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Stock Strategist Industry Reports

Analyzing the Household Products Industry

The waters are still choppy in household and personal products.

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After weathering a significant downturn in consumer spending through 2008 and 2009, it would seem household and personal product firms would be poised for accelerated top-line and earnings growth. Unfortunately, this scenario isn't necessarily playing out and headwinds persist. Even though moderating input costs have benefited consumer product gross margins recently, we expect input cost inflation to return as developing and emerging markets increase their demand for commodities.

Additionally, sovereign debt issues in Europe could further dampen already weak Western European markets should austerity measures put any resurgent consumer spending on hold. The translational impact of a euro potentially headed to parity with the U.S. dollar by the back half of the year will also impact both sales growth and margins at companies like  Procter & Gamble (PG),  Avon (AVP),  Estee Lauder (EL), and  Colgate-Palmolive (CL), all of which have significant exposure to the continent.

Lauren DeSanto does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.