Church & Dwight (CHD) Gets Rung Out as Competitor Looks to Trim Prices, Add Pressure
Church & Dwight (NYSE: CHD) is getting arm-and-hammered Tuesday morning following relatively strong second-quarter 2012 results, but guidance and comments which are giving investors pause.
Much of what investors are watching came from comments by CEO James R. Craigie, who said "We continue to expect a difficult and challenging economic environment for the remainder of 2012. Consumer spending and growth in many categories is expected to remain weak due to high unemployment and consumer uncertainty. Commodity price pressure remains in 2012 and competition will remain fierce. Nevertheless, we are in a strong position to continue to deliver value to our stockholders as a result of our balanced portfolio of value and premium products, aggressive cost cutting and tight management of overhead costs." Church & Dwight guided third-quarter EPS to 58 cents, lighter than the 61 cents expected by analysts.
Others point some of the pressure to Proctor & Gamble (NYSE: PG), which is Church & Dwight's largest competitor in the laundry aisle. Though P&G's Tide brand has been known as the more expensive counterpart to Church & Dwight's Arm-and-Hammer, P&G said on its August 3rd call that it's looking to lower prices. Specifically, P&G CFO Jon Moeller said: "World competitors, including private label have also taken pricing, we stand in very good shape. Price elasticity at the category level is generally low in consumer staples categories. In some instances where competitors have not taken pricing, we need to adjust. This is relatively easy to do, but takes some time to fully execute. During our last earnings call we mentioned six category country combinations but we have made a decision to roll back prices or match increases in competitive promotion levels."
Shares of Church & Dwight are down about 7 percent on the session.
Much of what investors are watching came from comments by CEO James R. Craigie, who said "We continue to expect a difficult and challenging economic environment for the remainder of 2012. Consumer spending and growth in many categories is expected to remain weak due to high unemployment and consumer uncertainty. Commodity price pressure remains in 2012 and competition will remain fierce. Nevertheless, we are in a strong position to continue to deliver value to our stockholders as a result of our balanced portfolio of value and premium products, aggressive cost cutting and tight management of overhead costs." Church & Dwight guided third-quarter EPS to 58 cents, lighter than the 61 cents expected by analysts.
Others point some of the pressure to Proctor & Gamble (NYSE: PG), which is Church & Dwight's largest competitor in the laundry aisle. Though P&G's Tide brand has been known as the more expensive counterpart to Church & Dwight's Arm-and-Hammer, P&G said on its August 3rd call that it's looking to lower prices. Specifically, P&G CFO Jon Moeller said: "World competitors, including private label have also taken pricing, we stand in very good shape. Price elasticity at the category level is generally low in consumer staples categories. In some instances where competitors have not taken pricing, we need to adjust. This is relatively easy to do, but takes some time to fully execute. During our last earnings call we mentioned six category country combinations but we have made a decision to roll back prices or match increases in competitive promotion levels."
Shares of Church & Dwight are down about 7 percent on the session.