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P&G’s Beauty Segment Improved in Fiscal 2Q16

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An overview of P&G’s segments

Procter & Gamble (PG) operates under five reportable segments:

  1. Fabric Care and Home Care
  2. Baby, Feminine, and Family Care
  3. Beauty, Hair, and Personal Care
  4. Health Care
  5. Grooming

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The beauty segment’s fiscal 2Q16 results

The company’s Beauty, Hair, and Personal Care segment’s organic sales rose 1% in fiscal 2Q16. The increase was primarily due to higher pricing of 4%, which was partially offset by a 3% impact from the lower organic volume.

Organic sales fell for the Olay brand due to competitive activity from Dove (UL), Clinique (EL), and L’Oréal (LRLCY). However, organic sales for Personal Care and the super-premium SK-II skin care brand rose in fiscal 2Q16. The increase in organic sales for antiperspirants and deodorants were driven by strong Old Spice sales in the US.

Organic sales for haircare were flat primarily due to lower sales in developed markets. The growth in Head & Shoulders was more than offset by challenges for Herbal Essences and Vidal Sassoon. The Beauty, Hair, and Personal Care segment’s net revenue for fiscal 2Q16 was 10.1% lower versus a year ago.

P&G’s reshaping

The company launched new conditioner innovation on Pantene in the US this month and rolled out two new Head & Shoulders variants in the US recently to increase market share. However, P&G’s beauty brand merger with Coty (COTY) will also help P&G in its strategic portfolio reshaping. To learn more about P&G’s beauty segment divestment to Coty, read Coty Buys 43 Procter & Gamble Brands: What Investors Should Know.

P&G makes up 6.2%[1. Updated on January 27, 2016] of the First Trust Morningstar Dividend Leaders Index (FDL). We will focus on P&G’s Grooming segment’s performance in the next part of the series.

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