Procter & Gamble to purge up to 90 underperforming brands

by The City Wire staff ([email protected]) 164 views 

Procter & Gamble plans to sell more than half of its brands to streamline the company operations and boost sales growth, CEO A.G. Lafley announced during the company's earnings presentation Monday (Aug. 4) for its fiscal fourth quarter and full year ended June 30.

P&G will focus on 70 to 80 consumer brands, including Tide and Pampers, which together account for 90% of the company's sales and either divest or find ways to exit between 90 to 100 smaller brands, the company notes.

"We are going to create a faster growing, more profitable company that's far simpler to operate," Lafley said. "We delivered our business and financial commitments in 2013-14, but we could have and should have done better," he said regarding the company’s $83 billion in annual sales with net income of $11.6 billion.

Net sales slid 1% in the fourth quarter but were up 1% for the full year. Net income rose 3% from the prior year.

Lafley said culling the brands herd will allow the company to focus more on about 75 of its top performing brands where it plans to increase market share rather just holding on. The brands being culled have seen sales declining 3% and profits declining 16%, Lafley said, and have margins less than half the company average.

"The timing on this will be governed by our ability to create value," said chief financial officer Jon Moeller, though he estimated it would take 12 to 24 months to complete the process.

It is unclear if these brand divestitures will have any material impact on local employment numbers at P&G’s Fayetteville office. The local office averages around 200 employees and is the largest supplier presence with regard to Wal-Mart Stores Inc.