Procter & Gamble Co. share price up, to discontinue up to 100 brands

Procter & Gamble Co., the worlds largest consumer-products company, announced it is going to let go of at least half its brands, in a bid to improve profitability by focusing on its core, better-selling brands.

“We’re going to create a faster-growing, more profitable company that is far simpler to manage and operate,” Chief Executive A.G. Lafley said.

The move is seen as a major strategy shift for the company, which under Lafley, in his previous 9-year spell as CEO, and his now-replaced successor Bob McDonald agressively expanded and churned out brands on a regular basis.

“There is a lot of evidence in a number of our business categories that the shopper and the consumer really don’t want more assortment and more choice,” Lafley told analysts, adding that the consumer goods industry is offering people more products than they want. “Consumers want to keep their life simple and convenient,” he said.

The company did not specify which brands it will let go of, but pointed that it will keep its 70-80 brands, which generate 90% of its revenue, and will dispose of the other some 100 brands.

“Im not interested in size at all,” Mr. Lafley said on Friday. “Im interested in whether we are the preferred choice of shoppers.”

The Cincinnati-based company announced the write-down with the release of its earnings report. Revenue was up 1% in the 12 months through June to $83 billion, including acquisitions and currency valuation, and without those items sales were up 3%. Profit was up 3% to $11.6bn.

Procter & Gamble Co. was up 3.01% as Wall Street closed on Friday, to trade at $79.65 per share, for a market capitalization of $209.22bn. According to the Financial Times, 19 analysts offering 12 month price targets for The Procter & Gamble Company have a median target of $88.00, with a high estimate of $97.00 and a low estimate of $79.00. The median estimate represents a 10.48% increase from the last price of $79.65.