What's going on?
American consumer goods giant Procter & Gamble (P&G) – which deals in everyday household items like Gillette razors, Pampers diapers and Tide laundry detergent – reported results on Tuesday with a loud thud.
What does this mean?
P&G managed to beat expectations on profit, but miss them on sales. After accounting for restructuring and tax costs, the firm’s earnings were 11% higher than this quarter last year, but its sales were roughly $40 million shy of what was predicted. P&G shares have fallen 13% since the beginning of the year and this set of results doesn’t look like much help.
Why should I care?
For you, personally: Times are a-changin’.
One of P&G’s weak spots has been its shaving business, where it’s facing ongoing competition from Dollar Shave Club – an online, subscription-based company that delivers personal grooming products to your front door. P&G’s baby business has also suffered, in part from retailers laying on discounts (likely in an attempt to compete with ecommerce adversaries like Amazon). The internet continues to disrupt business – giving you, the consumer, ever-greater power (if not cheaper prices, too) and ageing corporations (P&G’s a doddery 181 years old) a run for their money.
The bigger picture: Pills are all the rage.
P&G agreed to acquire pharmaceutical giant Merck’s consumer health business earlier this year, expanding its healthcare offerings (which currently include Vicks and Pepto-Bismol). Meanwhile, another pharmaceutical powerhouse – Pfizer – reported second-quarter earnings that gobbled up expectations. The maker of Viagra is upping its spending on research and development to speed up the release of “blockbuster drugs” (drugs that generate sales of $1 billion or more per year) and thinking about what to do with its own consumer health business…