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Sales were down 3 percent in this year’s second quarter at Kimberly-Clark, maker of such consumer staples as Huggies and Kleenex.
Home-care products brought in 17 percent less revenue, year over year. Sales of personal care products rose 6 percent and commercial products 2 percent.
Margins slid 40 percent, more than analysts were expecting.
The disappointing numbers resulted from a reopening economy in which consumers no longer feel the need to hoard toilet paper and feminine hygiene products, the Wall Street Journal said.
While sales and margins slumped, the company’s costs rose as commodity prices climbed steadily in recent months. (See “Inflation Ripples Through U.S. Economy,” Trends Journal, 11 May, 2021.)
Kimberly-Clark expects to fully recover its increased costs by raising consumer prices of its products through this year and next, CEO Michael Hsu said in a 23 July call with analysts that was reported by the WSJ.
The company is not alone.
Analysts expect Clorox Co. and Colgate Palmolive Co., both of which will report second-quarter results in the near future, to announce price hikes, the WSJ said.
Procter & Gamble already has announced September price increases for adult diapers, baby products, and feminine hygiene items.
Unilever, the conglomerate that owns consumer brands from Lipton tea to Lifebuoy soap, announced last week that rising costs would cut its profits this year, news that sent the company’s share price tumbling 5 percent.
The company raised consumer prices 1.6 percent in the first quarter, “but inflation has been even higher than we anticipated,” CFO Graeme Pitkethly, said in comments quoted by the WSJ.
“We are going to have to take a little higher levels of price increase,” he warned.
TREND FORECAST: As we have detailed in this and previous Trends Journals, minus a dramatic global lockdown to fight COVID War 2.0, inflation will gallop as long as the Fed holds interest rates near zero.
And while we had forecast that the Fed would raise rates, should Washington, states and cities escalate the fight against the Delta variant, the economy will slow down, and so too will rising prices.
Thus, the Fed will pause its planned interest rate hikes. However, should they keep rates at their low levels and governments continue to pump in cheap money to keep the economy from crashing, inflation will rise and the value of the dollar will decline.
However, since it is three years before the next presidential election, Washington and the Bankster Gang may raise interest rates to stop inflation’s rise. And, they will let the economy decline for the next year-and-a-half, only to reinvigorate it by again lowering rates and pumping up the economy before the 2024 elections. Remember, “It’s the economy, stupid!”