Colgate-Palmolive Plans Ad Push to Stoke Sales -- 2nd Update
January 27 2017 - 4:25PM
Dow Jones News
By Sharon Terlep and Anne Steele
Colgate-Palmolive Co. executives promised to ramp up advertising
this year to combat lackluster sales, as the toothpaste and
consumer-products maker battles weak demand at home and abroad.
On a conference call Friday afternoon, Colgate executives said
they are now targeting the low end of their 4% to 7% range for 2017
organic sales growth, which excludes acquisitions and currency
swings. Organic sales rose 1.5% in the fourth quarter.
Shares of the company slumped 5.6% in Friday afternoon
trading.
Executives said fourth-quarter sales were hurt by a series of
developments, including a disagreement with a retailer in France,
India's decision to take bank notes out of circulation and weakness
in its Hill's pet food business.
"As we move into 2017, I think it's safe to say that the
uncertainty continues and indeed, there is likelihood of more
events unpredicted occurring as the year unfolds," Chief Executive
Ian Cook said.
However, Mr. Cook said the New York-based company would increase
advertising, both in absolute dollars and as a percentage of sales,
to help drive growth. "We are not going to reduce our investments
in advertising to deliver a quarterly number," he said.
In 2016, Colgate spent $1.43 billion in advertising, or about
9.4% of net sales, compared with $1.49 billion the year before.
Rivals Procter & Gamble Co., Unilever PLC and Kimberly-Clark
are also struggling to boost sales, as they battle fluctuating
exchange rates and sluggish demand for household staples.
Mr. Cook said he didn't think the recent weakness was caused by
an underlying change in consumer habits. "They don't go away from
the he behavior of brushing their teeth," he said. "They will
exhaust pantry inventory, which is to say, if people have more than
one tube of toothpaste at home they may try and stretch that tube
before they reload their own pantry. "
For the December quarter, Colgate-Palmolive reported a profit of
$606 million, or 68 cents a share, compared with a loss of $458
million, or 51 cents, a year earlier.
Revenue fell 4.6% to $3.72 billion. Foreign-exchange rates hurt
sales by 1.5% in the fourth quarter, while world-wide unit volume
fell 5.5%.
North American sales were flat, while Latin American sales, the
company's largest segment, slumped 11%. Sales in Europe and Asia
slipped 7.5% and 4%, respectively, while sales in Africa and
Eurasia edged 1.5% lower.
Write to Sharon Terlep at sharon.terlep@wsj.com and Anne Steele
at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 27, 2017 16:10 ET (21:10 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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