Procter & Gamble Co. is rolling back part of this summer’s U.S. price increase on diapers due to lower prices from private label competitors, analysts said Monday.
P&G and Kimberly-Clark Corp. each raised U.S. prices on diapers by about 5 percent this summer, but P&G is now cutting that increase back down to just 2 percent, analysts said.
The company told retailers Friday that it would take a price reduction of just over 3 percent on U.S. diapers “in order to stem market share losses to private label,” CIBC analyst Joseph Altobello said in a note to clients.
Cincinnati-based P&G and Dallas-based Kimberly-Clark were not immediately available to comment Monday.
P&G, the maker of Pampers and Luvs, had raised list prices on its diapers and training pants by about 5 percent, effective July 15, to offset higher costs for materials such as resins and paper. Kimberly-Clark matched P&G’s move with U.S. price increases on its Huggies diapers, Pull-Ups training pants, GoodNites youth pants and Little Swimmers swim pants.
Morgan Stanley analyst Bill Pecoriello said that P&G would partly roll back the increase in diaper prices on Dec. 5 in response to “aggressive” private label pricing, particularly from Wal-Mart Stores Inc..
Pecoriello called the change “a marginal negative” for Procter and bad news for Kimberly-Clark, due to the companies’ relative exposure to the market. He estimates that North American diaper sales account for 2 percent to 4 percent of P&G’s total sales, but 11 percent to 12 percent of sales at Kimberly-Clark.
