Dial's decision to go it alone against much larger marketers would be spurred by an inability to find a suitable buyer, but also by surprisingly strong business results.
Last August, Dial's board voted to actively pursue a sale after concluding the $1.2 billion personal and consumer-products company would be better off as part of a larger enterprise. But earlier this year, Chairman-CEO Herbert M. Baum said in an investor conference that no talks were under way. "There is no buyer for Dial," Deutsche Bank Securities analyst Andrew Shore said bluntly during a speech last April at an Information Resources Inc. conference.
Last month, Mr. Baum told analysts he would consider using the company's $127 million in cash on hand, up from a mere $8 million a year ago, to acquire small, complementary brands. That would be an unusual move for a company seeking a sale, said William Steele, analyst with Banc of America Securities.
A Dial spokesman said last year's decision has not been reversed but may be reconsidered when the board meets later this month.
"I would be surprised if they reiterated their intention to be part of a larger organization," Mr. Steele said. "They're prepared to go it alone. It's a very strong company ... stronger than anybody would have thought one or two years ago."
With its comparatively low sales total and only its flagship personal-care brand receiving media support, Dial is one of the industry's smaller players. Yet in part because of a strong relationship with retailing behemoth Wal-Mart Stores, the feisty marketer is taking share in U.S. household-products categories from competitors up to 40 times its size, including Unilever, Colgate-Palmolive Co. and S.C. Johnson & Son. A full 24% of last year's revenue came from Wal-Mart.
Dial's sales were up 5.6% in the second quarter to $333.3 million and would have been up 8% excluding the devaluation of the Argentine peso. Net income before special gains was up 112% to $31.2 million.
Mr. Baum took over Dial in August 2000. He succeeded Chairman-CEO Mal Jozoff, who resigned after three quarters of missed earnings forecasts, costly acquisitions such as Sarah Michaels and Freeman Cosmetics personal-care products, and failed launches of Purex Advanced and Custom Cleaner co-marketed with Germany's Henkel.
Mr. Baum has sold or written off the specialty personal-care brands, shuttered the Henkel joint venture and sacked Omnicom Group's DDB Worldwide, New York. Dial opted for Omnicom's GSD&M, Austin, in a 2001 review for the flagship brand. Independent Cramer-Krasselt, Chicago, handles marketing communications for Purex and Zout stain remover.
Personal care remains a problem area. Dial soap sales fell 1.6% during the second quarter, hurt by category-wide promotion in defense against Procter & Gamble Co.'s launch of Old Spice bar soap. Mr. Baum said he is pleased with GSD&M's efforts behind Dial and plans heavier ad spending in the second half to support launches of Dial Vitamins body wash and other line extensions.
Value-priced Purex has been a robust performer, with sales up 28% in the second quarter. Mr. Baum said Purex now outsells P&G's liquid Tide on a unit basis at Wal-Mart. The brand has also been helped by Unilever's decision to manage for profit rather than share in the detergent category (AA, May 27).