After years of expansion into areas like pet food and beauty products, Procter & Gamble Co (P&G) announced on Friday it would cut as many as 100 brands from its range of products to focus on others.
The move is part of a strategy to improve the company’s financial performance by doubling down on about 80 brands that generate 95 percent of the profits and 90 percent of sales, chief executive officer A.G. Lafley said.
The company has faced pressure as consumers continue to spend less than they did before the financial crisis.
“This new streamlined P&G should continue to grow faster and more sustainably, and reliably create more value,” he said in a telephone call with reporters and analysts to discuss the firm’s fourth-quarter results. “Importantly, this will be a much simpler, much less complex company of leading brands that’s easier to manage and operate.”
While Lafley did not say which of the estimated 100 brands would either be discontinued or sold off, he said that taken together they had aggregate sales declines of 3 percent a year over the past three years. The cuts would leave 70 to 80 more-lucrative products remaining.
An analyst with Sanford Bernstein Ali Dibadj said that Procter & Gamble would probably keep mainstay products like Pampers, Gillette and Tide. However, he said that lesser-known brands like Zooth, a children’s oral care brand, the beauty brand Graham Webb and the Southeast Asian laundry detergent Trojan could be cut.
Dibadj said that Procter & Gamble could also choose to divest itself of brands that did not necessarily fit with its traditional baby and family products, like battery maker Duracell or the Braun line of small electronic appliances.
Excluding currency adjustments and one-time events, the company said that sales in beauty products declined 3 percent in the fourth quarter, lagging below the corporate average for beauty products of 2 percent growth, RBC Capital Markets analyst Nik Modi said.
Lafley appears determined to streamline the company’s core operations. In April, Procter & Gamble agreed to sell pet food brands Iams and Eukanuba to the candy-maker Mars for US$2.9 billion.
On Friday, the company reported that overall net sales fell 1 percent to US$20 billion in the quarter ending June 30, while cost savings helped increase profit 38 percent, to US$2.6 billion.
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