Darren Weeks

Gillette: The Worst a Company Can Get

A woman holds "me too" signCoalition to Govern America
April 26, 2019

Months ago, Proctor & Gamble subsidiary, Gillette, which manufactures razors to millions of men, decided to run an ad campaign lecturing them on their "toxic masculinity".

Now, a few months later, we are starting to see the payoff for the company. Or, perhaps, we should say "the payback".

Via USA Today:

Slower sales of Gillette razors put a nick in Procter & Gamble's quarter profit Wednesday as the low-priced competitors forced the best-known name in shaving to cut prices. P&G reported a $2.5 billion third-quarter profit, a 8% decrease from the same period a year ago but in line with analysts' estimates. Sales, however, fell 1% to $15.6 billion, well short of Wall Street forecasts.

P&G reported earnings per diluted share of 93 cents and core earnings at 96 cents. Wall Street expected the company to report core earnings of 94 cents.

CEO David Taylor blamed economic conditions, despite the fact that the economy in the United States has been fairly robust. There was only a hint from Taylor that the company was being hurt by the thousands of male customers the company managed to piss off.

CEO David Taylor said in a statement the company's growth was slowed by an uncertain economy and political discourse here and abroad.

Why should a razor company be adversely impacted by "political discourse"? Of course... because they foolishly inserted themselves into the political discourse. Now that they have made their beds, its time to sleep.

Via Fox Business:

Gillette, which dominates the global razor business, has long followed a simple and lucrative strategy: Add new features and raise prices.

But the 115-year-old brand is changing tactics this month by slashing prices and putting a new focus on its cheaper products. The Procter & Gamble Co. unit hopes to stop defections of its U.S. customers to online startups like Dollar Shave Club and Harry's that sell lower-priced razors and blades.

Gillette's plan to cut prices by as much as 20% jolted Wall Street. "An act of desperation on Gillette?" asked Barclays analyst Lauren Lieberman, in a research note soon after the announcement in February by P&G.

The Fox article says that sales were already trending downward. If that's the case, then how does pissing off half your customers help reverse the trend? Apparently, not very well.

Ms. Lieberman, the Barclay's analyst, called Gillette's move a "full capitulation on price," and said she doubted it would stem the company's market-share erosion in the long run. "We think it will be very tough to switch users back from Dollar Shave Club & Harry's," she wrote.

Via MarketWatch:

But sales of grooming products, including Gillette, slipped 1%, continuing a long string of declines. Margins disappointed. The upside earnings surprise came from non-operating items, like a tax-rate change. Grooming products are 9% of P&G’s revenue.

Perhaps P&G had better reign in their staff of "Social Justice" warriors, starting with the CEO.


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