The race to succeed A.G. Lafley has shifted into a new gear.
This story first appeared in the October 24, 2014 issue of WWD. Subscribe Today.
More names have emerged in the latest Procter & Gamble management shuffle, with some observers speculating the field of contenders is narrowing to ultimately succeed Lafley as chief executive officer.
Charlie Pierce has been named president of the company’s Global Grooming and Shave Care category, succeeding Patrice Louvet, who takes the leadership of two divisions — P&G Salon Professional and Global Prestige. Pierce has been group president of Global Oral Care and New Business Creation.
The elevation of Louvet follows by a month the promotion of Alex Keith from personal care to president of skin care, including the troubled Olay megabrand. Deb Henretta remains group president of Global Beauty. What touched off speculation was the disclosure that Melanie Healey will step down as group president of North America next year. She was thought to be a contender for the top job, along with Henretta and other group presidents.
“It’s pretty clear that A.G. is readying the organization for succession,” said Bill Schmitz, managing director at Deutsche Bank. The analyst’s pick to be the next ceo is David Taylor, group president of Global Health and Grooming. “He is a very clear thinker and he is well liked internally,” Schmitz noted.
P&G spokesman Paul Fox dismissed the winnowing-out theory, saying the changes were partly triggered by retirements, and the promotions of Louvet and Keith show the company’s level of investment in building “a leadership team reflecting a more streamlined and focused P&G.” He was referring to Lafley’s pledge to eliminate 80 to 90 of the company’s 160 brands within 18 to 24 months. P&G’s retreat might well open up some opportunities for other competitors in the field.
“They’re probably licking their chops for the brands that they might want to pick up, [brands] that have not being doing well, that were probably not supported,” said Grace Barnett, a debt analyst who covers consumer product companies for Fitch Ratings, but not P&G.
“To see a competitor in a little bit of turmoil is probably a good time for the others to strengthen what they’re doing,” said Barnett, who added that retailers might start to see P&G competitors as more stable since they’re not in the midst of cutting brands.
Analysts will be keeping a close eye on which brands might be cut when the company reports first-quarter results today, but their financial expectations are muted.
Wall Street is looking for the company to post earnings of $1.07 a share, up 2.9 percent from $1.04 a year earlier. Overall revenues are slated to fall 1.8 percent to $20.83 billion.
While noting that Pantene’s shampoo business has picked up in the U.S., Schmitz nonetheless concluded that overall, “we don’t expect any material acceleration in the business.”
Mark S. Ashtrachan, an analyst at Stifel, said, “Strategically, the culling of brands is supposed to improve revenues and gross margins, but we question if it is drastic enough to improve the underperformance of recent years. The beauty business lost share while profitability remained muted, indicating the company has a lot more work to do to improve what should be a good business for Procter. They have a collection of well-known brands and should be able to invigorate them with appropriate action.”