Recession Dents P&G’s Results for Fiscal Year
The recession did some damage to Procter & Gamble in its recently concluded fiscal year. Unit volume declined 3% as the global economic downturn, credit crisis and price increases contributed to market size declines and trade inventory reductions. Organic volume, which excludes the impact of acquisitions and divestitures, was down 2% for the fiscal year. As a result, net sales fell 3% to $79 billion for fiscal 2009.
Beauty net sales fell 4% to $18.8 billion in fiscal 2009 behind unfavorable foreign exchange impacts of 4%. Retail hair care volume grew by low single digits behind Pantene, Head & Shoulders and Rejoice.
Prestige fragrances volume declined by high single digits and professional hair care volume declined mid-single digits mainly due to market contractions and trade inventory reductions during the fiscal year.
Volume in skin care declined by mid-single digits primarily due to increased competitive promotional activity affecting Olay and the divestiture of Noxzema.
Personal cleansing volume was down by high single digits behind trade inventory reductions, market contractions and divestiture activity. Net earnings fell 7% to $2.5 billion, according to P&G.
Grooming net sales fell 9% to $7.5 billion. Organic sales fell 2% due to a sharp decline of the Braun business, P&G reported.
Fabric care and home care net sales fell 2% to $23.2 billion. Lower shipments of Tide and Ariel were partially offset by growth of Gain and Downy.Home care volume was down by low single digits due to market contractions and trade inventory reductions.
Baby care net sales increased 1% to $14.1 billion.
For fiscal 2010, P&G confirmed previous guidance for organic sales growth of 1-3%. The company said it expects net sales in the range of flat to up 3% versus prior year levels.
Challenging Times at Elizabeth Arden
Elizabeth Arden, Inc. reported declines in fourth quarter and fiscal year sales. For the quarter, net sales fell 10% to $212.6 million. For the year ended June 30, 2009, net sales slipped 6.2% to $1.07 billion.
E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, Inc., commented, “We finished fiscal 2009 as we had anticipated, and while it was a challenging year, we accomplished a great deal. Our global efficiency re-engineering initiative allowed us to improve gross margins, reduce inventories by $90 million year over year, and generate cash flow from operations of $37 million, according to the company.
“Our brand innovation also experienced global success, including the recently launched Elizabeth Arden fragrance, Pretty Elizabeth Arden, which was the No. 2 women’s fragrance launch through June 2009 in the U.S. and is doing well internationally, and Viva la Juicy, which was the No. 1 launch last fall in the U.S. and contributed to the continued global expansion and success of the Juicy Couture fragrance franchise.”
Mr. Beattie continued, “During fiscal 2009, the company completed a comprehensive multi-year planning process to systematically improve gross margins, EBITDA margins, organic brand growth and return on invested capital.
“I am confident that each of these initiatives is well thought through, measurable and has traction as we enter fiscal 2010.”
For the first quarter of fiscal 2010, Elizabeth Arden expects net sales of $255-$265 million, according to Mr. Beattie.
Regis Corporation Reports 4Q Losses
Need more evidence that the recession has impacted the beauty industry? Regis Corporation, a leading player in the salon market, reported a net loss of $4.5 million in the fourth quarter ended June 30 and a 5% slide in fourth quarter sales to $466.5 million.
For the year, Regis’ sales fell 1.6% to $1.83 billion and it reported a net loss of $124.4 million compared to a profit of $85.2 million in 2008.