Advantage Solutions (NASDAQ:ADV) executives highlighted continued growth in its experiential and merchandising operations, while outlining plans to use stronger cash generation to reduce leverage and support investments in the business.
Speaking at a Canaccord event, Chief Executive Officer Dave Peacock described Advantage as North America’s largest sales, marketing and merchandising firm. The company operates across Branded Services for consumer packaged goods companies, Retailer Services and Experiential Services. Its work includes supporting product availability, executing sales and joint business plans, resetting shelves, and providing product sampling and discovery services.
Consumer trends create mixed backdrop
Management said a value-seeking consumer environment is creating both opportunities and pressures across its businesses. Peacock pointed to challenges facing lower-income consumers, who are increasingly seeking deals and value-oriented products.
That trend has supported Advantage’s private-label advisory work, where the company works between retailers and more than 6,000 contract manufacturers. It has also contributed to assortment changes in stores, including more value-focused and multi-pack products, supporting the company’s shelf-reset business.
At the same time, Peacock said higher-income shoppers are altering purchases around health and wellness trends, including GLP-1-related behavior. Those changes, along with continued product innovation, are creating demand for discovery and sampling services.
However, he said consumer-products companies remain under pressure from factors including tariffs and inflation, which can constrain spending and budgets in Branded Services. Management said it has seen softness in that business, while not currently seeing a broad pullback in innovation activity.
Experiential Services posts event growth
Advantage’s labor-intensive businesses, including merchandising and experiential services, have shown durable demand, according to Peacock. He attributed that demand partly to changes in retail labor allocation, as more store employees focus on e-commerce order picking rather than stocking shelves.
Peacock said labor hours dedicated to the center of the store are below pre-COVID levels, contributing to out-of-stocks and inconsistent product availability. That has created demand from both brands and retailers for merchandising work, including product remediation, displays, shelf resets and assortment changes.
Experiential Services has also benefited from retailers seeking to improve the in-store experience. Peacock said that while e-commerce continues to grow, “80% of the shop is in the store,” and retailers are trying to restore more of the experience that declined after the pandemic.
Growe said events grew 18% in the second quarter and were up comfortably in the double digits for the first half of the year. He said the company has maintained execution rates above 95% while handling higher event volume, aided by its centralized labor model and workforce operations.
Management said the business has generated strong profitability and incremental margins. Peacock added that margins in the labor-focused operations and the company’s relationship-based operations are converging.
Technology investments and cash flow plans
Peacock said Advantage has invested in systems including SAP, Oracle and Workday, as well as a data lake intended to support artificial intelligence and machine-learning applications. The company has completed the final phase of a major implementation, he said.
While the implementation temporarily affected working-capital timing by delaying payments and receipts, Peacock said the company is already seeing improvement and expects days sales outstanding to fall below its level at the end of the prior year. Because Advantage has low capital expenditures relative to sales, improved working-capital management could support cash generation, he said.
The company is also using technology to reduce labor-management costs. Peacock cited AI-assisted photo verification and onboarding improvements as examples. He said the time between an applicant applying for a position and beginning work has been cut roughly in half, with additional improvement expected by year-end.
On the balance sheet, Peacock said the company’s goal is to reduce leverage below 3.5 times. Advantage refinanced its debt in March, extending maturities to 2030. Growe said the company has reduced debt by $500 million over the past three years and expects free cash flow, lower capital expenditures and fewer one-time costs to support continued deleveraging.
Management said its priority for cash utilization is retiring debt. Looking ahead, Peacock said he wants investors to see stabilization in Branded Services, more consistent growth in Retailer Services and durable growth in Experiential Services, alongside evidence of new services and pilots gaining customer adoption.
About Advantage Solutions (NASDAQ:ADV)
Advantage Solutions is a leading sales and marketing agency that provides outsourced solutions to consumer packaged goods companies. The firm’s offerings include field sales execution, retail merchandising, in-store and shopper marketing, e-commerce activation and data-driven analytics. By deploying dedicated sales teams alongside proprietary technology, Advantage Solutions helps brands optimize shelf placement, ensure compliance with promotional programs and strengthen consumer engagement.
The company’s service portfolio spans field sales and marketing, retail execution, brand ambassador programs, digital and experiential promotions, and shopper insights.
