Procter & Gamble plans to shed up to 100 brands
Procter & Gamble is planning to slim down its product slate.
The maker of Gillette razors and Crest toothpaste has unveiled a plan to shed up to 100 brands.
P&G Chief Executive Alan Lafley told analysts Friday that the company would streamline to focus on 70 to 80 brands, which were responsible for about 90% of the company’s recent sales and 95% of profit. The businesses P&G intends to either discontinue, or divest, have reported weaker profits of late, Lafley said during a conference call.
Lafley said the move to own fewer brands would enable P&G’s research and development team to focus their resources on new product ideas that would resonate more with consumers.
Some of P&G’s top-sellers, such as Pampers and Gillette, are likely safe based on their size and scale. Other potential keepers, because of their size, include Pantene, Olay, Oral-B and Bounty.
P&G (PG), which generates about $83 billion in annual sales, is by far the world’s largest consumer-packaged goods company. Head & Shoulders, Pantene, Tide and Pampers are among the company’s brands.
Though the company has vast scale, it hasn’t unveiled too many divestitures of late. It notably sold off Pringles for about $2.7 billion in 2012 to Kellogg (K), and in 2011 divested Zest soap and PUR Water Purification Products in separate transactions. Rival Unilever has acted more aggressively on divestitures of late, agreeing to shed the Slim-Fast brand last month after unveiling a plan in May to unload the Ragu and Bertolli brands.
P&G’s plan to unload more brands comes a little over a year after Lafley rejoined the company as president and CEO, after serving in those roles from 2000 to 2009. For the first fiscal year under Lafley’s control, P&G reported a tiny 1% increase in sales and a 5% rise in per-share earnings from continuing operations. The company is broadly exposed to the fickle nature of the consumer, and though some recent reports suggest U.S. consumer confidence is on the rise, retail and consumer-product executives have said consumers are still, particularly lower-income households, are still struggling.
P&G earlier Friday reported a 38% jump in fiscal fourth-quarter profit, though that growth was due to a cut in overhead expenses as overall sales trends were choppy.