A.G. Lafley knows he has something to prove during his second tour as chief executive officer of The Procter & Gamble Co.
This story first appeared in the September 5, 2013 issue of WWD. Subscribe Today.
“We’re in the show-me stage on beauty,” said Lafley, who laid out more of his vision for the consumer products giant at the Barclays Back-to-School investor conference in Boston Wednesday.
“We hit a huge stall with the [beauty] industry when the financial crisis and recession hit,” he said. “And we didn’t come out of it, and we own that and we are on it.”
The ceo is focused on two things in beauty, turning around the $2 billion Olay division and getting it growing in its “critical core markets,” while also reenergizing the U.S. market for Pantene — a $3 billion business.
Lafley, who has also served as chairman and president since taking back the reins from Bob McDonald in May, acknowledged that the beauty business can’t turn on a dime and that its retail customers have already made their buys for the next 10 months.
That means it will be some time before the ceo can fully realize his plan to revitalize the business.
“It’s coming and I’m bringing a real sense of urgency,” he said.
Lafley tried to a give feel for the trajectory and history of the $20 billion beauty business, which he said was put together 13 years ago with “odds and ends.”
“In 2000 Apple was a $7 billion company,” he said. “We had a $7 billion collection of beauty brands. [In] 2007 Apple was a $23 billion company. We had a $22 billion-plus collection of beauty brands. We took Oil of Olay and turned it from a few hundred million into $2 billion.”
Lafley also described Pantene as “an afterthought” in the company’s 1985 acquisition of Richardson-Vicks Inc. “It was this dinky little brand that showed up on department store shelves with a plastic cap on a plastic package,” he said. “We’ve turned it into a $3 billion-plus hair-care brand. And frankly it’s doing quite well in most markets around the world.”
Lafley’s comparison to Apple breaks down after 2007 — while P&G’s beauty business retrenched, the tech company introduced the iPhone, setting it on a course that would push revenues to more than $156 billion last year.
Lafley gave the impression of an executive on the move. He told investors and analysts at the conference that he was focused on improving the company’s execution while also amping up productivity and innovation.
He said he had gone through the consumer product company’s various businesses, keeping an eye out for what could be trimmed.
“[I have] already been through the portfolio in detail,” he said. “Already discussed with the management team. Already discussed more than once with the directors on the board. We’re on it. We know what doesn’t fit strategically and what does. We know what’s underperforming and what’s performing.…There’ll be few moves that will be obvious, and we’ll announce some when it’s the appropriate time.”
Lafley also said the company would be rolling out a new, lower-priced version of Tide, dubbed Tide Simply Clean and Fresh.
While investors initially welcomed the return of Lafley with a rally, the stock has since fallen back to just below where it was when the straight-talking executive rejoined in May. Shares of the company slipped 0.3 percent to $77.49 on Wednesday.