Procter & Gamble Co reported quarterly sales that fell short of analysts’ estimates for the first time in over a year, hurt by weakness in its baby and feminine care business, which sells everything from Tampax tampons to Pampers diapers.
The company has been investing heavily to develop new products, improve packaging and marketing as it tries to appeal to younger consumers and fights competition from Unilever , Reckitt-Benckiser and local upstarts.
Sales of P&G’s fabric and home care products, its biggest business, rose 4 per cent to $5.79 billion, while baby and feminine products rose just 1 per cent to $4.58 billion, both falling short of estimates.
The company said part of the weakness was due to a fall in inventory levels in Japan following a build up before the nation’s sales tax hike in October.
Jefferies analyst Kevin Grundy said Wall Street expectations were built on the company’s momentum in the past five quarters, but the modest second-quarter results are likely to be met with disappointment.
“Good quarter, but high bar,” he wrote in a note to clients.
Sales at the company’s grooming business, which makes Gillette razors, rose 2 per cent to $1.65 billion, but also fell below estimates. The company took an $8 billion charge last year related to the unit, which faces competition from smaller rivals Harry’s and Dollar Shave Club.
P&G, however, raised said fiscal 2020 forecast for core earnings per share growth to between 8 per cent and 11 per cent from a prior range of a rise of 5 per cent-10 per cent.
Net sales rose 4.6 per cent to $18.24 billion but missed the average analyst estimate of $18.37 billion, according to IBES data from Refinitiv.
Net earnings attributable to P&G rose 16.4 per cent to $3.72 billion in the quarter ended Dec. 31. Excluding one-time items, profit of $1.42 per share beat the average estimate of $1.37.