Procter and Gamble (P&G), the U.S. consumer firm giant announced Friday that the sales of its grooming business which include shaving cream, deodorant and razor blades dipped on account of the popularity of growing beards and mustaches among men. The sales of the firm’s non-disposable razors and blades dropped to 7.8 percent in a quarterly earnings review ending December 31 compared to the same quarter the year before. JPMorgan Chase & Co. in New York analyst John Faucher said the reason for the dip in sales is the “Increased interest in facial hair.”
In the said quarter, Procter and Gamble’s grooming unit generated $2.12 billion revenue which accounted for 9.5 percent of the overall company’s sales. In a statement, Procter and Gamble, the owner of the brand Gillette, said the decline in sales is mainly driven by the current fashion. Notwithstanding the fact that global sales in the grooming industry grew by three percent during the same quarter ending December 31, the company statement added.
Procter and Gamble Chief Financial Officer Jon R. Moeller said the grooming business’ sales performance can also be partly attributed to the holding of an annual charity event called Movember. This yearly activity held in November raises awareness on prostate cancer by asking men to grow beards and mustaches.
Also contributing to the popularity of growing beards and mustaches is the group called the Gotham City Beard Alliance where the group espouses “tolerance and acceptance of all facial hair.” The group even held a contest in downtown Manhattan for the best beards and mustaches. Not also helping P&G cause is the heavily bearded casts of the popular reality TV show “Duck Dynasty”.
The drop in the grooming business’ sales as well as the two percent decline in the beauty segment of the 177-year old company, affected the firm’s overall earnings bringing it down to 15.5 percent compared to a year ago level. The net income for the second quarter of the fiscal 2014 is $3.4 billion from a revenue base of $22.28 billion. This was down from previous year’s net income of $4.1 billion from slightly lower overall revenue of $22.18 billion.
Stockholders of Procter and Gamble were still happy with the latest results released by the company. This resulted in earnings per share of $1.21 not including one-time items. Reckoning the projections for the remaining months of 2014, full year profit is expected to hit five to seven percent growth especially with an anticipated strong performance in the next six months.
Moeller however cited needed improvements in the following product categories: skin care where its Oil of Olay brand is not performing up to expectations; shampoo where the Pantene brand is also under performing and with its grooming business unit.
While these product categories may pose challenges in the near future as the company hopes to attain its targets, an opportunity nonetheless exists in the body shaving section of its grooming business unit. The company said there was a marked increase in body shaving specifically among younger men. The ages of this relatively new market segment is from 18 to 24 years old and is part of the latest men’s holistic shaving requirement called “manscaping.” It is in this aspect that Procter and Gamble started offering the new Gillette Body razor this 2014 specifically targeting this new market segment.
Procter and Gamble may have experienced a dip in its razor sales as growing beards and mustaches among men is now the fashion. However, another window of opportunity rises in the so-called manscaping lifestyle of men.
By Roberto I. Belda