"The first quarter was a good start to the fiscal year," said chairman, president and CEO Bob McDonald. "We maintained strong top-line growth momentum in a difficult operating environment. We are well positioned - due to continued top-line strength, recently implemented price increases and our productivity improvement and cost savings efforts - to improve earnings growth as we progress through the fiscal year."
Beauty net sales increased 9% to $5.4 billion on unit volume growth of 4%, the company said. Organic sales grew 4%, the ninth consecutive quarter of growth, on 5% organic volume growth. Price increases added 2% to net sales growth.Net earnings declined 12% to $731 million as lower operating margin more than offset the impact of sales growth. Operating margin declined due to a commodity cost driven reduction in gross margin and increased marketing and research and development investments, the company said.
Grooming net sales increased 10% to $2.1 billion. Unit volume was in line with prior year. Organic sales were up 3%. Price increases added 2% to net sales growth. Volume grew low single digits in developing regions and decreased low single digits in developed regions. Male Grooming volume grew low single digits behind growth of blades and razors in Asia and Latin America, as well as growth behind male personal care products in North America, partially offset by a decrease in blades and razors in Western Europe due to market softness. Appliances volume decreased high single digits due to market contraction in Western Europe and a strong base period for shavers, epilators, and hair care appliances. Net earnings increased 10% to $438 million, in line with net sales growth.
Fabric Care and Home Care net sales increased 6% to $6.7 billion. Unit volume decreased 1%, and organic sales increased 1%. Net earnings declined 14% to $805 million as sales growth was more than offset by operating margin contraction. Operating margin declined primarily due to lower gross margin, as higher commodity costs were only partially offset by price increases and manufacturing cost savings, the company said.