(Reuters) - Procter & Gamble Co PG.N, the world's largest household products maker, said it could sell about half of its brands in the next two years and cut jobs to revive sales growth and save costs, sending its shares up as much as 4.3 percent.
The maker of Gillette razors and Tide detergent said it would consider selling about 90 to 100 brands whose sales have been declining for the past three years.
P&G said the 70 to 80 “core” brands it will focus on accounted for 90 percent of sales and more than 95 percent of profit over the past three years. Twenty-three of the brands have sales of between $1 billion and $10 billion.
“Less will be much more,” Chief Executive A.G. Lafley said.
P&G did not name the brands it planned to sell, keep or discontinue, but Lafley told Reuters the company’s family, feminine and baby care business would lose fewer brands than its other four businesses.
The business, which houses brands such as Pampers diapers and Always sanitary napkins, is P&G’s fastest-growing and was the company’s second-biggest revenue contributor in the year ended June 30.
P&G’s top 80 brands had sales of about $84.1 billion in 2013 while the other roughly 100 brands had sales of just $2.4 billion, according to Sanford Bernstein analyst Ali Dibadj.
The company might be more likely to sell laundry brands Fab and Trojan, Perma Sharp shaving blades and Fekkai hair products among others, Dibadj wrote in a note. P&G could potentially keep its Gillette, Tide, Pantene, Oral B, Olay and Old Spice brands, he wrote.
P&G said it would have fewer but larger distribution centers in North America and would focus on strengthening its presence in emerging markets, or what Lafley called the company’s “engines of growth”.
Lafley told Reuters he expects the moves to result in fewer job cuts than the near 10,000 the company cut in 2002.
P&G’s revenue growth has been sluggish, with sales missing Wall Street’s estimates in nine of the last 13 quarters.
The company says it has been hurt by “choppy” growth in developed markets, tough competition and a strengthening U.S. dollar.
P&G has sought to cut expenses by streamlining management, reducing costs and cutting jobs under a five-year, $10 billion restructuring plan announced in 2012.
P&G’s organic sales, which excludes divestitures and acquisitions, rose 2 percent in the fourth quarter, but currency losses wiped out the gains. Net sales fell 1 percent to $20.16 billion, missing the average analyst estimate.
P&G said it expected fiscal 2015 organic sales to rise by a low- to mid-single digit percentage and core earnings to rise by a mid-single digit.
A 7 percent fall in operating expenses in the quarter helped P&G post a core profit of 95 cents per share, beating the average analyst estimate of 91 cents.
“PG’s earnings quality is below its potential,” BMO Capital Markets analysts wrote in a note.
P&G’s shares were up 3.5 percent at $80.03 in early afternoon trading on Friday.
(This story has been corrected to clarify that the analyst mentioned in paragraph 8 said “The company might be more likely to sell” some brands mentioned and to say that the company “could potentially keep” and not “unlikely to sell” other brands mentioned)
Editing by Savio D’Souza
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