Procter & Gamble’s beauty business is holding steady, according to the firm’s first quarter fiscal year 2017 results.
Jon Moeller, P&G’s Chief Financial Officer, said in a webcast call, “we’re very happy with how [Beauty is] performing overall. [There’s the] Hair Care acceleration that’s occurred over the last 18 months or so. In the quarter, Pantene was up mid-single digits. Head & Shoulders was up mid-single digits. SK-II was up strong double digits. Our Personal Care business is doing fairly well. Olay is stabilizing.”
Overall the company posted net sales of $16.5 billion, unchanged versus the prior year. Organic sales increased three percent. Organic sales increased in all five business segments driven by low-to-mid single digit organic volume growth in all segments. For its first fiscal quarter, P&G reported $2.76 billion in net earnings for the quarter, a 5 percent increase from the prior year.
Continuing on Olay’s restructure in the US and China, Jon said, “We’re going to annualize coming up here in the not too distant future the SKU cuts that we made in the U.S. We should annualize those in the back half. And we’re just in the middle of redoing our entire counter system in China, and that includes some reductions in the number of counters to be more relevant in the channels [that Olay is in] and to have a better overall shopping and consumer experience. So I expect that those two items, the SKU reduction in the U.S. and the counter rationalization or redesign in China, will continue to put some pressure on Olay, call it through the balance of the fiscal.”
Beauty segment organic sales increased 3 percent versus a year ago behind higher organic volume and increased pricing in both hair, skin and personal care. Organic sales increased in skin and personal care due to the continued strong growth of the super-premium SK-II brand. Hair care growth was driven by mid-single-digit organic sales growth on both Pantene and Head & Shoulders, which was partially offset by declines of smaller brands. Net sales dipped 1 percent overall in the Beauty segment.
Grooming segment organic sales increased 3 percent due to strong innovation-driven organic volume growth in both Shave Care and Appliances. Organic sales increased low single digits in Shave Care and mid-single digits in Appliances. Net sales dipped 1 percent overall in the Grooming segment.
During the call Jon added that Hair Care and Baby Care, two of the company’s largest categories, were both up 2 percent but below the rates of market growth. Both, he said, along with the Grooming business in the U.S., represent notable opportunities for “further top line acceleration.”