I can't confirm that Gillette's (NYSE:G) Duracell division is planning to adopt as its mascot a fun-loving yellow lab, but I'd bet such a dog would've yelped with glee following yesterday's announcement of Gillette's Q3 financial results. That's because labs love the water -- and wet weather was a big part of the company's impressive quarter.
Gillette shares advanced more than 5% yesterday following the announcement of quarterly sales that advanced 12% to $2.69 billion. Operating and net income did even better, rising 14% apiece, the latter figure to $475 million. Though all divisions performed well during the quarter, Duracell and that wet weather stood out: Hurricanes and the like actually help the division because people tend to stock up for emergencies.
There are, however, still reasons for concern. Free cash flow -- a number Steven Mallas was right to raise questions about after it fell, year-over-year, in Q2 -- was off, dropping to $573 million from $617 million. (The nine-month figure slipped as well.) It's not hard to see why this should concern Gillette investors: That cash flow is what enables the company to fund the acquisitions and R&D needed to maintain the kind of towline numbers it reported yesterday.
In the kind of high-volume, low-margin consumer businesses in which Gillette traffics, competition -- particularly from Energizer (NYSE:ENE), hard-charging in the battery business and with its Schick shaving brand (not to mention certain overseas operations of Wilkinson Sword, purchased from Pfizer (NYSE:PFE) -- is fierce and every dollar counts.
Yesterday's move, however, indicates that Gillette shareholders, accustomed to years of market-beating returns, are standing behind the company.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
