BEAUTY CARE

Colgate releases 3Q results, announces four-year restructuring program

BY Antoinette Alexander

NEW YORK — Colgate-Palmolive reported on Thursday a dip in third-quarter sales and unveiled a four-year restructuring program that involves a 6% reduction in its global employee workforce.

The program’s initiatives are expected to help Colgate ensure continued worldwide growth in unit volume, organic sales and earnings per share and enhance its global leadership positions in its core businesses, the company stated. Savings are projected to be in the range of $365 million to $435 million ($275 million to $325 million after tax) annually by the fourth year of the program.

Initiatives under the program will focus on the following three areas:

  • Expanding Commercial Hubs – Building on this structure already implemented in several divisions, continue to cluster single-country subsidiaries into more efficient regional hubs, in order to drive smarter and faster decision making, strengthen capabilities available on the ground and improve cost structure.
  • Extending Shared Business Services and Streamlining Global Functions – Implementing the company’s shared service organizational model, already implemented in Europe, in all regions of the world. Initially focused on finance and accounting, these shared services will be expanded to additional functional areas to streamline global functions.
  • Optimizing Global Supply Chain and Facilities – Continuing to optimize manufacturing efficiencies, global warehouse networks and office locations for greater efficiency, lower cost and speed to bring innovation to market.

It is expected that by the end of 2016, the restructuring program will reduce the company’s global employee workforce by approximately 6% from the current level of 38,600, the company stated.

 “As we look ahead to 2013, while our global budget process is still in its initial stages, based on the company’s current growth momentum, our confidence in this new efficiency program in addition to our ongoing funding-the-growth and strategic worldwide pricing efforts, we are planning for a return to our long-term target of double-digit earnings per share growth on a dollar basis and another year of gross margin expansion, excluding charges related to the 2012 restructuring program,” stated Ian Cook, chairman, president and CEO.

For the third quarter, the company posted worldwide net sales of $4.33 billion, a decrease of 1% compared with the year-ago period.

Net income and diluted earnings per share were $654 million and $1.36, respectively. Net income and diluted earnings per share in third quarter 2011 were $643 million and $1.31, respectively.

In North America, net sales rose 2.5%, and operating profit rose 3% during the quarter to $219 million, or 27.5% of net sales.

In the United States, Colgate’s toothpaste market share reached 36.2% year-to-date, up 1.2 share points versus a year ago, driven by strong sales of Colgate Optic White toothpaste. In manual toothbrushes, Colgate’s market share reached 37.3% year to date, up 1.8 share points versus a year ago, driven by the success of Colgate 360° Optic White, Colgate 360° Sensitive Pro-Relief, Colgate 360° Total Advanced and Colgate Extra Clean manual toothbrushes, the company stated.

 

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Revlon posts 3Q results

BY Antoinette Alexander

NEW YORK — Beauty company Revlon posted a net loss for the third quarter due to charges, as sales rose 2.9% thanks to higher net sales of Revlon color cosmetics and the inclusion of net sales of Pure Ice.

Net sales for the quarter totaled $347 million, up $9.8 million, or 2.9%, compared with the year-ago period. Excluding unfavorable foreign currency fluctuations, net sales rose 4.8%.

Net loss for the quarter was $15 million, or 29 cents per diluted share, which included $24.1 million ($23.1 million after tax) of restructuring and related charges and another charge of $2.2 million, before and after tax, related to the litigation, compared with net income of $500,000 or nil per diluted share. Net loss in the third quarter of 2012 included $11.5 million of income tax expense, compared with $22.1 million in the third quarter of 2011.

In the United States, net sales were $192 million, an increase of 4% compared with the same period last year. According to the company, the increase was primarily driven by higher net sales of Revlon color cosmetics and the inclusion of the net sales of Pure Ice. These increases were partially offset by lower net sales of Almay color cosmetics, Revlon ColorSilk and Mitchum antiperspirant deodorant.

“In the third quarter, we continued to execute our strategy of profitably growing our business as we grew net sales by 4.8%, maintained competitive operating income margins, and improved free cash flow. We continue to bring highly innovative, consumer-preferred new products to the marketplace. In the quarter, we also announced actions to drive operating efficiencies, which, once fully implemented, are expected to generate annualized cost reductions of approximately $10 million. These actions are further enabling us to invest in the execution of our strategy while maintaining highly competitive margins,” stated Revlon president and CEO Alan Ennis.
 

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Study: Engaging consumers through social media boosts brand sales

BY Michael Johnsen

CINCINNATI — Social media engagement between a consumer and brand drives both immediate and long-term sales increases, according to a study released Thursday by LoyaltyOne. The research constitutes a social media marketing breakthrough because it establishes the accountability link long sought by brands that have showered dollars on social media outlets while attempting to prove the return on investment to C-suite skeptics, the company stated.

“The good news is this research delivers the evidence that investment in social media has the potential to return benefits in the form of transactions, profits and ROI, if done well,” LoyaltyOne EVP and CMO Neil Everett said. “The even better news is this study demonstrates that the data obtained through loyalty programs generates a reliable method of measuring this connection.”

The research findings are based on a two-year analysis of brand-customer social media engagement and actual transaction data with Canada’s more than 10-million member Air Miles Reward Program. Consumers who participated in LoyaltyOne’s Air Miles loyalty program earned reward miles by making purchases from its affiliated business partners and services across Canada. 

The breakthrough results revealed that Air Miles Collectors who participated in social media events and promotions increased their purchases from Air Miles program partners by 15% to 30% over nonparticipants.

Other highlights from the study included:

  • The mere act of writing a short public statement on a social media site spurs significant lifts in transaction activity;
  • However, longer, more elaborate posts dealing with redemption experiences (travel, entertainment) created higher lifts than shorter, product-based posts;
  • The higher the level of participation in a social media event, the greater the impact on a consumer’s purchasing activity;
  • Brands can use social media as a tool to raise the value of lower-volume, high-potential consumers who have more room to increase their spending; and
  • Events that encourage participants to recreate the core benefits of a brand have higher lift effects than more generic posts — resembling a “co-creation effect.”

Transaction-based proof that social media participation increases purchases is the outcome of a research effort undertaken as the 2012 LoyaltyOne Social Media Transaction Impact Study.

Complete findings from the 2012 LoyaltyOne Social Media Transaction Impact Study can be found in a white paper titled The Social Media Payoff – Establishing the Missing Link Between Social Media and ROI.

 

 

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