New bosses always paint it black.
Whether tacitly, or outspokenly, “it’s going to take time to sort out the mess I inherited”, has been inferred in the utterances of countless new chief executives, supply chain directors or supermarket managers, with the obvious exception of Sir Stuart ‘400p-a-share’ Rose.
Dropping expectations, and dumping a load of exceptionals on the P&L, a year down the line, you’re a hero.
So when new Unilever CEO Paul Polman announced a mere 0.1 percentage point improvement in operating profit margins, and refused to give a forecast for 2009, I might have smiled.
“The growing consensus is we may not see improvement [in the economy] for 18-24 months,” he told the City. “It’s better to be wrong by being overcautious.”
But the City was spooked and understandably so. Shares fell 7% on Thursday because this was supposed to be a safe haven stock. Pension fund jitters can only have been made worse by the pronouncements of AG Lafley at Procter & Gamble last week, as the US-based household goods giant reported falling earnings. This week, Kraft followed suit. What price Danone, Nestlé and Cadbury to do the same in the weeks ahead?
With Unilever’s performance deteriorating sharply in the fourth quarter, it’s clear that while we all have to eat and wash, grocery companies – although nothing like as fragile as banks, car manufacturers and construction companies – are no longer immune. With a 33% rise in budget own-label sales (see p6), it’s increasingly costly for brands to defend their positions and, as Asda CEO Andy Bond made clear when he guest edited The Grocer last week, the appetite for retailers and consumers to trial new products has diminished.
The good news for Unilever is that it has retooled the business in the past 18 months to face this onslaught. Those who are less prepared face a very tough time indeed.
Whether tacitly, or outspokenly, “it’s going to take time to sort out the mess I inherited”, has been inferred in the utterances of countless new chief executives, supply chain directors or supermarket managers, with the obvious exception of Sir Stuart ‘400p-a-share’ Rose.
Dropping expectations, and dumping a load of exceptionals on the P&L, a year down the line, you’re a hero.
So when new Unilever CEO Paul Polman announced a mere 0.1 percentage point improvement in operating profit margins, and refused to give a forecast for 2009, I might have smiled.
“The growing consensus is we may not see improvement [in the economy] for 18-24 months,” he told the City. “It’s better to be wrong by being overcautious.”
But the City was spooked and understandably so. Shares fell 7% on Thursday because this was supposed to be a safe haven stock. Pension fund jitters can only have been made worse by the pronouncements of AG Lafley at Procter & Gamble last week, as the US-based household goods giant reported falling earnings. This week, Kraft followed suit. What price Danone, Nestlé and Cadbury to do the same in the weeks ahead?
With Unilever’s performance deteriorating sharply in the fourth quarter, it’s clear that while we all have to eat and wash, grocery companies – although nothing like as fragile as banks, car manufacturers and construction companies – are no longer immune. With a 33% rise in budget own-label sales (see p6), it’s increasingly costly for brands to defend their positions and, as Asda CEO Andy Bond made clear when he guest edited The Grocer last week, the appetite for retailers and consumers to trial new products has diminished.
The good news for Unilever is that it has retooled the business in the past 18 months to face this onslaught. Those who are less prepared face a very tough time indeed.
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