Procter & Gamble had a big second quarter, with expansion across all segments — including the grooming division, which has struggled in recent years.
Overall company net sales gained 5 percent year-over-year, to $18.2 billion for the quarter. Net earnings increased 16 percent from the prior year, to $3.7 billion. Diluted earnings per share were $1.41, also up 16 percent.
Beauty net sales, which are comprised of brands such as SK-II, Olay and Pantene, were up 7 percent, to about $3.6 billion, driven by premium innovation and increased pricing. Hair care rose 6 percent in the quarter, after seeing disproportionate growth of higher-end products, the company said. Skin and personal care were up 10 percent, P&G chief financial officer and chief operating officer Jon Moeller said on the company’s earnings call.
Grooming net sales were up 2 percent, to $1.6 billion. Shave care saw organic growth in the low single digits due to innovation and price increases, though the segment did see unit volume declines in certain markets. Overall gains were offset by “competitive activity,” the company said. Appliance sales increased in the high-single digits, driven by innovation and growth in premium products.
P&G’s grooming segment, which owns Gillette, Venus and other shaving brands, has been struggling in recent years due to increased competition from newer shaving businesses like Dollar Shave Club and Harry’s, which have lower-priced products and started with direct access to their consumers through selling to them directly.
Moeller told journalists Thursday morning that the Gillette business is “strengthening quite nicely” and was up 4 percent globally during the quarter. “We are able to price behind innovation, which we’ve been doing for quite some time. And as long as that creates performance value for consumers and stays within reasonable [prices] versus competitive offerings, we can do that pretty successfully,” he said. He added that the brand built 0.3 points of market share in the quarter, and that strength was “broad based,” and included the U.S., Gillette’s biggest market.
P&G recently agreed to acquire Billie, a shaving and personal care start-up centered around women.
“We think there can be some magic here between the combination of their capabilities, knowledge and experience, and our capabilities, knowledge and experience. They’ve done a great job building this brand,” Moeller said. He noted that P&G expects to bring its innovation capabilities, retail distribution, manufacturing offerings across the categories Billie operates in, which include shaving and body care.
“They also will bring — we’re hoping — increased knowledge…and capability in the digital space and [direct-to-consumer] one-on-one marketing. We think it can be a very growthful combination,” Moeller added.
P&G raised its fiscal 2020 guidance. Now, it expects sales growth between 4 and 5 percent for the year, versus previous estimates of 3 to 5 percent.
“Our strong first-half results enable us to further increase our outlook for the fiscal year across each of these metrics, and to increase our commitment of cash return to shareowners,” said P&G chief executive officer David Taylor in a statement. “Our focus remains on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver balanced top-line and bottom-line growth along with strong ash generation in a challenging competitive and microeconomic environment.”
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