Procter & Gamble Gets Shoppers to Pay Up
January 20 2021 - 7:31AM
Dow Jones News
By Sharon Terlep
Procter & Gamble Co. sales surged in the most recent
quarter, fueled in part by demand for high-end household products
from pricey dish soap to a $300 electric toothbrush.
Despite a tough economic picture and high unemployment, the
maker of Gillette razors and Pampers diapers said consumers are
increasingly willing to pay more for products. And P&G, armed
with extra cash following years of downsizing and solid sales, has
been churning out a range of high-end items including
laundry-detergent pods designed for extra-large washing machines
and a special line of Gillette shaving products. The shift comes as
consumers stuck at home because of the coronavirus pandemic broadly
are spending more to keep their homes and themselves clean.
The Cincinnati company's organic sales increased 8% to $19.8
billion in the quarter ended Dec. 31. P&G raised its estimates
for full-year organic sales growth to between 5% and 6%, up from
the previous range of 4% to 5%.
"Consumers are driven to products where they can say, 'I know
that will deliver for me and my family,' " P&G operating chief
Jon Moeller said in an interview.
The strongest growth was in P&G's fabric and home-care unit,
which posted a 12% sales gain. The unit's brands include Tide, Mr.
Clean, Dawn dish soap and Cascade dishwasher detergent. Sales in
P&G's grooming unit, which includes Gillette razors, rose 5%.
Sales in P&G's health-care unit, which includes dental care as
well as over-the-counter medications, rose 9%.
Mr. Moeller said P&G has been able to spend more on new
products and advertising while also boosting margins. The company
underwent a yearslong restructuring in which it slashed jobs, cut
billions of dollars in annual costs and overhauled its management
structure.
Sales volumes rose along with price increases, offsetting
pandemic-related sales losses. While many trends related to
Covid-19 have bolstered sales for P&G and other household
staples makers, the pandemic has dealt some blows, from retail
closures that are hurting sales of some beauty products to the fact
that men are shaving less as they work from home, Mr. Moeller
said.
The sales gains build on momentum that started before the
pandemic, when P&G was notching sales gains higher than
peers.
For its fiscal second quarter, P&G generated net income of
$3.9 billion, or $1.47 a share, up from $1.41 a share a year
earlier.
Analysts expected net income of $1.48 a share and sales of
$19.98 billion, according to S&P Global Market
Intelligence.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
January 20, 2021 07:16 ET (12:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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