14 Jun

What Could Limit Kimberly-Clark’s Sales


Sales headwinds

Kimberly-Clark (KMB) has beaten Wall Street’s sales estimates in the past three quarters. Its price restructuring initiatives and favorable mix have supported its organic sales growth, and in turn, its total revenue. Despite beating analysts’ estimates, Kimberly-Clark’s top line has fallen by a low-single-digit percentage YoY (year-over-year) in the past three quarters, due to currency volatility and weak volumes.

What Could Limit Kimberly-Clark’s Sales

Weak pricing in developed markets outside the US and lower volumes in developing and emerging markets have hurt its top line. Heightened competition in the value segment and low birth rates have also dragged it down.

We expect Kimberly-Clark’s top line to stay low in the second quarter of 2019, though its rate of decline could moderate. Higher pricing and an improved mix could support sales, while low volumes and currency rates could limit them.

We expect currency volatility and heightened competition to also impact sales for Procter & Gamble (PG) and Colgate-Palmolive (CL). However, pricing, innovation, and brand marketing could support them.

What does Wall Street expect?

Analysts expect Kimberly-Clark’s top line to stay muted in the coming quarters, with its net sales falling by a low-single-digit percentage in the second quarter and the fiscal year due to currency exchange and weak volumes.

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