Dollar’s Slide Boosts Outlook for Gillette

Shares of consumer products maker Gillette Co. climbed Wednesday amid growing confidence it is heading in the right direction for a recovery, partly bolstered by a decline in the U.S. dollar. The manufacturer of Mach3 razors and Duracell batteries rose $1.59, or 5.7%, to $29.50 by the close of New York Stock Exchange trading.

“This is a sign of increased investor confidence in the company,” said Jason Fox, a researcher at H&R Block Financial Advisors.

Gillette’s chairman and chief executive James Kilts has been meeting with investors and analysts in the past week and communicating his vision for the company, Mr. Fox said. Gillette officials could not be immediately reached for comment.

Mr. Kilts took over the helm in February, replacing Michael Hawley, who was ousted 10 months ago as Gillette struggled with lagging results at Duracell and as a declining euro hurt U.S. dollar earnings from Europe.

“People are starting to get comfortable with his vision and there’s a lot of positive buzz out there,” he said.

Gillette’s profit, excluding special items, dropped 22% in the second quarter with the Duracell operation the main drain on results.

The U.S. dollar slid to five-month lows against the euro, being last quoted at 91.37 cents, on growing concern the U.S. is still far from a widely expected economic rebound.

Many analysts believe a weak U.S. dollar will improve revenue growth at multinational consumer product giants such as Gillette, Colgate-Palmolive Co. and Procter & Gamble Co. that have large foreign exchange exposure. Colgate shares, though, slipped 22 cents, or 0.4%, to $54.38, while P&G lost 32 cents, or 0.44%, to $72.18.

In a research note on Monday, Lehman Brothers analyst Ann Lefever said these companies have the largest foreign currency exposure to the euro. While the translation benefit is still small, the recent U.S. dollar weakening could mark “a welcome inflection point” for them, as they translate revenues into U.S. dollars for reporting purposes, she said.

But the foreign currency translation fluctuation tends to be a “zero sum game” over the long term, insisted Ms. Lefever.