Gillette Posts a Slight Rise in Sales for the Third Quarter

The Gillette Company, Boston, MA, said net income for the third quarter climbed 20%, driven by the strong growth of new products and solid cost savings. Sales and market shares also increased for Gillette’s new and core brands in blades and razors, oral care and electric shavers.

Sales for the quarter were $2.17 billion, up 2% from $2.12 billion a year ago. Foreign exchange had no material effect on reported sales, as strength in the euro was offset by the unfavorable impact of weaker currencies in Latin America and some emerging markets.

Profit from operations for the quarter was $522 million, up 10% from $473 million, due to cost-savings initiatives, a favorable blade and razor mix and lower year-over-year trade spending for batteries. The adoption of SFAS 142 resulted in a third quarter decrease in amortization of about $9 million, compared with the prior year. Net income for the third quarter climbed from $296 million last year to $354 million.

For the nine months ended Sept. 30, sales grew 5% to $5.92 billion, compared to $5.67 billion in 2001. Foreign exchange had no material effect on reported sales.

“We are pleased with our third-quarter and year-to-date performance,” said James M. Kilts, chairman and chief executive officer. “We continue to make good progress in strengthening our brands, reducing costs and improving our capabilities throughout the company. Our success with new products across the board is a good indicator of our overall momentum.”

Cited were the introductions in North America of Mach3Turbo, the top-selling men’s razor with more than a 23% value share in the U.S.; the global rollout of Venus, the best-selling overall razor with a 29% value share of the U.S. market; Oral-B Stages, a top-selling line of manual toothbrushes for children; the Oral-B battery toothbrush, which captured a 22% U.S. value share in September and PowerStripe for antiperspirants and deodorants, which increased the market share of Soft & Dri for the first time in more than three years and the share of Right Guard for the first time in more than a year.

By segment, blade and razor sales of $887 million for the third quarter rose 3%, and profit of $377 million was up 14%, compared with a year ago. Oral Care sales of $321 million for the quarter rose 7%, and profit of $60 million decreased 12%. Sales increased the manual and power oral care businesses, reflecting strong new product performances. In the manual business, the gains were paced by Oral-B Stages children’s toothbrushes in North America and strong increases by entry-level-priced toothbrushes in Asia and Central Europe. For the nine months, sales of oral care grew 8% to $861 million, and profit of $163 million was unchanged.

Personal Care sales of $213 million for the quarter were 1% lower than in the previous year, and profit of $17 million decreased 40%. In the U.S., PowerStripe antiperspirants and deodorants and Satin Care and Gillette Series shave preparations increased Gillette share in these categories.

Reduced Personal Care profit and margin reflected increased marketing investment, somewhat countered by lower product costs related to savings from the Strategic Sourcing Initiative, according to executives. For the nine months, sales of $595 million grew 2%, and profit of $33 million fell 31%.