Companies Clean Up On Pandemic-Driven Hygiene Products

Global sales jump as consumers shift from stocking up during lockdowns to buying pricier home products. Companies Clean Up On Pandemic-Driven Hygiene Products

Procter & Gamble said recent demand appears driven by an increased focus on cleaning and person hygiene as people remain home more.

Procter & Gamble Co. reported its biggest global sales increase in 15 years as the world’s consumers spent more to keep their homes and themselves clean during the coronavirus pandemic.

Even as the economic picture grew bleaker around the world, the maker of Tide detergent and Gillette razors said demand grew for pricier products. It logged the strongest growth in the unit that sells Swiffer mops and Dawn dish soaps.

Earlier Tuesday, Lysol maker Reckitt Benckiser Group PLC reported its sharpest quarterly sales growth on record, driven by its hygiene unit.

Where sales gains early in the coronavirus pandemic were driven by consumers stocking up amid lockdowns and shortages of products such as paper towels and toilet paper, P&G said demand in recent months appears driven by a sustained focus on home cleaning and personal hygiene as people remain home more.

“The dynamics associated with this period of economic difficulty are different than in the past,” P&G finance chief Jon Moeller said. “Large portions of peoples’ budgets are not being spent on travel, leisure and hospitality, which leaves them more money in the budget.”

Reckitt Chief Executive Laxman Narasimhan said he thinks renewed interest in hygiene will outlast the pandemic: “Consumers are adopting better hygiene practices,” he said in a call with journalists.

Reckitt and Clorox Co. have reported booming demand for their cleaning products, straining their abilities to keep stores stocked with their disinfectant sprays or wipes.

Reckitt said it had doubled capacity for Lysol and other major disinfectant products from a year ago—through capital investment and by adding contract packers and raw material suppliers. It said it was well-positioned to meet future demand.

P&G and its peers have cut back on deals and discounts as demand is so high that consumers buy whatever they can find.

P&G said organic sales, a measure that excludes currency moves, acquisitions and divestitures, rose 9% for the quarter ended Sept. 30 compared with a year earlier. Increased consumption drove most of that growth, but consumers also paid higher prices and shifted toward more premium products, such as Tide laundry pods and scented laundry beads, the company said.

Sales of private-label household and personal-care products fell 1% overall in the U.S. for the four-week period ended Oct. 3, according to Nielsen, a signal that consumers are leaning toward higher-priced, name-brand products.

The biggest growth was in P&G’s home-care unit, where sales jumped 30%. The unit’s products include Swiffer, Febreze air freshener and Mr. Clean. An antibacterial surface cleaner, Microban 24, launched in February and initially planned as a niche product, is on track to reach $200 million in annual sales.

Mr. Moeller said he expects deals and discounting to return to more normal levels going forward as P&G and its rivals catch up with demand and consumers have more choices. He said replenishing retailers’ depleted inventories likely accounted for 1% to 2% of the company’s sales growth for the most recent quarter.

The company raised its guidance for the full year to 4% to 5% organic sales growth, up from 2% to 4%. Mr. Moeller said expectations for the full year are more muted than the most recent quarter’s results due to global uncertainties, from the potential for widespread shutdowns to political unrest in the U.S. and elsewhere.

Overall, P&G said net sales for the quarter were $19.3 billion, up 9% versus the prior year. Net income was $4.31 billion, or $1.63 per diluted share, an increase of 20% from the prior year.

The results were ahead of Wall Street’s expectations. Analysts polled by FactSet predicted sales of $18.35 billion and earnings of $1.41 per diluted share.

The company raised its guidance for profit gains as well as sales gains for the fiscal year ending in June 2021.

Reckitt, which also sells big international brands like Dettol disinfectant and Harpic toilet cleaner, said its third-quarter comparable sales rose 13.3% compared with the year before, beating analysts’ estimates.

Revenue rose to £3.51 billion, equivalent to $4.55 billion, from £3.29 billion. Reckitt didn’t report net income for the quarter.

Its hygiene unit logged a jump of 19.5% in sales, driven by sales of Lysol, Finish and Air Wick. Reckitt recently launched a new business selling its cleaning expertise to hotel operators, airlines and other companies, and on Tuesday the company said it had added Amtrak and Airbnb Inc. to its list of clients.

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