PG Gets Boost from Push to Get Shoppers to Buy Pricier Products

P&G Gets Boost from Push to Get Shoppers to Buy Pricier Products

David Taylor, who took over as PG’s CEO in November 2015 after 35 years with the company, pledged to make the owner of Tide, Pampers and Olay a more nimble and innovative competitor. 

Procter & Gamble Co.’s (IW 1000/50) drive to sell more upscale skin-care, grooming and house-cleaning products is beginning to show up in its bottom line.

Sales of its premium brands helped lift earnings to $1.08 a share last quarter, excluding some items. Analysts estimated $1.06, on average.

The results reflect a crusade by CEO David Taylor to get consumers to pay a bit more for the items in their bathroom cabinets and kitchen pantries. P&G’s premium SK-II skin-care brand helped sales in the beauty division last quarter, and scent beads and Tide pods for high-efficiency washers boosted the home-care unit, giving the company a leg up on sellers of bargain health and cleaning products.

While total revenue slipped 0.3% to $16.9 billion, that topped analysts’ $16.8 billion average estimate. Organic sales -- which exclude the effects of  acquisitions, divestitures and currency exchange-rate fluctuations -- rose 2%, Cincinnati-based P&G said.

Sales by that measure rose 3% in the beauty division. Organic sales gained 7% in health care, driven by innovation in oral-care products. Organic sales increased 1% in the grooming, fabric & home care and baby, feminine & family care units.

Profit Forecast

The company reiterated its forecast that earnings per share, excluding some items, will gain at a mid-single-digit percentage this year. Organic sales may increase as much as 3%, up from a previous projection of 2%.

Taylor, who took over as PG’s CEO in November 2015 after 35 years with the company, pledged to make the owner of Tide, Pampers and Olay a more nimble and innovative competitor. Once known for churning out hit products like Swiffer mops, P&G has struggled to invent new blockbusters in recent years.

P&G’s challenges aren’t unique. New brands, particularly those with natural or organic ingredients, have attracted younger shoppers, a trend that prompted Unilever’s acquisition of Seventh Generation Inc. last year. Large consumer companies also are coping with higher ingredient costs, sluggish demand and a stronger U.S. dollar, Goldman Sachs Group Inc. analyst Jason English said in a report downgrading the household products sector to cautious. English also lowered P&G to a sell rating this month.

By Lauren Coleman-Lochner

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