P&G’s Beauty Sales Slip, Profits Rise

The segment managed to overcome a dip in sales and drove first-quarter net profits up 5 percent to $690 million.

The Procter & Gamble Co.’s beauty business managed to overcome a dip in sales and drove first-quarter net profits up 5 percent to $690 million.

This story first appeared in the October 28, 2013 issue of WWD.  Subscribe Today.

The segment’s net sales for the quarter ended Sept. 30 slipped 1 percent to $4.9 billion.

P&G’s organic beauty sales rose 1 percent in the quarter, which the company attributed to “innovation in hair care, deodorants, cosmetics and personal cleansing, coupled with market growth.” This growth was partially offset “by a decrease in skin-care sales and unfavorable geographic and product mix.”

Chief financial officer Jon Moeller told analysts on a conference call that the company was planning on “a heightened level of competitive promotional spending” to support product initiatives in beauty.

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“We have a strong slate of initiatives coming to market December through March in beauty,” Moeller said. “The specifics are not items that we’ve disclosed yet, and we’ll do that as we get closer to the events themselves. But there is significant innovation coming.”

Beauty is also seeing “real progress on productivity,” the cfo said. “They’re working that as hard as anybody and are frankly doing a great job.”

Moeller acknowledged that the category was “very competitive” and that “we continue to have more work to do.”

Sales in the personal-cleansing business increased by a percentage in the high-single digits in the first quarter and Moeller said the cosmetics business was doing “extremely well.”

“We continue to need to make progress on North American Pantene, on Olay, and we need to make progress in our Salon Professional businesses,” he said. “Those are the strengths and the weaknesses, as it were, and we’re fully focused on maximizing the opportunity behind the strengths and addressing the opportunities.”

Overall, the consumer-products giant saw its net income rise 8 percent to $3.03 billion, or $1.04 a diluted share, as sales increased 2 percent to $21.21 billion in the quarter. Adjusted earnings of $1.05 a share met analyst estimates. The firm’s stock closed down 0.8 percent to $80 on Friday.