Unilever is expected to use its international scale to turn US razor subscription service Dollar Shave Club into a global male grooming power player, after acquiring the business in a deal rumoured to be worth $1bn.
DSC, which is set to hit a turnover of $200m (£151m) in 2016, currently has 3.2 million subscribers and operates in the US, Canada and Australia. In addition to offering razors and razor blades subscriptions, it also sells male grooming products under brands including Dr Carver’s and One Wipe Charlies.
In a presentation, CEO Paul Polman described DSC as an “innovative and disruptive brand” that would take Unilever further into the male grooming category, which was growing faster than the overall personal market. The company now planned to “leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential”.
Analysts at Société Générale said it was clear the deal was about taking DSC global, pointing to an “enormous opportunity” to scale up the DSC platform. “We estimate current profitability is low (single digits), but with Unilever’s economies of scale, the profit upside looks interesting.”
The value of the DSC deal was not disclosed; the transaction is set to close in the third quarter.
Unilever also announced first-half and second-quarter results this week, reporting a 2.6% year-on-year fall in H1 sales to €26.3bn, though underlying sales were up 4.7%. Operating profit slipped 0.1% to €3.8bn, but net profit rose 2% to $2.7bn.
Europe had been particularly challenging, Unilever said, with underlying sales flat as a result of price deflation. The declining margarine market in the UK and France hit its food business hard, though the company was addressing this with NPD such as Flora dairy-free.
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