Will Old Spice lawsuit hurt Procter & Gamble?

By Simon Pitman contact

- Last updated on GMT

Will Old Spice lawsuit hurt Procter & Gamble?

Related tags: Old spice, Pleading, Procter & gamble

P&G has been facing up to the challenge of flat sales and a significant restructuring of the business, but more challenges come as it is slapped with a lawsuit on its Old Spice brand.

Almost two weeks ago Cosmetics Design reported on the lawsuit​, which is being filed in Cincinnati by Connick Law and seeks compensation from P&G's Old Spice deodorant brand of up to $25 million for allergic reactions that led to uncomfortable and unsightly rashes.

Now industry observers and analysts are left wondering if the lawsuit could means thousands of consumers will join in the litigation, which has now garnered a lot of media attention since it was first filed.

More missed sales estimates?

All the while, investor pressure is mounting on the company to improve its performance, particularly as it has now missed Wall Street sales forecasts for five quarters in a row, and like many US-based multinationals it is also facing up to the added pressures of a strong dollar against other global currencies.

Looking at P&G share  prices since news of the lawsuit was announced on March 24th​, values have slipped slightly, although it cannot be determined if the litigation is the sole reason for this.

When news of the Old Spice lawsuit broke on March 24th​, share prices stood at $82.89, and ended up falling trading at $82.00 in late afternoon trading on Friday April 1st​ , suggesting that news of the litigation has not had a marked impact on investors.

But since the beginning of the year, the overall trend is up for the company. Investors believe the company’s restructuring is going in the right direction, which has helped push share prices up from around $78.00 at the beginning of the year.

Although financial experts have pointed to the fact that the lawsuit may impact Old Spice sales in the current quarter, the consensus is that the brand will ultimately recover in the longer-term, while the fact also remains that the company's product portfolio remains diverse.

P&G has not made any official comment about the litigation to date.

'Defective' Old Spice deodorant

In the new lawsuit, for which notification was given by the law firm yesterday, it is stated that the action was filed on behalf of the plaintiff and all other parties for upwards of $25m in damages:

“…on behalf of consumers who purchased allegedly defective Old Spice deodorant, which regularly and routinely causes rashes, irritation, burning and other injury to unsuspecting consumers,”​ a Connick Law statement read.

Connick has also called on any consumers wishing to participate in the lawsuit as a named lead plaintiff, to get in touch with the plaintiff’s council, Thomas J. Connick.

Full details of the lawsuit​ include the fact that it has been filed under the name of ‘Rodney Colley and all others similarly situated’.

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