Procter & Gamble Co. is out to prove that change is well underway and that more dramatic results are to come.
This story first appeared in the November 14, 2014 issue of WWD. Subscribe Today.
That was the message delivered by chairman, president and chief executive officer A.G. Lafley to Wall Street at the company’s annual analyst meeting, which was held in Cincinnati on Thursday.
Several analysts have long said P&G’s $19.5 billion beauty business, which has stalled in recent years, should serve as a key element in the company’s plans to boost performance.
Lafley said on Thursday that P&G’s strategies to revitalize several of its biggest beauty businesses — namely, the $3 billion Pantene brand and the $2 billion Olay brand — are showing early signs of promise.
“We are not there yet, but we believe — and early data show — Pantene and Olay are moving in the right direction,” Lafley told analysts.
The company said that, in the first quarter, Pantene grew sales by 4 percent globally and 6 percent in the U.S. with a simplified marketing message and improved formulas and packaging.
P&G acknowledged that Olay has been declining at a 2 percent average rate over the past five years, as competitors have ramped up innovation. To fight back, “we are clarifying the brand architecture, making each subline of Olay, the benefits they offer and the packaging that goes with them more distinct on the shelves,” said R. Alexandra Keith, president of global skin and personal care. “We are focusing our innovation on getting back to past success factors.”
Lafley said P&G has refocused its efforts on the consumer. “We’re chasing shoppers and customers. We’re not chasing competitors,” he said, acknowledging that, at times in the past, P&G has been guilty of the latter. In his view, focusing on outdoing competitors with a flurry of product — or “sku’s for news,” as he referred to it — is a short-sighted tactic.
P&G also is rethinking its approach to marketing and, increasingly, shifting toward digital strategies.
In related news, just before the start of the company’s analyst meeting this morning, P&G said it had struck a deal with Warren Buffett’s Berkshire Hathaway to acquire the Duracell battery business.
The deal comes three months after P&G said it would narrow its portfolio to 70 to 80 brands from the current pool of 160 brands. “We are going to create a faster-growing, more profitable company that is far easier to operate,” said Lafley, referring to the portfolio plans.
Lafley, who returned to the ceo post at P&G a year and a half ago, said management has uncovered most of P&G’s issues. “A problem well defined is a problem half solved…[and] most of all problems are opportunities,” said Lafley.