Drop in Toilet-Paper Demand Prompts Kimberly-Clark's Worst Sales Drop in a Decade
By Sharon Terlep
Kimberly-Clark Corp. delivered its worst sales performance in at
least a decade, hit by supply-chain disruptions, continued business
shutdowns and fallout from last year's toilet paper hoarding amid
The maker of Huggies diapers and Cottonelle toilet paper
reported an 8% decline in organic sales, which strips out deals and
currency moves, for the quarter ended March 31. Sales in its
consumer-tissue segment, which includes toilet paper, Scott paper
towels and Kleenex tissue, fell 14%.
It is a sharp reversal from 2020 when the world's consumers,
stuck at home and hyper focused on cleaning, drove a 6% increase in
organic sales for the year as they loaded up on paper towels,
cleaning products and other household staples. Consumer-tissue
sales last year rose 14%.
"I am not pleased with the results," Kimberly-Clark CEO Michael
Hsu said in a call with analysts. He said that while the company
expected slower consumer-tissue sales, the extent to which
consumers stopped buying toilet paper came as a surprise.
Kimberly-Clark's shares fell more than 5% Friday morning.
Demand for toilet paper shot up in the outbreak's initial weeks,
doubling in the second week of March, and remained elevated
throughout most of 2020. Americans spent more than $11 billion on
toilet paper last year, up from $9 billion in a typical year,
according to NielsenIQ. If the current pace holds, 2021 sales would
be less than $9 billion.
That pullback came in addition to other issues, including severe
weather in the South and soaring costs of raw materials and
transportation as pandemic- and weather-related complications
continue to hamper global supply chains.
Adding to the woes: After a bleak 2020 for Kimberly-Clark's
professional unit, which sells toilet paper, paper towels, napkins
and other products to businesses, sales fell another 13% for the
quarter as many offices, schools, restaurants and hotels remained
either fully or partially closed.
Mr. Hsu said the company is cutting costs, overhauling marketing
efforts and rolling out broader price increases as a way to recover
sales and improve profitability. The company previously announced
plans to increase prices on products in its baby- and child-care,
adult-care and Scott bathroom tissue businesses starting in June.
Those increases would be in the mid- to high-single digit
percentage points and take effect in late June. Mr. Hsu said
additional increases are likely.
Rival Procter & Gamble Co. also said this week that it will
raise prices in response to rising commodity costs. P&G, maker
of Pampers diapers, Gillette razors and Bounty paper towels, saw
more tempered sales growth for the quarter, but wasn't hit nearly
as hard. P&G's organic sales increased 4%, helped by a lineup
with a greater variety of products, including beauty and grooming
products, household cleaners and oral care products.
Kimberly-Clark logged first-quarter earnings of $1.72 a share in
the latest quarter, a decline from $1.92 a share in the same period
a year earlier. Net income attributable to the company was $584
million, compared with $660 million in last year's first
Kimberly-Clark's adjusted earnings were $1.80 a share. Revenue
was down 5% at $4.74 billion, compared with $5.01 billion a year
The company lowered its forecasts for 2021. It now expects flat
to 1% organic sales growth, down from 1% to 2%. The company
predicts net sales growth of 3% to 5%, down from 4% to 6%, and
adjusted earnings per share of $7.30 to $7.55, down from $7.75 to
--Matt Grossman contributed to this article.
(END) Dow Jones Newswires
April 23, 2021 12:38 ET (16:38 GMT)
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