Procter & Gamble Gets Shoppers to Pay Up

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 [e-mail]

(END) Dow Jones Newswires

January 20, 2021 07:16 ET (12:16 GMT)

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