Olay's new packaging.

Olay’s about-face seems to be working, according to Procter & Gamble executives.

“We are making meaningful progress on [Olay],” said Alexandra Keith, president global skin and personal care at P&G at the company’s investor meeting Friday. “Olay stretched too far…the shelf became complex. As sales slowed, cost reductions were made…the relevance of our brand declined,” she said.

But P&G has taken steps to fix the skin-care brand, including reducing stockkeeping units by 20 percent in 2015, which Keith described as a move that was necessary, despite creating several headwinds. Then, the brand refocused on Regenerist Micro-Sculpting Cream, “which remains, more than 10 years after its launch, the numer-one selling facial moisturizer in North America,” Keith said. “This hero item grew 7 percent last fiscal year and the total Micro-Sculpting line grew 27 percent,” she said. “We’re bringing prestige quality packaging back to the brand,” Keith added. In the U.S., the new packaging rolls out next month.

P&G is also switching up its counter strategy in China, closing about 30 percent of counters, remodeling others and investing in training employees and diagnostic devices. The company is working to ‘return Olay’s innovation program to points of competitive advantage — antiaging products grounded in meaningful science,” Keith said, calling out Olay Eyes as a good example. “Launched in July, in its first few months we are seeing positive results,” Keith said. The launch gained Olay nine points in segment share, she added, saying that following a 3 percent decline in the eye category before the launch, now the line is growing the eye segment by double digits.

“Our shelf simplification, counter reinvention and Olay Eyes are just the beginning — we have bigger and more exciting things coming in the next 12 to 18 months,” Keith said.

While Olay has struggled, premium skin-care brand SK-II continues to soar. “Sales of SK-II in China finished last year up 25 percent and are accelerating this fiscal [year],” Keith said.

Stifel analyst Mark Astrachan wrote in a note following the meeting: “P&G disclosed super-premium skin care, mainly SK-II, accounts for about 2 percent of company sales. Given previous disclosure of approximate low-to-midteens organic sales growth for the brand in [fiscal] 2016, we estimate SK-II accounted for as much as 25 percent to 30 percent of total company organic sales growth of 1 percent in [fiscal] 2016. As we believe the large majority of sales are in Asia, especially China, the brand accounts for outsized growth in China, P&G’s second-largest market and which has meaningfully underperformed in recent years.”

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