Unilever reveals "action plan" amid underperforming Q3 results & sells Dollar Shave Club
British multinational company Unilever today announced its turnover decreased by -3.8% to €15.2bn amid declining volume sales.
Although sales in its Beauty and Personal Care categories were still going strong, the company’s other categories had lost footing.
Unilever said that underlying sales had grown by 5.2% for Q3, yet its product prices had grown by 5.8% and volume sales had declined by -0.6%.
The company shared that it had set out an action plan focusing on faster growth, greater productivity and simplicity, and a stronger performance culture. It said it hoped that targeted actions would “address the gap between our past performance and potential, delivering improved value creation.”
Going forward, Unilever shared that it had planned to focus first on its 30 Power Brands, which represent over 70% of its turnover, focus on “multi-year innovation” and “selectively optimise the portfolio.”
CEO Hein Schumacher stated: “Unilever is a company with strong fundamentals: a portfolio of great brands used by 3.4bn people each day, number one or two category positions across 80% of its turnover, an unrivalled global footprint, and a team of talented people.
“Despite these strengths, our performance in recent years has not matched our potential. The quality of our growth, productivity and returns have all under-delivered.
“Today we are setting out our action plan to close this gap. We will drive faster growth by stepping up innovation and investment behind our Power Brands; we will drive simplicity and productivity, leveraging the full strength of our operating model; and we will sharpen our performance culture through strong leadership and stretching goals.”
It also announced numerous executive leadership changes, including a new Chief Financial Officer, Fernando Fernandez from 1 January 2024.
Fernando is currently President of Unilever’s Beauty & Wellbeing Business Group and will replace Graeme Pitkethly, who announced his decision to retire from the company earlier this year.
Positive volume sales in Beauty & Wellbeing and Personal Care
Volume sales were positive for the Beauty & Wellbeing portfolio, which saw 7.4% underlying sales growth with a balance of price and volume growth.
Both the Prestige Beauty and Health & Wellbeing sectors continuing to grow strongly.
Its Beauty & Wellbeing portfolio (which accounted for 20% of turnover for Q3) experienced underlying sales growth of 7.4%, with 3.6% from price and 3.6% from volume.
The Hair Care sector grew by mid-single digits, mainly through price hikes, but it saw good performances in the South Asia and Latin America regions. The Sunsilk brand grew in double digits thanks to a relaunch and the company had also launched premium brand Nexxus into Japan in this quarter.
Core Skin Care grew by mid-single digits, with strong growth from Vaseline, which is currently experiencing a revival thanks to the ‘slugging’ trend.
While in Prestige, growth was driven by Dermalogica, Tatcha and Hourglass.
Personal Care (which accounted for 24% of Q3 turnover) grew by 8%, with 4% from price and 3.9% from volume – driven by double-digit growth from Deodorants, particularly in the Latin American and European regions.
Oral Care grew high single-digit with Pepsodent and Close Up growing double-digit.
Skin Cleansing grew mid-single digit with volumes returning to positive growth. Lux grew strongly and in South-East Asia and Dove delivered double-digit growth driven by a strong performance for deodorants.
Sale of Dollar Shave Club
Today the company also announced that it was selling subscription shaving and male grooming brand the Dollar Shave Club to Nexus Capital Management LP, a US-based private equity firm, but will retain a minority shareholding of 35%.
Fabian Garcia, President of Unilever Personal Care, said: “Dollar Shave Club has a loyal membership and following, and I am confident the brand will thrive under its new ownership and continue to serve consumers across North America and beyond.”
Michael Cohen, Partner at Nexus Capital Management, said: “We are thrilled to acquire Dollar Shave Club, based on its strong brand loyalty, pioneering DTC model, and omni-channel presence. We see growth potential and will invest in cutting-edge marketing, product quality and new innovations. Dollar Shave Club will also serve as a platform for additional brands with a similar DNA. We are excited to work with Dollar Shave Club employees to drive accelerated growth and welcome Unilever's continued partnership.”
Dollar Shave Club Interim Co-CEOs Mary Jensen and Dale Brockmeyer said: "We are grateful to Unilever for their support and are looking forward to a strong partnership with Nexus Capital Management."
The deal is expected to close this year, subject to customary conditions.
