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P&G Execs Talk Strategy in Event of U.S. Slowdown

On the company's latest earnings call, where numbers were up, P&G executives shared how they think about safeguarding the business in the event of a recession.

Procter & Gamble executives declined to predict the future of U.S. consumer market on the company’s Tuesday earnings call, but they did share some insight into how they’ve worked to safeguard the business should a slowdown occur.

“In terms of predicting any kind of acceleration or consumer slowdown, we aren’t in that business,” said P&G chief operating and chief financial officer Jon Moeller. “We are better positioned today for several reasons to deal with the downturn then we were, for example, in 2007, 2008.”

He went on to tick off some of the differences in P&G today, versus the group then. The company’s focus on daily-use products, like shampoo, is one of the reasons it is likely to be better off now if a slowdown were to occur, Moeller said.

“We’re largely out of highly discretionary categories….We don’t see consumers stopping laundry or shampooing or feminine protection during a downturn,” he said, adding that P&G’s focus on “superior” products is meant to lead consumers to buy its products. The company has also worked to evolve pricing options, offering different prices and sizes of products.

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“Put all of that together, again, no guarantees, but we’re in a much better place,” Moeller said.

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He spoke on the company’s earnings call for the first quarter of fiscal 2020, during which P&G posted a 7 percent net sales gain, to $17.8 billion. Sales were driven by growth in every category except grooming.

Beauty sales were up 8 percent, to nearly $3.6 billion for the quarter, driven primarily by skin care, especially SK-II and China Olay, P&G said. Hair-care sales increased in the single digits, the company said.

In the U.S., hair care was up 6 percent, and for the quarter, personal care gained 10 percent, executives said Tuesday.

“Skin care and SK-II grew at even higher rates than that,” Moeller said, noting that for SK-II the focus is on attracting new users.

In grooming, net sales were down 2 percent for the quarter, to $1.5 billion. Shave-care sales were flat, as price increases offset volume declines. Appliances experienced a slight uptick in organic sales, which was driven by premium products, but offset by volume decreases due to “category contraction and retailer inventory reduction,” the company said.

The Gillette Skin Guard launch is going well, Moeller said, and the company is also “spending more effort to meet the needs of men who choose not to shave,” he added. “If we do that, this category will grow.”

P&G raised its guidance for fiscal 2020 from a sales increase of 3 percent to 4 percent to a gain of 3 percent to 5 percent, versus the prior year.

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