Shop Talk

Chavez puts a damper on U.S. earnings season

Venezuela President Hugo Chavez has rained on the U.S. consumer goods parade.

His government’s decision this month to devalue the Venezuela bolivar promises to hurt the profits of many leading U.S. consumer products makers this year even as they seem to be turning a corner.

On Friday, Newell Rubbermaid said the devaluation – which basically creates a two-tiered system that sells U.S. dollars for 4.3 bolivars in one market, and a separate parallel market where the greenback is going for about 6 bolivars- would shave 4-5 cents per share off of its 2010 earnings, sending its shares down.

The news follows Colgate-Palmolive and Procter & Gamble also saying on Thursday that Hugo’s tinkering with exchange rates would hit their 2010 profits, putting a little damper on the news that both companies had done better than expected last quarter.

More bad news may be on the way as we make our way through earnings season: companies exposed to Venezuela could feel an average earnings hit of about 2 percent from translating business from that country into U.S. dollars, Bill Pecoriello of Consumer Edge Research warned us earlier this month.

(Reuters photo)

Check Out Line: The slow return of the splurge

Check out signs that consumers are getting more comfortable with spending and, at times, even splurging.

Estee Lauder reported a far better-than-expected 62 percent jump in quarterly profit and boosted its full-year forecast as consumers began to splurge on cosmetics after a year-long slide in sales. Results were helped by strong growth in Asia, new products, and a better-than-expected performance in airport stores and in the United States.

Under Armour, the maker of athletic clothing and footwear, reported an 83 percent rise in its holiday-quarter profit helped by gains in its apparel business. It said it now expects 2010 revenue and earnings to grow 10 percent to 12 percent, up from its prior range that called for a rise in the high-single to low-double-digits.

Meanwhile, Procter & Gamble and Colgate-Palmolive posted better-than-expected quarterly results and boosted sales of their brand name products in the last few months by convincing consumers to spend a little more with a bigger investment in advertising. Profit at P&G, the maker of Tide laundry detergent and Pampers diapers, fell less than anticipated.  A higher profit at toothpaste and dish-soap maker Colgate was even stronger than analysts expected.

But consumers don’t feel comfortable spending across the board. Ethan Allen reported a wider than expected loss in its quarter as cost cuts failed to offset weak demand for its higher-priced furniture.

And Estee Lauder Chief Executive Fabrizio Freda said the company is taking nothing for granted:

“While certain businesses have shown signs of improvement, and the economic challenges and some external uncertainties have abated, we remain mindful that they have not completely disappeared,” he said in a statement.

From Charmin, $10,000 to meet people in Times Square toilets

Want to earn $10,000 working in Times Square this holiday season?  No, no.  Not that way! Rudy Giuliani cleaned all that up.   P&G’s Charmin toilet paper has a different job for you.  The company is looking for five “Charmin Ambassadors” to work in its portable rest rooms in Times Square this holiday season.   The people must be “super-fun” and “enthusiastic.”   The job description: “Greet and entertain bathroom guests.  Then blog about the experience.  All candidates must really, really enjoy going to the bathroom.”    Except for the blogging part, I think my 15-month-old would be perfect for the job.

(Reuters photo)

Check Out Line: P&G shows its sustainable side

Check out Procter & Gamble’s environmental and social efforts.

P&G was added to the Global 100 list of the world’s most sustainable corporations in 2009.  On Monday, the household products powerhouse released its latest sustainability report, “Designed to Matter.” 

The report comes seven months after P&G raised its 2012 sustainability goals.   P&G said that since 2002 it has cut water consumption by 52 percent, energy usage by 48 percent, carbon dioxide emissions by 52 percent and waste disposal by 53 percent in its operations.

The company has been making concentrated Tide detergent (shown here), for a few years.  Industry watchers may recall that Wal-Mart pushed detergent makers to cut back on the use of water and plastic packaging.  The smaller, lighter bottles also require less fuel to ship.

Through social responsibility programs, P&G has undertaken projects such as delivering millions of liters of clean drinking water to children in need.    P&G said that $13.1 billion in sales since 2007 have come from products with a significantly lower environmental impact.

Also in the basket:

Hasbro profit tops Street estimates

Check Out Line: Will P&G get a “bounce” from outside?

Check out Procter & Gamble’s latest collaboration, which isn’t getting all rave reviews.  P&G has been working with others for nearly a decade under a program it calls Connect + Develop.  Now it is looking for its next success.

Quite a few products have come together with help from the outside.  A few years ago, for example, a P&G employee heard a scientist from Sederma speak at an academic conference.  P&G used the French company’s peptide technology in its Olay Regenerist skin care line.

Its newest product, now hitting U.S. and Canadian stores, is based on technology from Ecolab.  The Bounce Dryer Bar sticks on the inside of a dryer.  The innovation comes at a price — a bar that should last the average consumer about four months has a suggested retail price of about $7.79, while 105 sheets of Bounce with Febreze (which would last about 3-1/2 months based on doing one load a day) sells for about $5.49 to $6.49.

P&G said that consumers it spoke with saw the idea as valuable, since it makes their lives a little simpler.  Recent reviews were mixed.  More than one user was excited by the idea but said the product broke quickly, while others wrote they “loved it.”  Several reviews on the company’s website are less than stellar.  One writer said it was “horrible” and another posted a comment labeled “Hate It.”

Still, another collaborative product launched in January is doing well despite the downturn, even though P&G’s overall sales fell in the latest fiscal year.  Crest Whitestrips Advanced Seal sell for about $45 a box.  The strips — which include adhesion technology from an outside company — have been ”tremendously successful, we couldn’t be happier,” said Paul Sagel, the P&G research fellow who created the company’s whitestrips.

“I would not have imagined it would have been this successful, especially in recessionary times when you’re dealing with products that are reasonably expensive, this one’s just exceeding everyone’s expectations,” he told Reuters.

Also in the basket: