Following a financial year where Procter & Gamble has seen its sales continue to slide, the company has announced that it will slash the size of its product portfolio by more than half in an effort to make the business more efficient.
During a press conference in Cincinnati, last Friday, company executives elaborated that they want to eliminate around 100 minor brands from the portfolio, in an effort to focus on the bigger and more profitable brands that the company already holds.
The brands the company will be holding on to number approximately 70 to 80, and the company indicated that they already represent somewhere in the region of 90% of the annual revenues for the business.
Although the company executives did not elaborate on which specific brands that they wish to eliminate from the portfolio, the beauty division, which is the biggest of the company's five divisions, has been underperforming during the course of this year, which could spell a shake up for that portfolio.
Lafley tweets his feelings on the portfolio cull
The charismatic A.G. Lafley was bought back in as CEO for the business last year after former CEO Bob McDonald handed in his resignation at the end of last year, ending a four year reign at the top after he took over from Lafley in 2009.
"Everything needs to begin with consumer value creation — and end with consumer satisfaction & loyalty," said CEO A.G. Lafley in a P&G tweet.
The financial world has responded positively to the decision to slim down the brand portfolio, with P&G share prices closing for business on Friday up 3% to $79.65 a share.
A downward spiral for P&G in 2014
Net sales for the quarter ending in June came in at $20.16bn, compared to $20.30bn in the same quarter last year, results that show a steady deterioration in the company revenue performance for each quarter in the fiscal 2013/2014 year.
CEO A.G. Lafley said that organic sales growth for the quarter had been 2%, stressing that both currency translations and a number of minor divestitures has impacted the reported results.
Fully year sales were up 1%, from $82.58bn, to $83.06bn, a figure that represented an increase of 3% in terms of organic sales, and what that also underlined the challenge the company has had to overcome with respect to currency translations throughout the year.