RB Sees Shortages from Exceptional Demand but Expects ‘Pantry Load’ to Unwind
Stay-at-home orders and the spread of COVID-19 lifted Reckitt Benckiser (RB) sales to exceptional heights in the first quarter, with the parent company to such brands as Lysol, Mucinex, Dettol, Durex and Gaviscon reporting e-commerce net revenue up over 50%.
Total sales for the health and hygiene manufacturer rose 12.3%, with 31.5% growth in over-the-counter products and 10.9% growth in hygiene.
While it acknowledged product shortages for some customers, RB has ramped up production and streamlined its SKUs in order to better meet demand.
In May, the company reproduced the quantity of hand sanitizer that it had produced in all of 2019, said CEO Laxman Narasimhan in an earnings call. “By June, we should be at 20 times the number.”
Narasimhan said the split between “defensive buying” and increased levels of consumption were unclear, but nonetheless the company expects to “see some unwinding of ‘pantry load’ as we work our way through the crisis.”
“The near-term operational challenges to meet additional demand and handle lockdown conditions, with the associated costs, are also likely to continue for some time,” he added.
RB, which is No. 48 on the CGT Top 100 Consumer Goods Companies of 2019 list, recently announced a partnership with Hilton that elevates the hospitality company’s level of sanitation. The Hilton CleanStay with Lysol program will leverage advisement from members of the Mayo Clinic’s Infection Prevention and Control team in order to enhance Hilton’s cleaning and disinfection protocols for its 6,100-plus properties.