Procter&Gamble stated in its financial report that net sales of skincare products decreased by over 20% in the first quarter of fiscal year 2025, attributed to the negative impact of the SK-II brand decline.
From the perspective of revenue and net profit growth, the pace of daily chemical giant Procter&Gamble has slowed down. On October 21st, a reporter from Beike Finance of the New Beijing News learned that Procter&Gamble released its first quarter financial report for the fiscal year 2025.
In the three months ending September 30, 2024, Procter&Gamble achieved net sales of $21.737 billion, a year-on-year decrease of 1%. Excluding the impact of acquisitions, asset divestitures, and foreign exchange, its organic sales increased by 2% and organic sales increased by 1%; The net profit attributable to the parent company was 3.959 billion US dollars, a year-on-year decrease of 12%, mainly due to the large-scale liquidation of some market businesses, including Argentina, resulting in an increase in related restructuring expenses.
SK-II lags behind, net sales of skincare products decline by over 20%
From a business perspective, Procter&Gamble has five major departments: beauty and skincare, grooming, health care, textile and home care, and infant and women's care. During the reporting period, the net sales of the beauty department, which owns brands such as Braun and Gillette, were 1.723 billion US dollars, unchanged from the same period last year; Net profit increased by 1% year-on-year to $426 million, mainly due to an increase in net profit margin. The net sales of the healthcare department where Crest is located increased by 2% year-on-year to $3.147 billion, and the net profit increased by 8% year-on-year to $741 million.
Image/Screenshot of Procter&Gamble's Financial Report
Textile and home care have become the main revenue contributing departments of Procter&Gamble, achieving net sales of $7.71 billion, a year-on-year increase of 1%; Net profit increased by 3% year-on-year to 1.621 billion US dollars. The financial report shows that the sales volume of the textile business did not change during the reporting period, mainly due to the growth of the North American market (due to innovation) and the European market (due to increased marketing support), offset by the decline in Latin America and the Asia Pacific region. The net sales of home care business showed low single digit growth, driven by high single digit growth in Europe and single digit growth in the North American market, organic sales achieved medium single digit growth.
In the new fiscal quarter, Procter&Gamble's beauty and skincare, infant and women's care departments experienced negative growth. Among them, the net sales of the infant and women's care department, which owns brands such as Pampers, decreased by 2% year-on-year to 5.102 billion US dollars, and the net profit was 1.066 billion US dollars, a decrease of 1% year-on-year.
Starting from July 1st of this year, Procter&Gamble will separate the skincare and personal care departments of its beauty and skincare division into separate operating divisions. At present, the beauty and skincare department includes three sections: hair care, skincare, and personal care. During the reporting period, the net sales revenue of the beauty and skincare department was 3.892 billion US dollars, a year-on-year decrease of 5 percentage points; Net profit decreased by 13% year-on-year to $840 million. If the impact of acquisitions, asset divestitures, and foreign exchange is excluded, organic sales will decrease by 2% while organic sales will remain unchanged.
Procter&Gamble stated in its financial report that net sales of skincare products decreased by over 20% in the first quarter of fiscal year 2025, attributed to the negative impact of the SK-II brand decline. In addition, sales of skincare products have also declined, led by the Greater China region (mainly due to the decline of SK-II brands and market contraction) and the North American market (due to distribution losses)
The Chinese market continues to move forward, and Procter&Gamble expects sales to grow by 2% -4% in the fiscal year 2025
According to incomplete analysis by Beike Finance reporters from the New Beijing News, since officially entering the mainland Chinese market in 1998, SK-II quickly gained market share with its star product "Shenxian Water"; In 2005, the brand had 78 counters nationwide; In 2012, SK-II became a brand under Procter&Gamble with an annual sales volume of $1 billion; In 2015, Procter&Gamble adjusted its business and "slimmed down" its beauty and skincare brands, focusing on developing the product portfolio strategy of SK-II and Olay, with resources also tilted towards these two top brands; In the 2018 fiscal year annual report, Procter&Gamble mentioned that SK-II has achieved a sales growth rate of over 20% for fifteen consecutive quarters.
However, the good times did not last long, and due to factors such as market share being squeezed, the "halo" of SK-II gradually faded. As a high-end skincare brand under Procter&Gamble, SK-II has been repeatedly named in financial reports in recent years, pointing to its negative impact on performance.
According to data from Outeo International, in 2022, SK-II's retail sales on online platforms such as Tmall and JD.com decreased by 1.3% year-on-year, while its popular brand Olay increased by 10%. The third quarter performance report for fiscal year 2023 shows that the beauty and skincare division, where SK-II is located, saw a 3% increase in net sales to $3.494 billion. Procter&Gamble stated that "the slowdown in growth is due to the weak performance of the SK-II market." In the first quarter of fiscal year 2024, Procter&Gamble also pointed out in its financial report that "the negative impact of SK-II's declining sales offset some of the sales growth caused by product growth and pricing increases
Nevertheless, Procter&Gamble has not given up on this' ace '. In May of this year, SK-II Shanghai New World City Mall upgraded its counters, providing skin testing and customized skincare solutions to allow consumers to return from "online sensation" to "physical sensation"; In September, the brand launched the luxurious skincare LXP craftsmanship series and opened the world's first duty-free flagship store in Hainan in the same month, taking an important step towards increasing tourism retail.
For the upcoming development, Procter&Gamble maintains its overall sales forecast for fiscal year 2025, with an expected total sales growth of 2% to 4% and organic revenue growth of 3% to 5%.
Li Zheng, a reporter from Beike Finance at the New Beijing News