Things are looking up for Procter & Gamble’s beauty business.
“There isn’t a piece of our beauty business that isn’t growing right now,” said P&G chief executive officer David Taylor on a call with analysts Friday morning.
Skin-care growth, which has been driven in past quarters mostly by SK-II, was “broad-based,” he said. “It’s a broad success story, not simply SK-II,” Taylor noted. China has become a core driver of P&G’s skin business, with a 22 percent jump in sales for the first quarter, driven by SK-II and Olay, which grew nearly 20 percent, Taylor said.
Net sales for the beauty segment were up 5 percent in the fiscal first quarter, to $3.3 billion, driven by gains from skin and personal care. In addition to double-digit growth from SK-II and Olay skin care, Safeguard, Old Spice, Olay (non-skin-care) and Secret grew in the midsingle-digits. P&G’s hair-care segment posted low single-digit organic sales gains driven by increased prices, innovation and improved retail execution, the company said.
Sales in grooming improved, but were still down.
“There will be challenges ahead, but…the strategies we’re putting into the marketplace are working,” Taylor said. P&G has been able to increase the users for Gillette Shave Club, which it created to compete with newer direct-to-consumer brands like Dollar Shave Club and Harry’s. “We’re the only one growing users in the U.S.,” Taylor said, referencing data.
In the grooming segment, net sales were down 1 percent, to nearly $1.6 billion, but volume was up 1 percent. Sales were helped by price cuts that P&G implemented in 2017, as well as product innovation and investments in the direct-to-consumer channel. Improved merchandising helped grooming appliances.
Taylor noted on Friday’s call that P&G is going to be raising prices in home care, personal care and oral care next year, and that some “volatility” may come from those pricing moves.
Procter & Gamble Co. posted $16.7 billion in net sales for the fiscal first quarter. Diluted net earnings per share were $1.22, up 15 percent. P&G is projecting organic sales will grow 2 to 3 percent for fiscal 2019, with a modest positive impact from acquisitions and divestitures.
Analysts were enthusiastic about the results. Steve Powers from Deutsche Bank called them “objectively good” — that sentiment was echoed by Wells Fargo analyst Bonnie Lee Herzog, who termed it “a solid quarter all around.”
P&G’s stock price was up 8.8 percent Friday, to $87.30.