The Procter & Gamble Company (PG) recently entered into an agreement with Alexander McQueen to manufacture and sell fragrance products. The fragrance products will be produced by P&G Prestige and will be sold under the Alexander McQueen brand.
Alexander McQueen is a popular brand in the global fashion market and has a huge customer base. The introduction of P&G’s fragrance products under such a popular brand as Alexander McQueen will strengthen the former’s position in the luxury fragrance category. P&G will also benefit from Mc Queen’s existing customer base.
P&G Prestige already has some of the strongest beauty brands such as Hugo Boss, Dolce&Gabbana, Gucci, Lacoste and Puma. In fact, the collaboration with Alexander McQueen is in line with Procter & Gamble’s long-term strategy of business expansion through tie ups with strong brands.
Overall, we are encouraged by P&G’s strong brand recognition, diversified portfolio, rapid growth in developing nations, impressive product development capabilities and marketing prowess. Though fiscal 2012 turned out to be a tough year for P&G, the company plans to implement some meaningful changes to re-accelerate its top and bottom line. However, we would remain on the sidelines until we witness further progress from the turnaround efforts.
Procter & Gamble currently carries a Zacks Rank #3 (Hold).
Other companies in the consumer staples sector that warrant investor attention include Zep, Inc. (ZEP), Flower Foods Inc. (FLO), and B&G Foods Inc. (BGS). Flower Foods and B&G Foods both carry a Zacks Rank #1 (Strong Buy), whereas Zep carries a Zacks Rank #2 (Buy).
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