Kimberly-Clark (NYSE:KMB) investors have a big week ahead of them. They'll get some big industry updates from their company, and from rival Procter & Gamble (NYSE:PG). The consumer staples giant's fiscal first-quarter report on Friday should also include a fresh take on management's cash return plans, along with its updated short-term expectations for the business following a record growth year in 2020.

Let's take a closer look.

A person pulls a tissue out of a tissue box.

Image source: Getty Images.

Measuring up

The owner of the Huggies franchise, which competes with P&G's Pampers in the massive global diaper industry, is likely to post another relatively weak growth quarter as compared to the industry leader. Sales gains landed at 5% last quarter, after all, while P&G grew by 8%. Kimberly-Clark also had to rely mostly on higher prices while its rival enjoyed a healthy balance between price growth and rising volumes.

Kimberly-Clark should be held back again by its enterprise division, which delivers paper products to businesses, many of which are still operating in a work-from-home environment. The broader 2021 year should include flat sales and a drop in profitability, management warned back in January, as pantry-stocking trends reverse themselves. But Kimberly-Clark is still targeting a better performance in 2020 and 2021, on average, than the company was posting before the pandemic struck.

Cost cuts

Management is under increasing pressure to get more aggressive in its restructuring program. Operating margin is trailing P&G and input costs are rising. And its relatively slow volume growth gives it less room to raise prices.

PG Operating Margin (TTM) Chart

PG Operating Margin (TTM) data by YCharts

As a result, look for executives to discuss how they plan to reduce expenses in areas like manufacturing, corporate overhead, and marketing. Those plans will be more important as the year progresses. Kimberly-Clark can't compete with industry heavyweights if it is burdened by a much higher cost infrastructure.

Cash returns

Kimberly-Clark returned just over $2 billion to shareholders last year and is targeting a similar level for 2021. Those returns include a 6.5% dividend hike that marked the Dividend Aristocrat's 49th consecutive annual raise. One more will qualify it for membership in that exclusive Dividend King club (with 50 or more consecutive increases), which P&G joined over a decade ago.

There's a slight chance that we'll get an upgrade to those cash return plans on Friday, but its more likely that management will decide to focus on shoring up the business through what's sure to be a volatile sales year. The stock's path from here will depend on how well Kimberly-Clark can manage the return to more normal spending habits in consumer staples like home cleaning supplies.

But the big question for Friday is whether executives still think sales will rise by between 1% and 2% this year compared to last year's 6% spike. P&G has a different fiscal year, but it is still targeting faster growth of about 5%. Innovation is Kimberly-Clark's surest path toward closing that performance gap, but it hasn't made much progress toward that goal over the last few fiscal years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.