Barclays on U.S. Cosmetics; Household & Personal Care: The Quarterly 'Dish': Mixing Up Gross Margin
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Rating Summary:
1 Buy, 20 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. Cosmetics; Household & Personal Care: The Quarterly 'Dish': Mixing Up Gross Margin
Barclays analyst, Lauren R. Lieberman, "Welcome to the first edition of "The Quarterly 'Dish,'" a note in which we take what we have learned during earnings season and identify emerging trends - positive and negative - that should inform our thinking over the coming weeks and months."
"Pricing is playing out as expected and should accelerate going forward. At our Back to School conference in September, CHPC companies mentioned that pricing was going through as expected and that, despite consumer weakness, developed market pricing was likely to stick as the majority of the CHPC industry was executing list price increases. We generally saw this play out in 3Q11 results with pricing up ~300bps on average for global CHPC companies."
"Innovation, especially in the mid/low tiers, is supporting volume growth. We were pleased to see volumes relatively resilient, growing at a rate of ~2% for the quarter (Clorox (NYSE: CLX), Proctor & Gamble (NYSE: PG), Kimberly Clark (NYSE: KMB) and Colgate-Palmolive (NYSE: CL)), as we were expecting some softness due to price elasticity. We think a critical driver of this relative strength is a discernible shift in company innovation strategies versus 2008/2009. While the macro remains tough and there is a persistent risk of trade-down and trade-out, we think companies are doing a better job keeping consumers spending on brands and within their franchises. Specifically, they are innovating in parts of the portfolio (i.e. low and mid tiers) that they ignored in the past, which is helping them compete more effectively versus private label. We saw specific evidence of this in CLX and PG results."
Barclays analyst, Lauren R. Lieberman, "Welcome to the first edition of "The Quarterly 'Dish,'" a note in which we take what we have learned during earnings season and identify emerging trends - positive and negative - that should inform our thinking over the coming weeks and months."
"Pricing is playing out as expected and should accelerate going forward. At our Back to School conference in September, CHPC companies mentioned that pricing was going through as expected and that, despite consumer weakness, developed market pricing was likely to stick as the majority of the CHPC industry was executing list price increases. We generally saw this play out in 3Q11 results with pricing up ~300bps on average for global CHPC companies."
"Innovation, especially in the mid/low tiers, is supporting volume growth. We were pleased to see volumes relatively resilient, growing at a rate of ~2% for the quarter (Clorox (NYSE: CLX), Proctor & Gamble (NYSE: PG), Kimberly Clark (NYSE: KMB) and Colgate-Palmolive (NYSE: CL)), as we were expecting some softness due to price elasticity. We think a critical driver of this relative strength is a discernible shift in company innovation strategies versus 2008/2009. While the macro remains tough and there is a persistent risk of trade-down and trade-out, we think companies are doing a better job keeping consumers spending on brands and within their franchises. Specifically, they are innovating in parts of the portfolio (i.e. low and mid tiers) that they ignored in the past, which is helping them compete more effectively versus private label. We saw specific evidence of this in CLX and PG results."
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