Shop Talk
Retailers, consumers and prices
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.
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.
A pimple worth pampering
While you might hate pimples, apparently they’re kind of a beautiful little thing over at Procter & Gamble.
Wella hair care is one of those businesses that fits into a broad portfolio of everything from Pampers diapers to Tide detergent. Right? Still, it’s just a little bit different enough to make some wonder why P&G has held onto it. It’s not like Wella brand products are filling up shelves at Wal-Mart like Clairol products are.
On Thursday, CEO A.G. Lafley was asked about Wella and Braun (the appliance business which, again, isn’t a clear match with some other P&G products).
Lafley admitted that P&G put some Wella restructuring “on the back burner” while it was busy digesting Gillette.
“We’re going to get it restructured this year and next,” Lafley said during the company’s quarterly earnings call.
He said he likes Wella, especially because innovation at the high-end salon business trickles down.
“Is it worth investing for two or three years? Heck, yes because a lot of innovation and a lot of ideas come out of salons and then go into retail and we want to be on the cutting edge of that.”
Still, it’s not the brand that’s going to drive major growth.
“Will Wella make the difference in the company’s financial results? It’s a pimple. Now, I hope it will become more, but right now it’s not going to make a big difference,” Lafley added.
Nothing sells like a little potty humor
In the news you may have missed category, a couple of household products makers are trying to grab your attention with a dose of elementary-school styled laughs.
First, Clorox is bringing some giggles to a blazing issue in its backyard. Nearly 30 portable toilets have been set on fire in San Francisco according to Clorox, which is based in nearby Oakland, California.
At Procter, Ellen arrives and Lafley’s sticking around
Investors worried about Procter & Gamble after today’s sales forecast appeared to breathe a sigh of relief when Chairman, President and Chief Executive A.G. Lafley said he was sticking around.
“Rumors of my passing are greatly exaggerated,” Lafley joked during a meeting on Thursday. “I have a cold today but otherwise I feel pretty good.”
When should Lafley, shown here in a 2005 photo, retire? Well, according to P&G’s guidelines of stepping down at 65, Lafley would be out in 2012.
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