The Procter & Gamble Company
) brought back its previous chief executive officer (CEO), Alan
George Lafley, to immediately replace its existing CEO Robert
McDonald, as the consumer goods giant struggles to turn around
Lafley has re-joined P&G as President and CEO and will
also chair the board of directors, effective immediately. Joining
the company in 1977, he became the President and CEO of P&G
in 2000 and continued till 2009. McDonald is due to retire in
June this year after serving P&G for 33 years. He was
President and CEO from 2009 to 2013. P&G also stood by its
fiscal 2013 and fourth-quarter guidance.
It is widely rumored that McDonald was asked to step down as
the company's results and turnaround efforts were not showing any
material improvement. Fiscal 2012 (ending Jun 2012) was a tough
year for P&G and it performed below its expectations in the
year. McDonald's fiscal 2012 pay was shrunk by 6.1% due to the
sluggish profits and revenue performance - a clear sign that his
job might be at stake. However, the first two quarters of fiscal
2013 were much better, proving to be a breather for McDonald. The
relief however, was short lived as the company posted mixed
third-quarter results in late April. Though earnings exceeded
management's expectations on strong cost savings, organic revenue
growth was quite weak. Its fourth-quarter outlook was also quite
subdued with earnings expected to decline from the year-ago
results, further adding to McDonald's woes.
McDonald embarked on a turnaround plan to implement some
meaningful changes to re-accelerate its top and bottom-line
growth keeping in pace with the peer companies.
P&G laid out plans to improve results in developed markets
while maintaining momentum in the developing nations. The company
is focusing on the 40 of its largest and most profitable
businesses, most of which are in developed markets. These
businesses account for about 50% of sales and 70% of operating
profit. The company is also focusing on driving 20 of its biggest
innovations like Tide Pods, Always Radiance, Bounty Trap &
Lock and Bounty Unstoppables in more markets in fiscal 2013.
Moreover, the company is concentrating on its 10 most important
developing markets. In addition, the company has implemented
costs-savings and productivity-improvement initiatives which are
expected to generate $10 billion in cost reductions by the end of
P&G carries a Zacks Rank #3 (Hold). Other consumer staples
stocks that are worth considering include
Flower Foods, Inc.
), carrying a Zacks Rank #1 (Buy) and
Campbell Soup Company
H. J. Heinz Company
), both carrying a Zacks Rank #2 (Buy).
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