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article imageGrowing beard popularity shaves P&G sales

By John Biers (AFP)     Jan 24, 2014 in Business

Procter & Gamble Friday revealed its latest challenge to earnings glory. This time it's a facial issue.

The US consumer giant, fresh off a recent corner office shakeup and already facing a battle for market share in shampoo, said second-quarter earnings were marred by the growing preference of men for moustaches and beards, which hit sales in its "grooming" segment.

But the company said that increasingly popular body-shaving by men had the potential to offset the loss of the facial-hair business.

Flat sales in grooming and a two-percent decline in the beauty segment were drags on P&G's earnings, which fell 15.5 percent from the year-ago level.

Net income for the second quarter of fiscal 2014 came in at $3.4 billion on $22.28 billion in revenue, down from $4.1 billion on $22.18 billion in revenue in the year-ago period.

Still, investors smiled on the results, which equated to earnings per share of $1.21 excluding one-time items, a penny above analyst expectations. The company also confirmed full-year profit growth expectations of 5-7 percent, predicting a "strong" performance over the next six months.

The news helped push up P&G shares 1.9 percent to $79.73 in afternoon trade.

Analysts are keenly awaiting further sign of where Chief executive A.G. Lafley will take the 177-year-old company after he was unexpectedly reinstalled to the top spot in May. Lafley, who had served as chief executive from 2000-2009, replaced Bob McDonald, who resigned after his turnaround plans fell flat on Wall Street.

Chief financial officer Jon Moeller characterized the latest round of results as on par with expectations.

Procter and Gamble's corporate headquarters in downtown Cincinnati  Ohio on July 15  2008
Procter and Gamble's corporate headquarters in downtown Cincinnati, Ohio on July 15, 2008
Scott Olson, Getty Images North America/AFP

But he cited three areas in need of improvement: skin care, where P&G's Oil of Olay line has lagged hopes; shampoo, where several campaigns around the Pantene line have underperformed amid discounting by rival Unilever; and grooming.

"Grooming is really a story about the market," said Moeller, who alluded to the mainstreaming of the three-day stubble "hipster" look in the US and other developed markets.

The most recent quarter included the effects of "Movember," a health promotion in November that urges men to grow out their moustaches and beards to raise awarness of prostate cancer.

The beard moving weighed on P&G's Gillette razors and shaving cream and Braun electric razors.

But all is not lost for P&G in grooming, Moeller said.

"While the incidence of facial shaving is somewhat down, the incidence of body shaving is up, and we can take advantage of that and plan to do that as well."

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