Procter & Gamble Co. is showing surprising U.S. growth lately, posting the best results in its home country since the financial crisis in 2008. The question puzzling analysts is how the company is managing that feat in a sluggish market where it's underperformed for years.
When P&G released its 10-K report in August to the Securities and Exchange Commission for its fiscal year ended June 30, it showed U.S. sales up 2.7% to $30.3 billion, essentially matching 3% organic sales growth globally (without adjustment for currency, P&G global sales grew only 0.6% to $84.2 billion).
That's a nice lift for P&G, given its U.S. sales barely budged to $29.5 billion in 2012 from $29.6 billion in 2009. (The 2009 figure represents a 10% falloff from the prior year, reflecting the recession and divestitures.)
So the recent turn comes as a pleasant surprise to analysts -- but also a mystery. P&G's reported U.S. sales percentage gain for the fiscal year ended June 30 clocked in three times as fast as the 0.9% increase in P&G's retail sales registered by Nielsen data for the 52 weeks ended July 6, according to Deutsche Bank. IRI data from Consumer Edge Research show a similar gap.
Two analysts said P&G told them in briefings last month that U.S. shipments rose 7% in dollar terms in the fiscal quarter ended June 30. That far outperformed other estimates. According to Nielsen data from Deutsche Bank, P&G retail sales rose around 2% last quarter. Consumer Edge Research, citing IRI data, put the figure at 2.4%.
One executive familiar with the matter linked P&G's shipment-to-retail-sales gap to three factors: heavy shipments ahead of big July 4 promotions; inventory increases by Walmart to prevent out-of-stock problems; and year-ago sales depressed by deductions for heavy couponing.
In an email, P&G spokesman Paul Fox attributed the U.S. results to "a significant focus we have placed behind North America -- our largest market" -- and all retail channels.
But he declined to elaborate further on the gap between shipments and measured retail sales.
Bernstein analyst Ali Dibadj believes part of the gap may come from fast-growing channels not tracked by syndicated data, including e-commerce and home-improvement chains -- which means Amazon.com, Home Depot and Lowe's are among those not counted. P&G also has a large away-from-home business of more than $500 million, selling everything from restaurant cleaning supplies to Tide Pods in vending machines, and it's grown by strong double digits annually in recent years, according to a person familiar with the matter.
But whatever the cause, it's a feather in the cap of Melanie Healey, group president-North America, who is among the front-runners to succeed P&G Chairman-CEO A.G. Lafley. The results snap a bad streak for the business headed by Ms. Healey, who has grappled with depressed U.S. sales since she took over North America early in P&G's fiscal 2009.
Clearly P&G's U.S. sales surge could be a boost for Ms. Healey in the CEO succession race, said Mr. Dibadj. "The question remains if it's sustainable," he said.