Beauty Results Lift P&G

Lifted by a 5% gain in beauty sales (7% organic), Procter & Gamble reported flat sales for the first quarter of fiscal 2019. The company said skin and personal care organic sales increased double digits due to premium innovation, increased marketing investments and positive product mix from the disproportionate growth of the super-premium SK-II brand and Olay skin care, which each grew strong double-digits. Personal care products, including Safeguard, Old Spice, Olay and Secret, delivered mid-single-digit growth. Hair care organic sales increased low single digits due to increased pricing, innovation and improved retail executions.


Corporate net sales in the first quarter of fiscal year 2019 were $16.7 billion, in-line with the prior year. The flat results were blamed on unfavorable foreign exchange (-3%). Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased 4% driven by a 3%increase in shipment volume. Positive mix impact was a 1% help to organic sales due to the disproportionate organic growth of the skin and personal care and personal health care categories and strong growth in the US. Pricing was neutral to the quarter.


“We generated strong consumption, organic volume and organic sales in the first quarter. This keeps us on track to deliver our top- and bottom-line targets for the fiscal year,” said David Taylor, chairman, president and chief executive officer. “Our focus on superiority, productivity and improving P&G’s organization and culture is driving improved results.”


Fabric and home care sales rose 2% (5% organic). P&G said organic sales increased mid-single digits driven by innovation and strengthened merchandising programs. Home care organic sales increased mid-single digits driven by innovation and improved retail executions.


In other sectors, grooming segment organic sales increased 4%. Shave care organic sales increased mid-single digits driven by improved consumer value, product innovation, investments in its direct-to-consumer programs and increased pricing in certain markets, partially offset by negative mix. Appliances organic sales increased low single digits due to improved merchandising programs and underlying market growth.


Health Care segment organic sales increased 4%. Oral care organic sales increased low single digits due to innovation and increased merchandising investments. Personal health care organic sales increased double digits due to innovation, increased merchandising investments and price increases. Vicks organic sales grew strong double-digits. All-in sales declined due to the dissolution of the PGT Healthcare partnership.


Fabric and Home Care segment organic sales increased 5% for the quarter. Fabric care organic sales increased mid-single digits driven by innovation and strengthened merchandising programs. Home care organic sales increased mid-single digits driven by innovation and improved retail executions


Baby, feminine and family care segment organic sales fell 1%. Baby care organic sales decreased mid-single digits as growth of premium-tier innovations were more than offset by declines on mid- and value-tier products and pricing investments to improve consumer value, primarily on the Luvs brand in the US. Feminine care organic sales increased mid-single digits driven by innovation and positive product mix, due to the disproportionate growth of premium pad and adult incontinence products. Family care organic sales increased mid-single digits due to innovation, increased distribution, and strengthened merchandising programs.


P&G is maintaining its guidance for organic sales growth in the range of 2-3% for fiscal 2019. The company now estimates fiscal 2019 all-in sales growth in the range of down two percent to in-line versus the prior fiscal year, which includes a headwind of three to four percentage points to sales growth from foreign exchange. The net effect of acquisitions and divestitures should have a modest positive impact on all-in sales growth.