P&G Finds Itself In A Hairy Situation
Different accounts put it different ways but it all comes down to Procter & Gamble’s profits being nicked by the Movember movement and hipsterism.
P&G’s net income for the quarter ending Dec. 31 dropped to $3.4 billion, down from $4.1 billion a year ago “as the company’s Gillette razors and shaving cream and Braun electric razors sales dropped,” Time’s Sam Frizell reports. “Flat sales in grooming and a two-percent decline in the beauty segment were drags on P&G’s earnings, which fell 15.5% from the year-ago level” reports Agence France-Presse.
The idea of encouraging men to not shave for the month of November, which launched without a cause in an Australian pub in 2003, has steadily gathered global momentum since it was attached to raising prostate cancer awareness. The UK’s Daily Mail quotes P&G CFO Jon Moeller at his data-crunching driest in reporting that he “blamed ‘a reduced incidence of facial shaving’ due to the campaign.”
But News Corp Australia’s John Dagge points out that “Moeller also said ‘the prostate cancer-related movement in North America to not shave facial hair in the month of November’ had only — ‘exacerbated’ the hit to the bottom line.”
“Beards are showing up all over, from the curated facial hair favored by Brooklyn hipsters to the solidarity beards sported by the Boston Red Sox baseball team, which in 2013 went from last place in their division to World Series champions, reports the Sydney Morning Herald all the way from down under.
You can blame Hollywood, too, as Tiffany Hsu does in the Los Angeles Times. “Each of the five contenders for the best actor Academy Award has rocked the hirsute look in his nominated film role or on recent red carpets,” she writes. “Sightings of scruffy-cheeked men in Silver Lake are as common as Starbucks cafes in a city center — it seems there’s at least one on every corner.”
And they are also holding bromantic events right in the heart of downtown Manhattan.
“Last month, a group called the Gotham City Beard Alliance, which bills itself as promoting ‘tolerance and acceptance of all facial hair,’ held a beard and mustache competition in downtown Manhattan, with contests for ‘freestyle,’ sideburns and starter mustaches. Even the heavily bearded cast of ‘Duck Dynasty’ are fashionable these days,” Bloomberg News’ Lauren Coleman-Lochner writes.
“Guys are hearkening back to a more ‘rugged, masculine,’ look,” Telsey Advisory Group analyst David Wu tells Coleman-Lochner. “Facial hair is becoming more accepted in the workplace, he said, in industries ranging from fashion to finance.”
But there’s a countervailing trend that bodes well for P&G.
“As male faces get hairier, other parts of the body are becoming less hirsute,” as Financial Times’ Barney Jopson reports. And the suits are on the case. “The incidence of body shaving is up, and we can take advantage of that and plan to do that as well,” Moeller says.
“P&G has been promoting ‘manscaping,’ and Gillette filed the trademark ‘Gillette Body‘ last year,” Jopson points out. And they have Kate Upton, Hannah Simone and Genesis Rodriquez to “help guide you along.”
Who knew that it’s “not cool to see a forest in the back”? as one of the ladies puts it.
Investors would be wise to not get into a lather over the Movember and hipster mojo in any case. As the Wall Street Journal’s Paul Ziobro reports, the “consumer products giant” is doing quite well otherwise, especially when measured against Unilever, and particularly in emerging markets.
“Sales in countries such as China and Brazil grew 8% excluding currency movements in the quarter ended Dec. 31 and continue to grow at about that pace,” Ziobro reports, contrasting the news to results at Unilever, which “is much more tied to the fates of emerging markets than P&G.”
“The European company blamed weakness in emerging-market currencies in September when it issued its first profit warning in almost a decade and warned earlier this week that weak conditions would persist in both developed and developing economies,” Ziobro reports.
“The emerging markets are definitely the future for P&G,” Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel, tells Reuters’ Phil Wahba.