continue to see the shift to Dollar and Club, which are more value channels, which is what we’re seeing in this consumer environment, and e-comm. Now I’d say in all cases, we have strong presence in those channels. And I’ve talked about e-comm, where 16 of our top 18 brands they actually have better shares online than offline. So that’s very manageable. But we are continuing to see these inventory pressures, drug retailers, but I think everybody, all retailers in the U.S. are dealing with that kind of environment.

Now as far as our performance. Our consumption is growing ahead of the market. Now to be clear, the market is slightly down, about 0.5%, and our consumption is slightly up, about 0.5%. So we’re growing ahead of the market, but not significantly to be clear. Now we’re seeing strong growth and market share gains in Oral Health and market share gains across Digestive Health, brands like Tums and Benefiber are doing extremely well. But overall, we’re not satisfied with the performance. And we have a bit mixed performance in Pain Relief and VMS. So let me unpick that a bit. So in pain, in the first half, we have slightly lost share on Advil. Now we’ve taken action, we have new plans in place. We have a new media campaign that’s on air live now, and we see early signs.

I mean in the back half of Q2, we were getting — we were back to share growth on Advil. Now on VMS, we have two brands, Emergen-C and Centrum. On Emergen-C, we continue to see really strong consumption and share gains. Now sales were up low single digits. Emergen-C was one of the brands that at the end of last year when we saw that very low cold and flu incidences in December, we started the year with a bit of higher inventories. But overall, the brand is very healthy. Centrum has been a challenge. Now overall on Centrum, really good growth, mid-single-digit growth outside the U.S., high single-digit growth in Q2 outside the U.S., but we saw declines in the U.S. Now a year ago is when we first activated our cognitive claims on Centrum Silver, and we grew high teens consumption, about 4x the market.

So we’re indexing across a high base. But listen, that said, even with a high base, our expectation is we continue to grow share. So we firmed up our plans. We have — we are — reactivating the Centrum Silver with a new claim, slows cognitive aging by 60% with some innovations in the U.S. on Centrum in the back half, and we have a new partnership with U.S. women’s soccer that we’re beginning to activate that we’re optimistic about. So in the back half, I definitely expect to see improved share positions on Centrum and Advil, but we do believe the inventory reduction will continue to happen. As we look at inventories across retailers, I think they’ve been much more proactively managing their inventory levels as they’re seeing issues with them delivering on their numbers in the whole environment.

We want to more proactively manage that with them going forward. Really, really important that we do what we need to this year to make sure that we’re at the right levels as we exit the year into next year. So in our around 3.5% guidance, we are not looking for a significant improvement in the U.S. environment at all, and we’re expecting to continue to see inventory pressure. I will say though, looking forward to the medium term, we have a fantastic business in the U.S. Really, really pleased with Oral Health in the U.S. where we gained 0.5 share point in the first half and continue to go from strength to strength and we’re confident in 2025, 2026 and beyond as we strengthen the business in the back half. Why don’t I pass it to Dawn to talk about A&P?

Dawn Amanda Allen: Yes. Thanks, Guillaume. So I think the first thing to say is, as we laid out at our Capital Markets Day, we have significant opportunity in supply chain productivity. And you saw that come through in the half and the benefit that’s come through in gross margin has enabled us to continue to invest in A&P and R&D, and that provides the flexibility and agility that we talked about across the P&L. So in terms of, if I focus then on A&P. So A&P is up 6.8% in the half to 20.8%, and we are leveraging A&P to focus on the three growth drivers that we’ve outlined, closing the incidence treatment gap, driving premiumization with our innovation and expanding reach to lower-income consumers. And if I think about from an innovation perspective, we’ve been rolling out very successful innovation, particularly around our clinical range, Nasal Mist on Otrivin and Panadol Dual Action.

So the first area that we’ve been focusing on in terms of spend is around supporting the innovation. If I think from a geographic perspective, we’ve been focusing on driving growth in key markets, so particular markets like India, where we saw just under double-digit growth, in EMEA, in Central Europe and also in China. And obviously, experts and our recommendation by expert for our brands is a critical part, and that’s the other area of our investment. But it’s not just about increasing the investment. It’s also about the effectiveness of that investment. And in the half, we’ve improved ROI by 4%, and we continue to look at the balance of working, nonworking and I think there’s more opportunity for us to go on that. So I wouldn’t say this is about phasing.

If I look to the second half, I would expect us to continue with similar shape, and I would expect us to continue to invest across those areas that I talked about in terms of our A&P.

Operator: Our next question comes from Rashad Kawan from Morgan Stanley.

Rashad Kawan: A couple for me, please. On — first one on North America, again, and the 3.5% growth for this year. You said you’re not expecting a significant improvement in the U.S. in the second half. I think the expectation, obviously, was that you’ll see quite a meaningful step-up in Q3, in particular, given the late end to the cold and flu season last year and retailers starting from a low base. I guess, what’s changed around expectations there? Is it just the destocking trends maybe cautiousness from retailers continued more so than you expected, Smokers’ Health being weaker? Just trying to unpack kind of the key changes from when you spoke to us in Q1 versus where we are today. And then just second question on the business — the percent of business gaining or maintaining share decelerating from the 71%, I think, in 2024 to 58%.

Can you just kind of talk about what the key drivers of those are? And I think you’ve said in the past kind of think of where we want to be as somewhere in the 60% range. Is that the right way to think about it longer term?

Brian James McNamara: Thank you, Rashad. I’ll take both of those. I think first of all, on North America and we look at Q3, I mean a couple of dynamics are happening. You remember last year, we did reduce our PE products in cold and flu in Q2, and we repiped in Q3. Now this year, it didn’t show up in the numbers because we had a low allergy season. We haven’t talked about that yet, but that has an impact on us that Flonase is a pretty significant brand in the U.S. environment. So Q3 needs to deal with that base on the sell-in. And the reality is the environment is uncertain. The environment is difficult in the U.S. and the retailer environment and the stock and trade. And to be clear, I don’t think our stock and trade levels are too high from historical or versus peers, but it’s really the retailers tightly managing that as they’re struggling with things like foot traffic and sales growth and things in that difficult environment.

And then the second question? Gain to maintain share, I apologize. Yes. No. Thank you, Rashad. Last year, we had a very strong result at 71%. And I think I said it was a fantastic result. I think I said at the time, while, listen, my objective and ambition is always to maximize that number, to be clear, I felt like that was a high number that would be difficult to sustain, and you are correct, I’ve always said that where I feel like we want to be is at 60% plus, and we are slightly below that in the first half. If you look at the two of the — two big drivers of that going from 71% to 58%, it’s the two that I talked about, both in the U.S. Advil grew share for full year last year in 2024. And this year, in these numbers, it’s not growing share.

Again, we’ve seen green shoots, and we’re growing in the back half of Q2, but this is a year-to-date number. And Centrum. Centrum is not growing share in the first half. And actually, we’ve seen consumption decline against that high base. Again, we are working on plans to kind of stabilize that in the back half. But those are two big things. With those two growing share, obviously, we would be well in the 60% range. But again, we want to maximize that number. I think 58% is a good number, but it is a bit below what I’d like to see on a consistent basis.

Operator: Our next question comes from Callum Elliott from Bernstein.

Callum Elliott: Perfect. And I wanted to just start with the U.S. again, hoping that we can talk about the retailer environment, which you call out again in the presentation. I guess my question is twofold. Firstly, maybe can you give me a sense or give us a sense of the channel split for your U.S. business and specifically how big the drug channel is as a percentage of revenues, which I guess is the problem that you’re calling out? And then more broadly, the drag that you talk about, I’d love your thoughts, Brian, on whether there’s anything that Haleon as a company can actively do to offset this? Or do you just have to accept that it’s an externality, so to speak? And then my second question is on some of the strategy from the CMD.

So you had obviously set out some very ambitious strategic plans just a few months ago. My question here is with the core business clearly struggling a little bit and sort of the negative revisions to the full year guidance that we’ve seen today, does that deemphasize or would deprioritize some of these — some of the strategic push that you had spoken about at CMD in terms of democratizing, expanding access to lower-income consumers, lower price points whilst you fix the core business, so to speak? Or do you think of these as two completely separate things, Brian?

Brian James McNamara: Thanks, Callum. Appreciate the question. Let me start first on the U.S. retailer environment. Listen, we’re like most companies that Walmart is our #1 customer in the U.S. and roughly 1/4 of the business. We tend to be a little more skewed towards the drug channel, given our portfolio, the combination of the drug channel is less than what Walmart would be in the business and then it cascades down from there for all the big companies. Listen, in the end, what we own and control and need to actively do is perform and deliver market — deliver share in the U.S. and also drive market growth. Listen, we are category leaders. So part of our role is — while the market is struggling a bit, part of our role is to grow those markets.

And we’ve done that in the past. We need to continue to do it. Obviously, the one place we continue to do it is in Oral Health. I mean we are driving category growth in Oral Health and that is our focus. So we need to deal with the current environment, but we’re very focused on our performance and our share growth. Listen, as far as CMD ambitions, absolutely nothing changes. I feel really confident about the medium term. We are clearly dealing some headwinds on the business and in the U.S. is a challenging environment, and we’re not immune to that right now. But as Dawn mentioned, as we look at our investment, part of our investment is that low-income consumer packs we’re doing in India, the INR 20 Sensodyne pack and we’ll be launching more SKUs on Sensodyne as we look at the balance of the year and into next year, Centrum Recharge in India, ENO, our INR 10 pack in India, our launch in Brazil that we talked about at Capital Markets Day, Sonridor, which is our foray into systemic pain relief there with low income offering.

So that continues to be there. The innovation-led premiumization has always been core to our strategy, and we’re going to continue doing it. And then core penetration is all about closing this incident gap. So listen, we’re staying very committed to what we said at Capital Markets Day on the growth side. Feel medium term, we will be where we need to be. Productivity, which is the other thing I laid out at Capital Markets Day, I feel really, really good about our progress, to be honest with you. We had talked at Capital Markets Day the reduction of SKUs that we did in 2024 that we weren’t starting from 0. We are seeing that pay dividends in the gross margin, 160 basis points in the first half, feel great about that. That enables us to deal with these growth headwinds, invest to make sure we’re competitive going forward and deliver the operating leverage on the business.

As Dawn said, it gives us an awful lot of flexibility on how we can manage the P&L while we’re facing a bit of growth headwinds in the U.S.

Operator: Our next question is from Celine Pannuti from JPMorgan.

Celine A.H. Pannuti: My first question is trying to a bit zoom out of the discussion on the short term. And if I look at your volume performance 0.8% this year, it was 1.3% last year. It was 1% the year before. I presume for this year we’ll land around 1%. So 3 years of 1% volume mix. What gives you confidence that you can deliver 4% to 6% in the midterm? I think we will need a step-up in volume, and we are not seeing that. I mean yes, if you could explain what you think has not worked and why you seem confident that you can still do 4% to 6% in the midterm? And then my second question may be somehow related. We’ve seen — you said you feel strong about Latin America. Europe, we’ve seen some other companies talking about weakness there. Yes, I would like to hear a bit your outlook in that region.

Brian James McNamara: Thank you. Listen, I’ll answer the first question, I’ll pass it to Dawn on the question about EMEA, LatAm. So listen, if you look — unpick our results a little bit, if you look at EMEA, LatAm, volume growth accelerated from 0.5 point in Q1 to 1.6% in Q2. In Asia Pac, volume mix accelerated from 3.3% to 3.9%. So if you — and — but we were at 0.8%, you are correct, in the half. And that’s completely linked to the dynamics and the challenges we’re seeing in the U.S. U.S. volume was down 1.8% in Q2. So — and 0.6% in the half. So no question that we see the challenges, and we’re on it in the U.S. environment. I talked about some of the actions we’re taking to firm up the business in the back half. We do have new leadership in the U.S. as of May 1.

I feel great about our leader there, and I’m confident that we’ll do what we need to in the back half and really be set up to return to growth in 2026, and I’m absolutely continue to be confident in our medium-term guidance. Dawn?

Dawn Amanda Allen: Yes. Let me just — I’ll just build on that and then come to the Europe piece. So I think, as Brian said, if you look across the other regions, our volume has improved in Q2 versus Q1. If you look at Asia Pac, 2/3 of our growth in Q2 came from volume. And actually, we continue to see that accelerate. And I would expect second half the growth in Asia Pac to be more weighted to volume. If I look over the last 3 years in Asia Pac, our growth is actually 4.6%. So actually, it’s very strong, it’s consistent. If you look at EMEA, LatAm, again, improving trajectory in Q2 versus Q1. If I look to the balance of the year, we’d expect a more balanced price volume mix growth. And actually, if you look over the last 3 years, we’ve been seeing that trend in that region in terms of volume growth.

To Brian’s point, we’ve talked about the situation in the U.S. in terms of consumer environment, retailer environment and a couple of our brands, and so actually, when I look at the volume piece, it is to do with the U.S. and actually, we’re seeing the shape we would expect to see across the other regions. And as I said, I would expect to see that shape in second half. If I then talk about Europe, in particular, actually, we’re seeing Europe is pretty resilient. Actually, we’re seeing a good performance, we’re seeing high single-digit growth in Central Europe, mid-single-digit growth in what you might call kind of Continental or Western Europe. So for us, that’s holding up pretty well. Why is it holding up so well? We see real strength in Oral Health.

actually, is a core driver of that. And we talked about some of the innovations, the successful innovations across the regions.

Celine A.H. Pannuti: Can I just follow up and maybe on the previous question, I think that Callum asked? I mean you have a high single-digit organic — sorry, reported EBIT growth as a target going forward. Again, if you think about the — my question about volume mid-term, I mean, does that kind of like — if the growth is less important, would you want to reshuffle some of your potential profit growth back into the business, i.e., grow less, but try to stimulate volume?

Brian James McNamara: Well, thanks for the follow-up, Celine. Listen, we guided to high single-digit growth — operating profit growth at constant currency driven by the gross margin opportunity we have. So you can see this year, while again, we’re a bit more challenged than we’ve been in the past on growth and specifically in the U.S., the gross margin improvement and with the leverage in the P&L has allowed us to invest in A&P and R&D in a healthy way, and still drop the organic operating profit to the bottom line. Obviously, we still have a drag of a couple of divestments that we will anniversary once we get through Q3. So no, again, I feel very confident about the algorithm we set out at Capital Markets Day and the fundamental tenet of the opportunity we have in productivity, which is coming through.

Operator: Our next question is from Warren Ackerman from Barclays.

Warren Lester Ackerman: Warren here at Barclays. I’m sorry some of these have been asked. I had a few technicals. So the first one, Brian, on Advil, you talked about some green shoots on that brand. What are you doing to fix it? I think it’s been losing share for a long time. I’d be interested to get any perspective on that specific brand. And then secondly, on Smokers’ Health, are you able to tell us how big it is in the U.S. and what your expectations are for Smokers’ Health in the second half of the year? I mean, do you need to take pricing down to make it more competitive versus private label or something else? And then thirdly, on Centrum, thanks for your comments on Q2. Is there anything happening on Centrum on innovation in the back half where we should feel a bit brighter in terms of the outlook for Centrum in the U.S.?

Brian James McNamara: Yes. So a couple of things. I think first on Advil, it has been a bit of an up and down story, to be honest with you. We did exit last year for the full year growing share on Advil. It was one of the things that contributed to 71% and that was a bit of strength as we exited the year, and it gave us — brought us into share growth for the full year, but it’s been a bit up and down without question. The green shoots that we’re seeing are, listen, we’ve had new media campaign, there were strong promotional plans in the back half. We feel like we feel good about Advil and where we will be. Listen, there’s no question, this has been a battle with Kenvue on Tylenol, which I said in the past, it is one thing that was working well for them, and they doubled down.

But we feel good about our brand, and we feel good about the plans we have in the back half. Smokers’ Health for us is a couple of hundred million kind of business for us, in that kind of range. Listen, we’re looking at it. We expect that in the back half, as we look at our plans, that we’ll see less decline in the back half on Smokers’ Health, but we’re not at a point where we think we’ll get that back to growth and because we don’t expect much change in the U.S. consumer environment, if that changes, then something would be different. We also do have an innovation on Smokers’ health, a dual-layer tablet that we have FDA approval on. It will launch in e-commerce in the back half and then do a full launch in 2026. So that gives us some reason to believe that we’ll have something that’s differentiated in the market that can help us there.

And then what was the third question?

Dawn Amanda Allen: Centrum.

Brian James McNamara: Oh, Centrum, apologize. Listen, on Centrum, a couple of things. I mentioned the new claim. Again, one of the things that drove Centrum tremendously in the U.S. last year was the Centrum Silver claim we had on cognition. We’re reactivating with a new claim. I think I mentioned it, it’s slightly different, but it’s meaningful and the new claim being slows cognitive aging by 60%. Aging, obviously, also is a very big topic for consumers in that cohort. So we have that. We do have a couple of innovations that are going out. I won’t talk specific of them because I don’t think they’ve been announced to the market, but a couple of things that we think will also help firm up. And listen, it’s a big focus for us.

Like I said, Centrum is a great brand. It’s doing quite well outside the U.S., but clearly facing headwinds in the U.S. on a base of tremendous performance a year ago. But again, we want to grow despite what the base is, to be clear. So that’s a big focus for us going forward.

Operator: Our next question comes from David Hayes from Jefferies.

David Hayes: So a couple from us, one nicotine replacement, and one on the margin. So nicotine replacement, just to come back to this, we may have missed this, but could you just quantify the drag that it had on the second quarter? And also, can you quantify what impact it has in that new guidance of 3.5% or around 3.5% growth for the full year? And staying with that topic, you just talked about new innovation, but it always feels like this is a little bit of a periphery category for you. I think it’s a partnership with Kenvue and even Sanofi as well. So is it fair to say it’s less of a focus for investment? How do you account for it given you’ve got these partnerships? Is it fully consolidated with the minority? And then given the partnership structure, is that why you’ve kept this business in the U.S. whereas obviously, you’ve exited in Europe?

Is this something you’re kind of stuck with? Or could we just see it as it could go at some point? And then the margin question was just on putting it all together, high single digit on organic, the FX and the M&A dynamics. Is the guide effectively for flattish margin year-on-year on a headline reported basis? Is that the right kind of conclusion?

Brian James McNamara: Thanks for the questions, David. So listen, I’ll pass the growth question, margin question on to Dawn, but let me start with the nicotine business and the structure. It is a bit of a three-way venture in the U.S. There’s a — part of it is with Opella, and Opella has — it’s a joint venture with Opella, and then Kenvue is a supplier of Nicorette. As you know, Nicorette is a brand that Kenvue owns outside of the U.S. So they are our supplier on that business, and there is a three-way partnership there. So listen, it’s a category that’s quite difficult to innovate in if I’m being honest with you. The innovation that we’re going to — that we will have is takes FDA approval, and it takes quite a bit to do it.

So there’s no question that, that’s a business that is, I think, harder to innovate on, but it is in our portfolio, and we’ll continue to do what we need to, to get to growth. Listen, it plays a really important role, to be honest with you, with consumers and the health care systems and things like that. So — but it is a complicated ownership structure to say the least. Dawn?

Dawn Amanda Allen: Yes. So let me just give you some specifics on Smokers’ Health first. So to Brian’s point, it is about 5%, 6% of the kind of U.S. business and in the quarter, we did see significant decline. The impact, so it has a 60 basis points impact on the total group in terms of — that would take us to 3.6%. And for North America, it would take minus — it would take North America from minus 1.8% to minus 0.2%. So it is a big change in — it is a big change in the quarter, and it has a size — it has a disproportionate impact. That’s the first thing to say. The second thing to say in terms of the margin, to Brian’s point, we’re really pleased with the margin in the first half, 9.9% growth, up 140 basis points. And it’s not just the number, it’s also the quality of that earnings in terms of the delivery through gross margin, investment in A&P and R&D, good cost control in G&A, which has then enabled that margin to come through.

If I look to the second half, the shape that we’ve delivered in the first half, I would expect a similar type of shape in the second half in terms of strength in gross margin, investment in A&P and continued good cost control. If you think about the — which is why we’ve updated the guidance to high single digit operating profit growth for the year. If you look at the other moving parts, obviously, we’ve given the guidance on FX, M&A, interest and tax remain unchanged. So when you put it all — when you put all of that together, I would say that we are comfortable where consensus is today.

David Hayes: And just on the full year, I mean, it looks like NRT, to your point, is 50, 60 basis points of headwind. So did that — I know you just don’t want to take out bits that aren’t going well and getting to that game. So I guess it would be fair to say that without that, you’ve been around 4%, I guess, to the guidance point going down to 3.5%. Is that a fair conclusion?

Brian James McNamara: Well, listen, I think, David, it’s hard to kind of speculate on that kind of thing. I think we don’t expect that drag to continue at that level in the back half. So we’ll see where it ends up at full year, but no question, it will be a drag on the growth in a full year, and it’s made it more challenging for us to hit that low end of the guidance.

Operator: Our next question comes from Tom Sykes from Deutsche Bank.

Thomas Richard Sykes: Yes. Sorry to bang on about the U.S. retailer trends again. But I think — so there’s obviously two issues. One is the stock levels per channel. And then another is the channel shift. So of the headwinds you’ve got at the moment, would you be able to split the volume headwinds between channels that are destocking and the channel shift? Because Amazon, I think, in your scanner sales has grown by over 30% in the last 12 months, and the rest of your business is flat in aggregate. And so therefore, there’s massive channel shifts occurring and so it would be helpful to try and understand what the shift impact versus destocking by channel is. And then why wouldn’t this occur in other countries? I mean I appreciate that there are differences in regulation, but you’re very overweight clearly in the pharma channel in Europe.

And it feels like this is something that’s going to be pervasive across all economies eventually. So just interested in your thoughts on that, please.

Brian James McNamara: Yes. Thanks for the questions, Tom. So listen, destocking by channel in the U.S. Listen, the channel shift is something that’s been happening over time for quite a while. The drug channel does tend to have higher inventory levels. So there’s a bit of an impact there. But the biggest impact is, frankly, I think you’re seeing inventory pressure across channels, maybe a bit disproportionately in drug because they’re struggling more. And again, if you look at the Amazon growth, we do have stronger shares on Amazon. I talked about Sensodyne in the past, where we’re in the low 20s in bricks and mortars and more like 28% on Amazon. So as we see more move to there, we’re moving to a channel with higher share. So I think it would be hard to break down exactly, but I think the bigger impact is the downward pressure as retailers in the U.S. are feeling the pressure of the economic environment, the foot traffic and all those things and trying to manage that situation because again, outside of our categories, there’s other categories that they deal with that are much more affected than we are, and that impacts their overall financial performance.

When I think about other countries, to be honest with you, if you think about pharmacies in Europe. In Mainland Europe, 70% of our business goes through pharmacies, very, very low inventory levels in pharmacies. There is no real stocking up. We have people that call on pharmacies weekly in some cases for the bigger pharmacies and taking orders. So it’s not like there is a massive stock-up opportunity or that they carry really high levels. Now there are distributors in between sometimes our pharmacy channel and us. And distributors in general, are pretty good at managing inventory levels and things like that. So I think that’s really the dynamic. I think, is very different in the U.S. than, let’s say, in Mainland Europe, where the pharmacy model is just very different.

Thomas Richard Sykes: Sorry, just one follow-up. Would you see the channel shift at all impacting your operating margin? Is Amazon lower margin than other parts of the business, please?

Brian James McNamara: No. Listen, on balance, if I look at e-com on a global basis and I look at that, it’s all relatively similar, and it’s all within our outlook and guidance. We expect that e-com will continue to grow. And by the way, Amazon is becoming less and less a piece of that as omnichannel has become more important. Walmart were really strong in walmart.com, and that’s grown well. So that’s all within the context of our outlook and the medium-term guidance we gave.

Operator: [Operator Instructions] Our next question comes from Olivier Nicolai from Goldman Sachs.

Olivier Nicolai: Just one question on my side actually. Going back the U.S. performance for VMS and for Respiratory Health. Would you say that you are losing share against private labels? Or is it more against other branded players?

Brian James McNamara: In Respiratory Health, to be clear, we’re growing share on the balance of Respiratory Health. If you remember, we’ve now put smoking in Respiratory Health. That has moved to private label. Frankly, we’re primarily the branded player in the U.S. So that would be private label. In VMS, it’s probably more competitive pressures that we see. And again, where gained significant share a year ago, some of that we are now giving up. And as I said earlier, it’s not our intention, and we’re very focused on getting that back. But I would say that’s probably the dynamic with the two. But again, if you look at respiratory, Theraflu has grown share really well; Robitussin, okay; even Flonase is in a down market. So it’s really about the smoking business, which is a down trade.

Operator: Thank you. We currently have no further questions. So I’ll hand back to our speaker team for closing remarks.

Brian James McNamara: All right. Well, listen, thanks, everyone, for joining us today. I look forward to catching up with all of you on upcoming roadshows and meetings, and please feel free to reach out to the IR team with any further questions. Thanks for the continued interest and support in Haleon.