P&G’s Quarterly Sales Up 5%; Marketing to Accelerate

29 January 2003

Procter & Gamble reported Tuesday it had achieved sales of $11 billion (€10.11bn; £6.68bn) in its second fiscal quarter to December 31, up year-on-year by five percent. Marketing activity also increased during the quarter, a trend the fmcg giant said it intended to continue through the January-March period

The major beneficiaries of increased spend during the quarter were beauty-care brands such as Tampax Pearl, Pantene and Clairol, while Q3 marketing dollars will be hiked for several hair-care initiatives and Olay Regenerist, a new high-end skin-care line.

Earnings per share rose by 14% to $1.06 despite increased marketing spending, which was offset by headcount cuts and other overhead reductions following the Clairol acquisition.

P&G’s earnings guidance for Q3 indicates an 11%-13% increase, excluding restructuring charges, while sales will achieve a mid-single digits rise. The guidance compares with a forecast of low double digits growth last time.

Chairman/ceo Alan G Lafley attributed some of the recent successful new product launches to longer-term marketing planning and support. He compared the new extended outlook to the “launch 'em and leave 'em” approach previously practised by P&G and its rivals, which concentrated all marketing into the first year of a launch – and led to an eye-watering failure rate of 80%.

The longer-term strategy had been used in fabric and home care and health and beauty care, aiding such brands as Swiffer and Crest Whitestrips. “This approach has been critically important where we have new to the world technology ... requiring consumer behavior change,” Lafley said.

Data sourced from: AdAge.com; additional content by WARC staff