UPDATE 4-Colgate sales weak, shares off 7 pct

* Q2 EPS $1.17 vs Street view $1.16

* Sales at $3.81 billion below Street view of $3.94 bln

* Reiterates forecast for double-digit EPS growth in 2010

* FY hit from Venezuela currency devaluation higher

* Shares fall 7 pct (Adds CEO comment, details, updates stock)

By Ben Klayman

DETROIT, July 29 (Reuters) - Colgate-Palmolive Co (CL.N) posted weaker-than expected second-quarter sales and said it would take a bigger hit from Venezuela's currency devaluation, sending its shares down 7 percent on Thursday.

The maker of toothpaste and other consumer goods repeated its profit outlook for 2010, but said its ad and promotional spending for the rest of the year will rise.

Consumer-goods makers like Colgate have focused on rolling out new products and boosting promotions to entice value-seeking shoppers. Global ad spending at the toothpaste and household products maker rose 1 percent in the quarter to $395 million.

"We have seen an uptick in promotional activity in the second quarter across a broader array of categories. We have responded to that," Chief Executive Ian Cook said on a conference call with analysts.

Morgan Stanley analyst Dara Mohsenian said in a research note that sales in the company's ongoing businesses, also known as organic sales, fell far short of expectations and competitive pressure from rivals like Procter & Gamble Co (PG.N) are not likely to ease.

"We would not be buyers on weakness (in the stock) given our concern that competitive pressure is likely to persist going forward," said Mohsenian, who has an "equal weight" rating on the stock.

Colgate's net income in the second quarter rose 7.3 percent to $603 million, or $1.17 a share, from $562 million, or $1.07 a share, a year earlier.

Analysts polled by Thomson Reuters I/B/E/S had expected a profit of $1.16 per share.

Sales rose 2 percent to $3.81 billion, below the $3.94 billion analysts had expected.

Organic sales, excluding foreign exchange, acquisitions and divestitures, increased 3.5 percent. That was far below the consensus 7 percent gain expected and the company's implied 6 percent to 8 percent guidance, Mohsenian said.

Volume of goods sold was up 3 percent and global pricing rose 0.5 percent.

The company also said the full-year hit of a currency devaluation in Venezuela would be 10 to 15 cents a share, up from its previous estimate of 6 to 10 cents. In April, Colgate's profit fell as it took a hefty charge to account for hyperinflation in that country.

The company reiterated that it expects double-digit earnings-per-share growth this year. Analysts were expecting $4.83 a share, or an increase of 10.5 percent from $4.37 last year.

Colgate, about one-fifth the size of P&G, said it expects its gross profit margin to be "up nicely" for the year. At 58.8 percent in the second quarter, it was even with last year.

The New York-based company expects North American organic sales to be up in the low single digits percentage wise for the third quarter and the full year, with operating profit up modestly.

For Europe, Colgate sees organic sales growth in the low-single digits for both periods, while operating profit will be down in the third quarter and up modestly for the year.

In Latin America, the company expects organic sales to be up in the high single digits, while operating profit will be down modestly. It sees organic sales and operating profit in Greater Asia/Africa both up double digits for both periods.

In the company's Hill's pet food unit, it expects organic sales to be down modestly in the third quarter and for the full year, while operating profit will increase modestly.

Also on Thursday, Colgate sued GlaxoSmithKline PLC (GSK.L), seeking a court order that its packaging for Colgate toothpaste does not infringe trademarks held by the maker of Aquafresh. [ID:nN29267306]

Colgate shares fell as low as $76.66, and were still off $5.81, or 6.9 percent, at $78.02 in afternoon trading on the New York Stock Exchange. P&G's stock was off almost 2 percent. (Reporting by Ben Klayman; Editing by Gerald E. McCormick, Maureen Bavdek and Gunna Dickson)