The Procter & Gamble Co. continues to grapple with how to fix its beauty business.

This story first appeared in the April 25, 2013 issue of WWD. Subscribe Today.

During the company’s third-quarter earnings call on Wednesday, the consumer products giant told Wall Street analysts that it has begun to reclaim lost market share across a number of its other categories — oral care and razors included. But it seems that growing the beauty business is proving to be a trickier feat.

“We’ve been working to strengthen the organization and the business now for some time,” Bob McDonald, P&G’s chairman, president and chief executive officer, told analysts. “We’re starting to see progress….We’ve launched a number of new innovations, and the innovation program looks even stronger in the future. We have more of what we call bigger change innovations coming in the future, and we’re [pleased] about that.” He added, “I expect the performance of the beauty organization to improve quarter-to-quarter and sequentially. And we’re going to continue to invest in it both in terms of innovation and in terms of marketing.”

P&G’s chief financial officer, Jon Moeller, added that P&G will consider “fill in” acquisitions across its portfolio, including in beauty.

P&G’s hair-care business, which introduced 150 stockkeeping units across hair care and color in January alone, is showing early signs of momentum. Moeller said the category’s new launch program — which includes Pantene Expert Collection and Vidal Sassoon Pro Series, among others — has restored share growth in the category with value share up nearly one point in March.


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“The earlier results of Expert Collection have been very good, delivering shipments, display and trial results at or above our going-in plans.” In March, P&G expanded the line to Latin America by launching in Brazil. Moeller also added that Vidal Sassoon shampoos and conditioners are approaching a 2 percent value share, as shipments are nearly double the company’s prelaunch estimates.

Taking a wider view, Moeller said that overall the company held or grew market share in businesses representing more than 50 percent of sales in the quarter, and saw sales strengthen at the end of March.

“In the U.S., we held or grew value share in businesses representing two-thirds of sales in the March quarter,” said Moeller. “Results strengthened as the quarter progressed with businesses representing over 70 percent of sales holding or growing share in the month of March. We have more work to do but trends are continuing to improve.”

Third-quarter earnings attributable to P&G were $2.6 million, or 88 cents a diluted share, compared to $2.4 million, or 82 cents a share. The company’s net sales gained 2 percent to $20.6 billion, up from $20.19 billion. Organic sales gained 3 percent.

Beauty sales in the quarter declined 2 percent to $4.8 billion, due to aggressive promotional activity from competitors in hair care and skin care, according to P&G. Beauty’s organic sales declined 1 percent.

P&G said it continues to work to improve productivity while driving out costs. The company, which last February said it planned to reduce the number of nonmanufacturing employees by 5,700 by the end of its fiscal year, had cut 6,250 roles by the end of March, or about 10 percent more than originally forecasted. It plans to further trim nonmanufacturing roles by an additional 2 to 4 percent each year over the next three years.

The company said it’s on pace to deliver more than $1.2 billion in savings this fiscal year in cost of goods sold. It’s reinvesting part of those savings into marketing spending, and will continue to shift a great portion of its media spending to digital efforts.

McDonald said, “We’re going to continue to bring out a large number of innovations.”