Apparently, the heat is on Proctor and Gamble CEO Bob McDonald. McDonald reported some disappointing sales and profit news this week. According to the Wall Street Journal, "He said the company's sales likely fell by 1% to 2% in the current
quarter from a year earlier, compared with a previous forecast of 1% to
2% growth, and said core earnings would come in at 75 to 79 cents a
share, down from a previously expected range of 79 cents to 85 cents." Investors are becoming restless and asking increasingly tough questions.
P&G clearly needs to find a way to jump start organic growth. However, I believe investors also will begin asking questions regarding the corporate portfolio. Does the firm need to trim some operations that appear outside the core? For instance, Iams is a billion dollar brand for P&G, yet pet food does not represent one of the company's main product lines. P&G focuses primarily on health and beauty as well as household care. The US pet food market is not as consolidated as the European market. Therefore, perhaps there may be an opportunity to find a buyer for the business. Investors may begin asking questions about other brands too, such as the Duracell battery brand. Does it fit well with P&G's portfolio. Whenever a company begins to struggle and investors become restless, these types of questions will begin to be asked.
2 comments:
Michael,
It's really not at all about Brands at P&G. Look at the history of the company. Senior leaders never have stepped up to the plate to do what is best for the company and shareholders. They never take accountability for results. They always leave the sitting CEO in the lurch. They are always about what is best for themselves. If you have an act, you can lead at P&G. If you have depth and substance, you are dead.
It is depth, substance and a bit of courage that is needed now at P&G and those are qualities that are not valued there. P&G's issue is all about people, how they are led, managed and rewarded. This is their fatal flaw. It is embedded in the culture. Fix the culture first and all else will follow.
Bob Starr
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