Colgate-Palmolive (NYSE: CL ) may have reported higher profits Tuesday, with some bright spots overseas, but the consumer products concern is seeing the effects of major competitive forces right here at home, most notably from Procter & Gamble (NYSE: PG ) . Considering that the first part of Colgate's hyphenated name is one of the household words for toothpaste, it seems a shame that its rival is cleaning up on the tooth whitening market.
Everybody's doing it! Do-it-yourself tooth whitening has become a popular new consumer pastime, and while Colgate's been banking on getting its Simply White toothpaste into your medicine cabinet, Procter & Gamble's the one grinning so far with the success of its Crest Whitestrips. The P&G product has snared 70% of the tooth whitening systems market, according to that company's conference call last week. And that's not yet including its newest launch, Crest Whitestrips Premium.
Colgate's tooth whitening biz has stumbled since this time last year, when Fool LouAnn Lofton observed the success of then-newly launched Simply White as it took on Crest Whitestrips. At that time, it quickly grabbed 40% of the market. Several months later, P&G's move to rethink pricing on its system seems to have had the desired effect, with Whitestrips now commanding the lion's share.
The bright spot in Colgate-Palmolive's fourth-quarter profits wasn't North American sales either, which fell 7.5%. However, overseas aspects were more heartening. For example, the company has had better sales in Latin America than expected -- a 7% sales gain -- which helped to make up for the lower sales on this continent. It also had a strong showing in Europe, where it reported 15% sales growth.
Fourth-quarter earnings at Colgate-Palmolive lifted 9% to $372.1 million, or $0.65 per share, as compared to $340.9 million, or $0.59 a share, in the same quarter a year ago. Among the aspects that also buffed up profit were favorable currency effects and the sale of a European laundry brand.
In December, Colgate's admitted that its emphasis on promoting the Simply White product to take on the competition took the focus away from the rest of its U.S. business. A conference call at that time also highlighted some confusing aspects of Simply White, such as the fact that it is shelved with toothpastes, not whitening systems. It would have been a lot more comforting to investors right now had there been more signs that Simply White was simply more popular.
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Alyce Lomax does not own shares in any of the companies mentioned; she welcomes your feedback via e-mail.
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