Dive Brief:
- Proctor & Gamble (P&G) announced its Q1 earnings report for fiscal year 2018 with a 1% increase in both net and organic sales year-over-year, a 10% increase in net earnings per share and a 6% increase in core earnings per share, as detailed in a company news release.
- The results were a mixed bag because, despite surpassing earnings estimates, P&G failed to meet sales expectations. The company's stock dropped Friday on the news, CNBC reported. The sales shortfall was blamed mostly on P&G's Gillette razor business, which is facing growing competition from digital-first brands like Harry's and Dollar Shave Club.
- In separate P&G news, Alan Boehme will reportedly be named global chief technology officer and vice president of information technology innovation, according to TechCrunch. Boehme was previously global chief technology officer for Coca-Cola and was credited as helping the brand transform its business for the digital age, with an eye toward innovation that might lead to significant changes at P&G. TechCrunch noted P&G usually hires internally, making the pick of Boehme especially interesting.
Dive Insight:
P&G's Chief Brand Officer Marc Pritchard has continued to be a standout figure in the ad industry this year, with major brands, agencies and platforms following a call-to-action made in January for a comprehensive clean-up of the digital media supply chain. Even as P&G has helped guide much of that conversation, it's internally come under a harsher spotlight in recent months, with skeptics including the activist investor Nelson Peltz suggesting that the CPG has been sluggish to innovate in the digital space, where upstarts like Dollar Shave Club have put a dent in some of its core brands' businesses. Shaky Q1 earnings stemming from properties like Gilette might lend weight to some of the criticisms coming from Peltz, who earlier this month narrowly lost a proxy battle for a board seat at P&G in what's speculated to be one of the most contentious and expensive campaigns ever run around a corporate vote.
Boehme, filling in as CTO, might more directly address Peltz's complaints and significantly transform P&G's digital architecture in the same way he did for Coca-Cola. He'll be working with familiar company alongside a fellow former Coke exec, Javier Polit, who's now P&G's CIO. Boehme was credited by TechCrunch for helping Coke accelerate its use of both consumer-facing and enterprise technologies like augmented reality, Big Data analytics and cloud services, as well as helping foster adoption of startups from the brand's The Bridge commercialization program.
Still, the hurdles both Boehme and P&G need to overcome are considerable. Market conditions for traditional CPGs aren't favorable right now, with players like P&G and Unilever cutting ad budgets, which has had a serious impact on the revenues and growth forecasts of major agency holding groups like WPP. Increased competition from e-commerce companies and especially Amazon will continue put a dent in these brands' sales for the foreseeable future.
As a response to a 94-page white paper from Peltz and his hedge fund Trian Partners — which sparked the tense proxy battle for a board seat in September — P&G rigorously outlined its digital strengths, including how it's grown its share in eight out of 10 e-commerce categories during the last fiscal year and that e-commerce sales totaled more than $3 billion during the same period.
