GILLETTE AD SPENDING UP, PROFITS AND STOCK DOWN

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(April 18, 2001) -- Gillette Corp., Boston, increased ad spending in the first quarter by 25%, to around $130 million, from a year ago, even as sales fell 7% to $1.76 billion and earnings fell 30% to $182 million, Charles Cramb, senior vice president-finance and chief financial officer, told analysts in a conference call today.

The spending increase backing the launch of the Venus women's razor and other initiatives came even before the $100 million marketing push scheduled to begin in June behind the relaunch of Duracell's base battery brand, to be redubbed "Copper Top." Omnicom Group's BBDO Worldwide, New York, handles both Gillette and Duracell brands.

Neither analysts nor investors were impressed: Gillette shares fell 7.2% to $26.90 by mid-afternoon on the earnings news, even as the broader market soared on word of an unexpected 0.5% cut in the federal funds rate by the Federal Reserve.

Gillette said sales were affected by declining market shares of Duracell, whose sales fell despite category growth. Mr. Cramb also said excess inventories were bigger than previously reported, leading to a further slowing of sales across all brands as the company moved to reduce them. -- Jack Neff

Copyright April 2001, Crain Communications Inc.

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