The COVID-19 pandemic raged through the first half of this year and continues to impact the world without signs of abating. Amid this health crisis, several companies reported strong results benefiting from the changes in consumer behavior while many others were hurt by store closures and other restrictions.
Many retail and consumer products companies saw high demand for certain products such as cleaning supplies and sanitizers which benefited them hugely at this time while some apparel companies saw an unexpected opportunity to roll out new products like masks.
Health is wealth
Many consumer goods companies gained from a spike in demand for cleaning products, disinfectants, and personal care products as health and hygiene took topmost priority. The Procter & Gamble Company (NYSE: PG) saw a 4% increase in net sales and a 6% growth in organic sales for the fourth quarter of 2020 driven by demand for cleaning and personal health products.
PG’s Personal Cleansing division saw higher volume due to increased demand for cleansing and degerming products. The Fabric and Home Care unit recorded the highest increase among segments with organic sales growth of 14%, helped by a 30% sales growth in Home Care fueled by high demand for home cleaning and dish washing products.
Also read: Has the COVID-19 pandemic led retailers to change their assortment and store fleet strategies?
Walmart Inc. (NYSE: WMT) stated on its second quarter 2021 earnings conference call that the company has seen massive demand for disinfectants, cleaning supplies and paper goods.
Unilever plc (NYSE: UL) saw 27% growth in its skin cleansing business driven by demand for hand hygiene products such as liquid hand wash and hand sanitizer. Prior to the outbreak of the COVID-19 pandemic, the company’s hand sanitizer business was quite small with only two manufacturing sites but by the end of the first half of this year, it was higher than that of last year’s market leader for the whole of 2019.
Unilever currently has more than 60 sites producing hand sanitizers and it has rolled out the product in 65 new markets. The company stepped up capacity across multiple brands by 600 times in five months. Unilever rolled out its Lifebuoy hygiene brand to over 50 markets while its Dove brand saw mid-single digit growth. Unilever saw underlying sales growth of 3.2% in its Home Care division helped by high demand for household cleaning products like Cif.
Retailer Vera Bradley (NASDAQ: VRA) started selling cotton masks during the health crisis which drove meaningful revenue growth and gross margin expansion. Vera’s consolidated revenues increased 10% during the second quarter of 2021 and cotton masks represented over 10% of total revenues. Cotton masks added around 300 basis points to gross margin for the quarter.
During the quarter, Vera Bradley ramped up the production and distribution of masks and also shifted its marketing spend from categories like travel and beach to areas like masks and other healthcare products. However, the company expects the sales of masks to slow down in the latter half of the year as the impact of the pandemic goes down.
According to a report by Grand View Research, the global hand sanitizer market size was valued at $2.7 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 22.6% from 2020 to 2027. Market size value in 2020 is expected to be $3.3 billion. North America dominated the market in 2019 with a share of 32.2% and this trend is expected to continue. Asia-Pacific is expected to see the fastest CAGR of 23.5% from 2020 to 2027.
Also read: COVID-19 drove retailers up the digital path years ahead than anticipated
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