THE MORNING RANT: P&G Just Took Another $1 Billion+ Charge Against Its Odious Gillette Brand

Back before Target, Disney, and Bud Light committed brand suicide with vulgar sexual wokeness that resulted in punishing consumer boycotts, there was Gillette’s suicide-by-wokeness.

Procter & Gamble is still paying the price, as it just took another write down exceeding $1 billion against its odious Gillette brand.

As you’ll recall, in early 2019 Gillette released its notorious “toxic masculinity” commercial, which effectively accused its loyal customer base of being bullies and sexual predators. That ad sparked an angry backlash from men who are fed up with attacks on them, and who vowed to stop buying Gillette products. (I was – and remain - one of them.) Six months later P&G had to take an $8 billion impairment charge due to Gillette’s declining sales and the declining book value of the Gillette brand, which caused P&G to have an overall $5 billion loss that quarter.

With malevolent curiosity, I’ve been reading P&G’s quarterly Securities & Exchange Commission filings ever since, especially because P&G has been teasing about another impairment charge against Gillette for a while. It finally came to pass.

This is a link to the 10-Q for the quarter ending 12/31/2023 (which is the 2nd quarter in P&G’s fiscal year.)

During the three months ended December 31, 2023, we determined that the fair value of the Gillette indefinite-lived intangible asset was less than its carrying amount. As a result, we recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) to reduce the carrying amount to its estimated fair value during the quarter ended December 31, 2023.

P&G is also keeping the stage set for further impairment charges related to Gillette.

Adverse changes in the business or in the macroeconomic environment, including foreign currency devaluation, increasing global inflation, market contraction from an economic recession and the Russia-Ukraine War, could reduce the underlying cash flows used to estimate the fair value of the Gillette indefinite-lived intangible asset and trigger a further impairment charge.

Puzzlingly, the reasons P&G gave for this massive charge-off did not include lost customers. As I’ve been reading these 10-Qs each quarter, I’ve observed that P&G first blamed Gillette’s problems on Covid, before segueing into blaming the Russia-Ukraine war, but never acknowledging that a consumer boycott resulted in permanently lost sales.

A little over three years ago I wrote about Gillette’s coy explanation to the SEC about its Gillette problems, and quoted this from P&G’s 10-K report for the fiscal year ending 6/30/2020: “The COVID-19 pandemic that occurred during the second half of fiscal 2020 [This means January through June 2020 because P&G’s fiscal-year-end is June 30 - Buck] resulted in a reduction in shave incidents by consumers and a weakening of certain currencies relative to the U.S. dollar, which led to a reduction in net sales for Gillette-branded products.” Yeah, that and a massive consumer boycott.

Although I had been waiting for the most recent 10-Q to learn about this latest Gillette write down, the business press actually picked up the story last month, but somehow I missed it.

“P&G to record up to $2.5 billion in Gillette writedown, operations revamp” [CNBC – 12/05/2023]

Procter & Gamble said on Tuesday it would record up to $2.5 billion in charges over two fiscal years as it writes down the value of its Gillette business and restructures certain markets.

The company’s shares fell about 2% in early trade. The consumer goods giant said it would take a $1.3 billion non-cash impairment charge before tax in the current quarter ending Dec. 31 on its Gillette business.

One thing that I can’t find anywhere is information on Gillette’s market share, more specifically, how much of the market share for men’s razors it has lost since 2019. I’ve heard that it is possible to hire companies to scrub the internet of negative information, and I wonder if that has been done on behalf of Gillette and its lost market share. There is abundant information about its 21st century market share, up until the mid-20-teens at which point the search engines can’t find me any data.

I’ve also contacted P&G’s media relations (mediateam.im@pg.com) and received no response to my request for Gillette market share data in 2018 and subsequent years. I even bought a couple shares of Procter & Gamble stock, and as a shareholder in the company I then requested (pginvestor.im@pg.com) market share information, but again, I received no response.

It doesn’t really matter what the market share figures are, I suppose. Procter & Gamble insulted and permanently alienated its core Gillette customers, and is taking billion-dollar hit after billion-dollar hit, rather than apologizing for its slander and asking for a second chance.

In conclusion, and since we’re all fans of philosophical razors around here…

Gillette’s Razor: “Go woke. Go broke.”

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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