Procter & Gamble Sales Rebound

February 2, 2010

Bob McDonald

Procter & Gamble Co. ––battling declining sales this past year as budget-conscious consumers cut back and retailers reduced inventories –– has found some sales momentum this quarter.

Analysts attribute the market share gains to aggressive price reductions on core brands and value line extensions on products such as Tide and Bounty with Tide Basic and Bounty Basic.

In addition to sales increases, the company posted better-than-expected earnings, according to a Market Watch report. As a result P&G raised its forecasts for fiscal 2010 organic sales and core earnings, which have lagged this past year. Organic sales are now forecasted to increase approximately 5 percent.

"While it is still early days, it seems to us that new CEO [Bob] McDonald's more aggressive posture is already starting to take hold and have effect at P&G," Citigroup analyst Wendy Nicholson wrote in a research report quoted by Market Watch.

P&G sales rose 6 percent to $21.03 billion from $19.76 billion. Organic sales –– or sales minus the impact of acquisitions, divestitures and foreign exchange –– rose 5 percent while unit volume increased 5 percent, Market Watch reported.

"Our investments in innovation, portfolio expansion, marketing support and consumer value are working," said McDonald. "We continue to drive simplification and leverage our scale to create cost advantages and accelerate growth."

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