Trian's Peltz Says P&G Needs to `Attack the Market' Like AmazonBy
Investor says growing market share more important than EPS
Billionaire seeking board seat to help reshape consumer giant
Billionaire investor Nelson Peltz said he’ll make sure Procter & Gamble Co. “attacks the market” to help grow market share and develop smaller offerings into big brands if he gets a seat on the consumer giant’s board.
Peltz, speaking on a conference call Monday, said it’s paramount that P&G refocus on growing market share. Doing so is more important than growing earnings per share, Peltz said, citing Amazon.com Inc.’s approach.
“Market share is what it’s all about in the consumer space,” Peltz said. “Market share has become even more of a barometer than EPS, and Amazon is a shining example of that. Nobody pays attention to Amazon’s earnings per share but they do look at their growth.”
Peltz homed in on Cincinnati-based P&G’s ability to attract new customers. Brands such as Crest are global leaders in their space, he said, but lack the “emotion” needed to attract younger buyers.
“You’ve got a company that’s got only global brands,” Peltz said. “That’s all they know how to operate with, and all the action today is local. It’s these small brands. What the millennials want, they want their own brand. They want a brand with emotion that’s got a story behind it. P&G has got to learn how to incubate or buy these little brands.”
P&G has resisted Peltz’s push for a seat on the board, arguing his views on the company are “flawed” and “outdated” and that he would bring little value as a director. It also said it had examined several different structures, including one similar to the one Peltz has suggested, and determined it would result in higher costs, lower efficiency and reduced profit.
“P&G is a profoundly different, much stronger, and more profitable company than it was just a few years ago,” David Taylor, P&G’s chairman and chief executive officer, said in a statement Monday. “Now is the time to build on our momentum and prevent anything from derailing the work that is delivering results.”
Peltz has also argued that the company needs to attract outside talent, as well as retain people at brands it acquires.
“The body of P&G rejects these things,” Peltz said Monday, pointing to P&G’s acquisition of Gillette Co. in 2005 as an example. “Two years later, you’d be hard-pressed to find anyone at Gillette at P&G.”
Peltz’s Trian Fund Management owns about $3.5 billion of P&G stock, making it the company’s sixth-largest investor, according to data compiled by Bloomberg. The hedge fund is seeking a seat on P&G’s board for Peltz at its annual general meeting on Oct. 10.
Trian released a 93-page white paper last week calling for, among other things, P&G to reorganize into three largely autonomous units: a beauty, grooming and health-care business; a fabric and home-care division; and baby, feminine and family-care products. Each unit would have regional leaders with full control over operations in their areas instead of the bureaucratic structure that he claims is in place now.
“I want to see us regain market share,” Peltz said. “I want us to outgrow the market. We have the resources. We have the balance sheet. We have the products. We have the people. Set those people free. Empower them to do a job.”