$50 Million First-Quarter Increase to Counter Pampers Rollout

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CINCINNATI ( -- Kimberly-Clark Corp., Irving, Texas, hiked first-quarter marketing spending by up to $50 million to more than $270 million, the company said today.

The company's president and chief operating officer, Thomas Falk, told analysts in a conference call that Kimberly-Clark increased marketing spending on its Huggies diaper and Pull-Ups training pants brands in the U.S. and Europe to counter rival Procter & Gamble Co.'s launch of its Baby Stages of Development line.

Mr. Falk said the increased marketing spending, which accounted for the bulk of the $50 million boost, was divided fairly evenly between increased advertising and coupon and other promotion expenses to support Huggies and Pull-Ups. P&G's line includes premium-price Pampers diapers and its new Easy-Ups training pants.

WPP Group's Ogilvy & Mather Worldwide, New York, handles Kimberly-Clark's accounts.

Increased price

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promotion -- both with retailers and consumers -- also carved about 2 percentage points, or more than $66 million, off Kimberly-Clark's top line sales of $3.3 billion last quarter, which were up 0.2% despite volume gains of 4.5%. Foreign currency effects carved another 2 percentage points off the top line. Kimberly-Clark said thanks to falling raw material costs, net income was up 1.3% to $439.2 million, while earnings per share rose 6.2% to 86 cents as share buybacks further improved per share results.

Mr. Falk said he expects marketing spending to stay heavy through the year as Kimberly-Clark supports its own product launches in the U.S., including an improved version of Pull-Ups and a yet-to-be-announced infant-care product.

He dismissed the threat of the Pampers rollout, noting Kimberly-Clark has weathered similar training pants launches by P&G in the past that proved unsuccessful.

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