P&G divestiture hits sales with worst drop in over a year for 1Q 2016

P&G divestiture hits sales with worst drop in over a year for 1Q 2016

Procter & Gamble’s strategy of shedding non-core brands doesn’t seem to be paying off, according to a report published by Bidness Etc. The FMCG giant reported the worst drop in sales for more than a year for the first quarter of fiscal 2016, with grooming, beauty and baby care products experiencing the sharpest fall.

Sales plummeted 12 percent on the back of weak demand across all product categories as well as the strong US dollar. The news will hit hard given that P&G has been attempting to revive sales growth by disposing of underperforming brands and products. The grooming category was the worst hit with a 14 percent drop, followed by the beauty and personal care sector, which lost 12 percent.

However, despite revenues missing analysts’ expectations by some US$640 million at US$16.53 billion, it wasn’t all bad news. Earnings were up 31 percent for net income of US$2.6 billion.

What’s more, a closer look at sales for P&G’s core brands suggests that its strategy will pay dividends, once completed, with core brands such as Oral B, Tide and Pampers all selling well and raising speculation that the FMCG giant will go on to shed under-performing skin care brand Olay and its Wella hair care business.