P&G’s grooming segment’s performance
Procter & Gamble’s (PG) Grooming segment’s net revenue for fiscal 2Q16 came in at $1.8 billion. The grooming segment’s net sales were 10% lower compared to fiscal 2Q15. The change in sales was primarily due to the unprecedented foreign exchange impacts, which reduced the top line by 12%.
Organic sales for grooming segment
Organic sales for the Grooming segment rose 3% as higher pricing in shave care and growth in the Braun brand more than offset lower volume. Organic sales from shaving care products rose due to price increases and growth from Fusion FlexBall and Venus Swirl.
However, the continuing growth of competitors like Estée Lauder (EL) and Unilever (UL) in men’s grooming products and the introduction of the Dollar Shave Club (or DSC) have led to slower growth in markets like the US. Recently, P&G’s Gillette Filed a Lawsuit against Dollar Shave Club for violating its intellectual property by selling its razors.
Gillette’s FlexBall innovation has been a catalyst for the growth of ProGlide cartridges, as per comments by CFO Jon Moeller. ProGlide cartridge sales grew 18% last fiscal year compared to a 7% decline in the overall male cartridge market.
The company is planning to support its products like Fusion FlexBall, MACH3 systems, and premium-priced and superior performance disposables with strong consumer value communication. Also, like peers Colgate-Palmolive (CL) and UL, P&G is focusing on in-store innovation to make products more easily accessible.
Focus on e-commerce
With more men purchasing blades and razors through e-commerce, P&G is also focusing on online innovation. The company’s e-commerce share of blades and razors increased more than six points and saw nearly double the online consumption since launching Gillette Shave Club. P&G aims to build partnerships with e-retailers and retailers who will offer shoppers subscription tie-ins to the Gillette Shave Club.
P&G makes up 1.6%[1. Updated on January 27, 2016] of the PowerShares S&P 500 High Dividend Low Volatility Portfolio ETF (SPHD). We will focus on what has helped the health care segment’s organic sales increase in the next part of the series.