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While the coronavirus pandemic was a disruptor for several industries, a number of cleaning products companies were on the bright-side of matters. Well, several cleaning and personal care products companies like Church & Dwight Co., Inc. CHD gained from favorable market conditions. With consumers realizing the importance of maintaining good hygiene, the demand for such products is likely to continue in 2021 as well. These trends along with strong e-commerce sales are likely to keep supporting Church & Dwight in the forthcoming periods. That said, let’s discuss some of the upsides of this Zacks Rank #3 (Hold) company.
Favorable Demand Scenario
Consumers’ cleaning frenzy amid the pandemic is aiding higher sales for several Church & Dwight’s products, especially in the household and personal care business categories. During the third quarter, the company witnessed double-digit consumption growth across several domestic categories, especially for products like gummy vitamins, women’s hair removal, cleaners and baking soda. The company’s international business was also strong on the back of broad-based consumption growth across several brands.
Encouraged with the trends so far, the company provided an optimistic sales view for the fourth quarter of 2020. For the quarter, the company expects 9% increase in sales, while organic sales are expected to rise 8%. Markedly, the company is on track with boosting manufacturing capacity at plants to continue tapping the rise in demand triggered by the pandemic. Further, the company is working with retail associates and suppliers to ensure a smooth supply chain and support the increased demand.
Online Growth is a Worthy Mention
Church & Dwight’s e-commerce platform is gaining from consumers’ accelerated preference for online shopping. During the third quarter, the company’s online sales surged 77% with growth across all retailer websites. Online sales contributed 13% to total sales in the reported quarter compared with 8% in the prior-year quarter.
The company’s strong brand position across various categories, positions it well to continue growing amid the ongoing crisis. In fact, acquisitions have played an important role in boosting portfolio strength. Last month, the company informed about the buyout of Matrixx Initiatives, Inc. The acquired company is the owner of the ZICAM brand, which is a leading zinc supplement in the United States. Notably, the addition of the ZICAM brand represents the company’s 13th power brand. The company’s power brands include names like ARM & HAMMER, Trojan, OxiClean, Spinbrush, First Response, Nair, Orajel, Xtra, L’IL CRITTERS and VITAFUSION, WATERPIK, FLAWLESS and Batiste, which represents majority of its consumer sales.
We note that the FLAWLESS brand is doing quite well lately, backed by rising at-home grooming trends. Additionally, the company’s regular innovation helps in improving brand positions and market share. It is coming up with several innovative gummy vitamin products under the VITAFUSION banner.
We expect Church & Dwight’s strong brand position along with expectations of favorable market trends for cleaning products to remain as key growth catalysts. In fact, such upsides are likely to help the company cushion the adversities emerging out of rising costs associated with the pandemic as well as high tariffs.
Shares of the company have inched up 0.8% in the past six months compared with the industry’s rise of 6.6%.
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