Mach 3 revs up Gillette's 1998 sales, earnings

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Sales of Mach 3 razors and blades helped Gillette Co. increase net sales 6.7% to $3.2 billion in the fourth quarter, compared to the same period last year, and net income rose 4.1% to $435 million.

Mach 3 sales have risen beyond the company's expectations since its introduction last August, said Chairman-CEO Alfred Zeien. In a conference call to announce yearend results, Mr. Zeien said Gillette's total consumer sales of razors and blades in the fourth quarter were approximately 30% ahead of the same period in 1997.

Mr. Zeien noted the Mach 3 had captured 14.6% of the U.S. blade market by the end of December and helped increase Gillette's share of the razor market to 70.7%, its highest since 1962. Retention rates have met the targets Gillette set last year, said Mr. Zeien. He quoted a Jan. 1 survey of 1,000 consumers that found 75% of Mach 3 buyers during the previous three months were still using the product. The company's total sales for 1996 were $10.06 billion, unchanged from the year before, and income dropped 24.5% to $1.08 billion.

Gillette officials said the drop in sales was due to the effects of exchange rates on international sales and the sale of Jafra Cosmetics International, while the lower income was due to a one-time restructuring charge during the third quarter. Mr. Zeien said the company expects earnings growth to rise back to 15% to 20% in the second half of 1999.

Copyright January 1999, Crain Communications Inc.

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