Gillette (NYSE:G) provided its rejoinder for Energizer (NYSE:ENR) today, with a first-quarter earnings report that might explain why the latter company feels the need to flash more cash in the name of competing with its rival.
Gillette's earnings rose 43% to $376 million, or $0.37 per share. Sales rose 13% to $2.24 billion, though that figure included 7 percentage points from the weak dollar, something we've been hearing a lot about lately.
Though Gillette cited a continued difficult market for its Duracell batteries, it said that its worldwide market share in razors has held at 72.8%. Meanwhile, its Mach3 and Venus razor products grew 10% in a global market where razor volume has risen 5%. These products compete with Energizer's Quattro razors, as well as Energizer's answer to the female-oriented Venus product, Intuition. Net sales of Gillette's blades and razors increased 16% to $1.04 billion, including an 8% boost from foreign exchange.
If you were reading yesterday, you recall that despite Energizer's robust quarter, its forward view lacked positive sentiment. Judging by Gillette's market share, it's no surprise Energizer's fixing to increase its marketing spending. Energizer's razors and blades segment increased 68%, which represented sales of $214.9 million.
Investors liked what they heard about Gillette, which also has Oral-B dental care in its stable of products. Today's news included the disclosure that Gillette has a succession plan in place if it loses its CEO -- likely a comfort, considering recent rumors that Gillette's chief executive was being wooed by Coca-Cola (NYSE:KO).
The razor wars remain an ongoing concern as these two companies battle to be the name in close shaves. It hasn't been lost on us that the rivalry between these two is a heated one. Gillette hit a new 52-week high today; investors dug the earnings growth, which also benefited from cost cuts, despite its assertion that growth will moderate in the second half of the year. Meanwhile, it's clear we haven't heard the last of Energizer yet.
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Alyce Lomax does not own shares of any of the companies mentioned.
