Priceline looks for growth as increased competition and discounting impact beauty sales; Johnson & Johnson to invest $US30 billion in R&D and key sectors; P&G acquires Merck Health Brands for $US4.2 billion; and Commonwealth Bank reports stronger spending in retail stores.
Priceline looks for growth as increased competition and discounting impact beauty sales
Priceline's market share remains steady, but the half-year profit of parent company Australian Pharmaceutical Industries (API) slumped by 14.4 per cent to $24.9 million in the six months to February 28th. Priceline Pharmacy and Priceline stores experienced a 1.7 per cent decline in comparable store sales over the period as 16 new locations came on board, taking the national network to 466 stores.
Dispensary and OTC health enjoyed gains, but beauty sales experienced pressure from specialist retailers such as Sephora and Mecca and widespread discounting from the other major pharmacy chains and the Big Two supermarkets, Coles and Woolworths.
The amount of discounting and competition that has emerged inside the health and beauty sector has ramped up significantly, said API Chairman and CEO Richard Vincent. Priceline has also slashed prices on beauty products in recent promotions to protect its position as the country's leading health and beauty retailer. "There are discounts being offered on a daily basis across various retailers in Australia, everyone is fighting for a share of the wallet and its deeper discounts for a longer period of time. I think this will continue in the current economic situation".
In a bid to appeal to Millennial women, in particular, Priceline has a strong fightback strategy in place, including the introduction of exclusive brands, many with a natural emphasis, to appeal to new customers and the Priceline Sister Club, Australia's biggest health and beauty loyalty program with over 6.4 million members. Priceline will add another 16 new stores by year's end and will seek out more retail acquisitions in the health and beauty space, added Mr Vincent.
Johnson & Johnson to invest $US30 billion in R&D and key sectors
Personal care and pharma giant Johnson & Johnson (J&J) enjoyed double digit growth of 12.6 per cent over the first quarter of the year to $US20.01 billion. Domestic sales in the US rose 6.1 per cent and international sales increased 19.9 per cent. A 5 percent spike in revenues from "magic" personal and beauty brands such as Neutrogena, Aveeno and Japanese skincare brand Dr Ci:Labo were major contributors to the surging bottom line.
Global consumer sales of leading brands across the baby care, skin and haircare, oral care and pain relief categories reached $US3.4 billion in Q1. But the multinational has its eye on the prize for continued growth over the next decade. Alex Gorsky, Chairman and CEO of J&J, announced that the company will invest more than $US30 billion in R&D and capital investments over the next four years – an increase of 15 per cent.
P&G acquires Merck Health Brands for $US4.2 billion
Procter & Gamble's (P&G) consumer health division boasts household names such as Oral-B, Crest, Vicks, Metamucil and Pepto-Bismol which rack up annual global sales of $US7.5 billion. With the world's population rapidly ageing and more consumers becoming exercise and health-conscious, P&G has acquired the consumer health division of leading German player Merck, one of the top 20 most successful multinationals in the OTC industry, for $US4.2 billion.
The buyout is one of the biggest in recent years for P&G and will expand its regional reach, brand portfolio and category penetration across most of the world's top 15 OTC markets. Merck's consumer health business is worth more than $US1 billion a year and covers a wide range of brands providing remedies for muscle, joint and back pain and colds and headaches and vitamins and health supplements. Merck products are available in over 100 countries and the company has had a subsidiary in Australia for the past 51 years.
Commonwealth Bank reports stronger spending in retail stores
The Commonwealth Bank's Business Sales Indicator (BSI) closely tracks the value of its credit and debit transactions. According to data from Australia's second largest bank, spending in retail stores rose 0.7 per cent in March – the 14th consecutive month of growth. Tapped as a highlight and key to boosting the overall economy, month-on-month retail store spending, combined with clothing store sales, is up 11.3 per cent on a yearly basis.
Commsec chief economist Craig James pointed out that travel expenditure continues to go from strength-to-strength with a pronounced increase in hotel and motel spending and Australians remain as keen as ever on home building and buying. Annual trend growth in the BSI increased from 6.7 per cent in February to 7.2 per cent – the fastest growth since 2015.
Snippets from the wires
- In the US, Target is expanding the conversation around diversity in beauty. The mass market retailer debuted eight makeup brands for medium and dark skin tones on www.target.com last week and they will roll out in selected stores in the US from May 20th. Price tags are very reasonable across all of the brands – Coloured Raine, EveryHue Beauty, Haleys, Hue Noir, Makeup Geek, Reina Rebelde, The Lip Bar and Violet Voss.
- Australians have a high regard for the nation's leading pharmacies and only the smallest percentages separated the big five in Roy Morgan's monthly Pharmacy/Chemist Customer Satisfaction rankings for February. My Chemist topped the list with a customer satisfaction rating of 90.4 percent, followed by Discount Drug Stores (89.8%), Priceline Pharmacy (89.3%), TerryWhite Chemmart (89%) and Chemist Warehouse (88.8%).
- Many online retailers have opened bricks-and-mortar stores in recent years. JD.com, China's second largest e-commerce company after Alibaba, is super-charging the trend. In 2017, CEO Liu Qiangdong announced that the online giant would open one million franchised stores over the next five years. Last week he revealed that JD.com is stepping up the pace and will be opening 1000 stores EVERY day by year's end, half of which will be in rural China.
- With less than a month to go before the nuptials of Prince Harry and Meghan Markle, Floris London has created a scent for the big day. The heritage British brand is the only fragrance company with a Royal warrant and although it is keeping mum about the name, the juice is based on the company's established hit – Bergamotto di Positano. Floris also made a commemorative wedding fragrance titled Wedding Bouquet for the Duke and Duchess of Cambridge in 2011.
