Change is on the horizon at Procter & Gamble Co., as activist investor William Ackman has entered the scene.
But the change may be faster and grander than Bob McDonald had planned, and several Wall Street analysts assert it could ultimately cost the chairman, president and chief executive officer his job.
On Thursday, the Federal Trade Commission gave Ackman’s hedge fund Pershing Square Capital Management clearance to take a stake in P&G. An FTC spokesman said the Hart-Scott-Rodino Premerger Notification Act requires clearance for investments of $68.2 million or more.
Ackman’s interest in the company is already being cheered by investors. P&G’s shares climbed 3.75 percent to close at $63.70 on the New York Stock Exchange on Thursday.
Analysts said an investment in P&G by Ackman, regardless of its size, would shake things up at the $82.6 billion company, which is confronting a slowdown in developed markets and market share losses. Last month, P&G cut its profit forecast for the final quarter of the fiscal year, citing a slowdown in developed markets in particular, as well as in China. P&G now expects organic revenue gains in the fourth quarter ended June 30 to be between 2 and 3 percent versus the year-ago period.
“This is an activist shareholder who is going to press for changes either in management or strategy,” said Javier Escalante, executive director at Consumer Edge Research. “This will put a sense of urgency on the board to make any changes that are needed and it opens the door to people outside the company.” He added that should the board ultimately decide to replace McDonald, P&G could be at a loss to find a successor internally. “There’s not an obvious successor within the company and that is a major issue,” he said.
Caris & Co. analyst Linda Bolton Weiser expressed the same concern, noting that many of the obvious successors left the company after getting passed over for the job when McDonald took the helm from A.G. Lafley in 2009.
In her view, McDonald inherited a lot of problems created at the end of Lafley’s tenure, but he should have aggressively tackled cost-cutting from the outset, and not waited until this year. In February, McDonald said the company aims to wring out $10 billion in costs by fiscal 2016.
“I have always wondered where the activist investors were,” said Connie Maneaty, analyst at BMO Capital Markets. “How could you have a large, established company like P&G underperform for so long, and nobody rabble rouse for better results? It’s a welcome development.” As for what Ackman’s involvement could mean for P&G and its management team, she said, “The company’s days of producing subpar results are numbered, and that could ultimately include a management change. I would like to see the pressure rise to the point where disruptive decisions have to be made. P&G’s evolutionary approach hasn’t worked. The company has become middle-aged. It’s got fat around the middle and it’s difficult for decisions to be made.” In her view, P&G has a lot of positives to build on, namely a strong creative ability, a pipeline of new products, management expertise that is often seen as the gold standard and a teeming portfolio of brands.
“There’s undervalued assets here. And so far the changes have only come internally,” said Maneaty. “Now external pressure is being added, and I think only good things are going to come of it.”
A P&G spokesman said of Ackman’s interest in the company: “We welcome investment in our company. We are focused on creating shareholder value by executing on our plan to deliver top- and bottom-line growth through our $10 billion cost savings program, renewing our focus on innovation, pricing initiatives and improved execution and reallocating resources to invest in the highest return opportunities.”
Stifel Nicolaus analyst Mark Astrachan would like to see P&G put a greater focus on its beauty business, given it promises better prospects from profitable growth. “Unfortunately, P&G has spent more and grown less compared to Unilever and L’Oréal.” He added that regardless of whether Ackman takes a position in P&G or not, “Stirring the pot isn’t a bad thing if it were to expedite the decision-making process at Procter.” He added, “Procter has a host of issues and most importantly, it continues to lose share” to its peers.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)