Anyone who's been following Colgate during the last year or so knows that it's been waging a price war in the lucrative tooth-whitening market, pitting its toothpastes and Simply White products against Procter & Gamble's popular Crest Whitestrips. Meanwhile, Gillette
Last December, Colgate admitted that it was neglecting promotion of its other products in favor of pushing its whitening line, an initiative that seems to have been ineffective so far. Although Colgate's heavily associated with toothpaste in the consumer consciousness, the company's behind a whole slew of well-known brand names such as Irish Spring, Fab, Ajax, Soft Soap, and, of course, Palmolive, among others.
Colgate's second-quarter earnings came in at $373.9 million, or $0.66 per share. Sales increased 4.5% to $2.57 billion. As previously vowed, the company said that it has increased marketing spending on its products.
Though the company touted a resurgence of strength in the North American market (the company's recent Achilles heel), sales declined by 2.5%, with unit volume "up slightly." Taking out Simply White comparisons, the company said that second-quarter unit volume growth was the strongest in the U.S. in three years, at 4.5%.
It's worrisome that Colgate continues to have such troubles at home, although admittedly, the Simply White comparisons are quite difficult ones. That's because last year, Simply White was doing quite well, leading to this year's painful repositioning after Procter swooped in and cut the price on Crest Whitestrips, effectively swiping Colgate's market share.
Today, shares dipped a smidge as investors registered some degree of disappointment but, apparently, little surprise. Though the company trumpeted gathering force here in the U.S., it's understandable that investors feel more proof is needed that more exciting levels of sales and profit growth can be achieved before Colgate makes them smile once again.
Talk about P&G vs. Colgate with members of the Fool community on the Procter & Gamble discussion board.
Alyce Lomax does not own shares of any of the companies mentioned. She never quite bought those old ads where Madge contended that one should sit around with hands in a bowl of Palmolive.