CPG Companies’ Inventory Levels Rose in Calendar 3Q15
Mixed Bag: What to Expect from CPG Companies in Calendar 4Q15
Distribution channels
CPG (consumer packaged goods) companies sell or market their products through mass retail (XRT) outlets—like Walmart (WMT) and Target (TGT)—e-commerce channels, wholesale distributors, mass merchandisers, warehouse clubs, the military, and other types of retail stores in the US. Outside the US, these companies sell products to retail trade through subsidiaries, licensees, distributors, and joint venture arrangements with local partners.
Inventory levels for calendar 3Q15
The inventory levels for CPG companies in calendar 3Q15 rose compared to the inventory levels in calendar 3Q14. The inventory turnover ratio for Procter & Gamble (PG) in calendar 3Q15 rose by 6.7% to 6.0x—compared to 5.8x in calendar 3Q14. This was due to reshaping the product portfolio. However, the sales growth was lower in developing markets like Asia and the Middle East due to lower volume.
The inventory turnover metric for Clorox (CLX) for calendar 3Q15 rose by 4.1% to 7.9x—compared to 7.6x in calendar 3Q14. The increase was primarily due to higher sales and volume growth. To learn more about Clorox’s business, read Clorox Is Cleaning Up in Consumer Staples Market Share .
Colgate-Palmolive’s (CL) 3Q15 inventory turnover ratio fell by 0.4% to 5.0x—compared to 5.1x in 3Q14. This was due to the global fall of 1% in the volume. In North America, the sales grew by 0.3% in 3Q15 compared to 3Q14 off a 2.5% rise in the unit volume.
Distribution hubs
Procter & Gamble is focusing on moving the manufacturing capacity closer to major consumer populations and new distribution hubs. Procter & Gamble is also focusing on shutting down more remote single-category production sites. It’s planning to build new multi-category facilities. Colgate and Clorox aim to expand their online retail distribution. Online shopping gained momentum in developing markets.
Clorox has exposure in the iShares Russell 3000 ETF (IWV). It accounted for 0.1% of the portfolio’s total weight.
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