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Unilever shelves planned Q-Tips sale

Unilever PLC has shelved plans to sell a string of struggling beauty and personal care brands after failing to drum up enough interest, according to people familiar with the matter, a setback for the consumer-goods giant that has been under pressure to accelerate growth.

The Dove soap owner said at the start of this year that it was carving out brands including Q-Tips, Caress, TIGI, Timotei, Impulse, Monsavon and bundling them into a new, separate business called Elida. It hired advisers earlier this year to explore a sale of the brands, which collectively generated sales of about 600 million euros, equivalent to about $695.7 million, last year.

The company has followed a similar process for other lower-growth businesses including its spreads arm, which it sold in 2018, and the majority of its tea business, which it is currently in the process of selling. However, interest in the beauty and personal care brands—a collection of largely regional brands across North America and Europe—failed to attract a high-enough bid, prompting Unilever to end the sale process in recent weeks, the people said.

As with all sale processes, the plans could still be revived in the future, one of the people said.

Unilever’s move to hit pause on the sale comes at a difficult time for the London-based company. Its share price has fallen over the past year. The company is seen by analysts to have underperformed some rivals during the pandemic in areas such as hygiene and packaged food.

Last month, Unilever reported third-quarter sales growth driven entirely by price as volumes declined, a trend investors generally dislike. That compares unfavorably with Nestlé SA, which has grown volumes as well as price, prompting its share price to rise.

To boost its performance, analysts have called on Unilever to produce more innovations and sacrifice profit margin to fund sales growth, while refining its portfolio by trimming underperforming brands and acquiring higher-growth businesses.

Jefferies analyst Martin Deboo recently said he expects Unilever’s share price “to spur management to more decisive action on the portfolio, or to serve as an invitation to activists,” while Bernstein analyst Bruno Monteyne suggested that Unilever could be a ripe target for an activist investor such as Nelson Peltz, who last month retired from the board of rival Procter & Gamble Co.

 

This story has been published from a wire agency feed without modifications to the text

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