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This article was originally published in The Tan Sheet

Executive Summary

GILLETTE'S ORAL-B DIVISION SALES ARE OFF 2% WORLDWIDE in the third quarter and through the first nine months of 1993 primarily due to a tougher competitive climate in the U.S. where Oral-B generates about half its business, Gillette reported to analysts on Oct. 22. In a presentation to securities analysts in Boston, Oral-B President North America Glen Archibald said that "competitors have been very aggressive in the U.S. marketplace" and that Oral-B has lost three to four share points in the last one-and-a-half years. Oral-B profits from operations were down 10% and 1% in the three- and nine-month periods, respectively. Archibald attributed the profit declines to increased spending devoted to developing new Oral-B products. "In order to compete, we must expand into major areas of preventative oral care to gain promotional synergies, professional support at retail and the consumer perception that we really care about oral health," he said. As part of an overall strategy to rejuvenate the Oral-B brand name, the company added anti-plaque and anti-cavity rinses and toothpaste to its line-up in October and will begin shipping the Advantage Plaque Remover toothbrush in November ("The Tan Sheet" Sept. 27, p. 19). At the Oct. 22 meeting, Gillette VP-Investor Relations Robert DiCenso said he expects these products to contribute to a 24% earnings gain in the forth quarter of 1993. Oral-B is part of Gillette's Diversified Group, which also encompasses Braun AG and direct-market skin care and cosmetics unit Jafra. The Diversified Group experienced flat sales in the third quarter and a 3% decline in profits from operations. Gillette third-quarter North American personal care and cosmetics sales climbed 30%, the firm said, boosted in part by sales of the recently repackaged and expanded Soft & Dri, Dry Idea and Right Guard deodorant and antiperspirant lines. In the fourth quarter of 1992, Gillette began introducing "environmentally friendly" packaging and new formulas for the antiperspirants and deodorants. DiCenso noted that the Soft & Dri, Dry Idea and White Rain hair care brands had "strong" unit volume gains, up 15% in the three months. In the nine months, personal care and cosmetics sales advanced 24%. The Gillette Series men's toiletries line had a "big impact" on North American personal care and cosmetics sales in the quarter, DiCenso said, adding that Series unit market share continues to grow in both the U.S. and Canada for deodorants, antiperspirants and shaving preparations. The personal care and cosmetics segment posted sales of $ 261 mil. worldwide in the third quarter, an 11.8% increase over the same period a year ago. Profits from operations were $ 17.6 mil. with a 6.7% profit margin. In the nine months, Gillette's personal care and cosmetics category had sales of $ 758 mil. and operating profits were $ 55 mil. Gillette's third-quarter worldwide consolidated sales rose 7.2% to $ 1.34 bil. and profit from operations grew 12.8% to $ 266.8 mil. In the nine months, consolidated sales were up 3.8% to $ 3.79 bil. and profit reached $ 773.4 mil., up 8.7% Consolidated net income was ahead 13.1% to $ 145 mil. in the quarter; however, through the nine months, net income was off 25% compared with 1992 to $ 283.4 mil. due primarily to a one-time $ 138.6 mil. charge taken in the first quarter to cover changes in accounting standards. Net income for the nine months would have increased 11.6% to $ 422 mil. Gillette spent $ 606 mil., or 16% of sales, on advertising and promotion in the first nine months of 1993 compared to $ 609.5 mil. (16.7% of sales) in the same period a year ago. DiCenso cautioned that it is difficult to compare spending this year with that of 1992, since 1992 ad/promo spending jumped 14% over the 1991 level.

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