Company Reports

While concerns abound regarding consumers' financial health and willingness to pay for the essential goods in Colgate-Palmolive's portfolio, we believe the firm is navigating the uncertain landscape astutely. Under CEO Noel Wallace, Colgate's strategy has been anchored in elevating research, development, and marketing spending (on its core mix, adjacent categories, and across the digital realm) and in responding expeditiously to evolving consumer preferences. Colgate has worked to bring products to market in as little as 6-12 months, down from 18-36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target through the end of 2024. We believe this reflects the firm's focus on consumer-valued innovation across price tiers and elevated brand spending. Colgate has spent an average of 12% of sales on marketing over the past five years, about 200 basis points above the level in 2017-19.

Colgate's organic sales increased 2.4% in the second quarter, driven by 1.6% higher prices and 0.8% growth in volumes (1.2% excluding the private-label pet business exit). Adjusted gross margin expanded 140 basis points, to 61.5%, as pricing and efficiency savings offset inflationary headwinds.

Organic sales ticked up 2.9% in Colgate's first quarter, reflecting higher prices (2.2%) and increased volumes (0.7%). The adjusted gross margin slipped 20 basis points to 60.6%, as higher prices, favorable mix, and cost savings failed to offset the hit from inflation and tariffs.

While concerns abound with regard to consumers' financial health and their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we believe the firm is navigating the uncertain landscape astutely. Under CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. Colgate has worked to bring products to market in as little as 6-12 months, down from 18-36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target through the end of 2024. We believe this reflects the firm's renewed focus on consumer-valued innovation across price tiers and elevated brand spending. Colgate has spent an average of 12% of sales on marketing over the past five years, about 200 basis points above the level in 2017-19.

Colgate chalked up 2.2% organic sales growth in the fourth quarter, reflecting higher prices. The one blemish was in North America, where sales fell 1.8% organically on 2.3% lower volumes. The adjusted gross margin eroded by a mere 10 basis points to 60.2%.

While concerns abound regarding consumers' financial health and their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we believe the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six to 12 months in some cases, down from 18 to 36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target (through the end of fiscal 2024). We believe this reflects the firm's renewed focus on consumer-valued innovation across price tiers, as well as elevated brand spending. The company has spent an average of 12% of sales on marketing over the past five years, 160 basis points above the level directed in 2017-19.

Organic sales growth languished in Colgate's third quarter, up 0.4%, a byproduct of lower volume (down 1.9%). Higher raw material and packaging costs, cost deleverage on depressed volumes, tariffs, and inventory write-downs resulted in a 190-basis-point decline in the adjusted gross margin to 59.4%.

While concerns abound regarding consumers' financial health and ultimately their willingness to pay up for essential goods in Colgate-Palmolive's portfolio, we believe the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six to 12 months in some cases, down from 18 to 36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target (through the end of fiscal 2024). We believe this reflects the firm's renewed focus on consumer-valued innovation across price tiers, as well as elevated brand spending. The company has spent an average of 12% of sales on marketing over the past five years, 160 basis points above the level directed in 2017-19.

Colgate's organic sales edged up 1.8% in the second quarter (driven by 2% higher prices). While a marked step-down from its recent mid- to high-single-digit cadence of top-line growth, the firm was lapping 9% gains in the year-ago period. Adjusted gross margin retreated 70 basis points to 60.1%.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six months-12 months in some cases, down from 18 months-36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target (through the end of fiscal 2024). We think this reflects its renewed focus on consumer-valued innovation across price tiers as well as elevated brand spending; the company has spent 12% of sales on marketing on average the past five years, 160 basis points above the level directed in 2017-19.

Colgate chalked up 1.4% organic sales growth in the first quarter, driven by higher prices, and profits improved. The adjusted gross and operating margins expanded 80 basis points to 60.8% and 22.2%, respectively.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six months-12 months in some cases, down from 18 months-36 months historically. The prudence of this course is evident, as Colgate has chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent 12% of sales on marketing on average the past five years, 160 basis points above the level directed in 2017-19.

The last three months of Colgate's fiscal 2024 culminated in 4.3% organic sales growth (balanced between a 2.5% increase in volumes and a 1.8% benefit from higher prices) and 70 basis points of adjusted gross margin improvement to 60.3%.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six months-12 months in some cases, down from 18 months-36 months historically. The prudence of this course is evident, as Colgate has chalked up 23 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent almost 12% of sales on marketing on average the past four years, 120 basis points above the level directed in 2017-19.

Colgate-Palmolive's organic sales growth approached 7% in the third quarter, reflecting a balanced contribution from higher prices (3.1%) and increased volume (3.7%) even as the firm was lapping the impressive performance of a year ago, when organic sales were up 8.8%.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously, bringing products to market in just six to 12 months in some cases, down from 18-36 months historically. The prudence of this course is evident, as Colgate has chalked up 22 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent almost 12% of sales on marketing on average the past four years, 120 basis points above the level directed in 2017-19.

The narrative around the weakening consumer spending backdrop is questionable, if wide-moat Colgate’s second-quarter results are any indication. Organic sales shot up 9% (on top of 8.2% growth last year), reflecting a near-balanced contribution from increased volumes (4.7%) and higher prices (4.2%). These runs counter to others in the industry, which have been more challenged to buoy volumes after several quarters of outsize price hikes.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, the firm's strategic focus has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously, bringing products to market in just six to 12 months in some cases, down from 18-36 months historically. The prudence of this course is evident, as Colgate has chalked up 21 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent almost 12% of sales on marketing on average the past four years, 120 basis points above the level directed in 2017-19.

Macro and geopolitical turmoil has failed to deter wide-moat Colgate, as evidenced by the whopping 10% organic sales growth posted in its first quarter, which came on top of similar marks a year ago. We attribute this performance to Colgate’s unwavering commitment to invest in consumer-valued innovation across price tiers supported by robust marketing spending, up 16% in the quarter to more than 13% of sales (versus an 11.5% average over the past five years). We don’t think the firm will veer from this course, with our forecast calling for 13% of sales to be directed toward research, development, and marketing annually on average. From our vantage point, this spending is essential in increasing the appeal of its brands with retailers and consumers. And the fruits of these efforts have manifest in building market share positions, with its global hold on the toothpaste and toothbrush categories now at 41.3% and 31.7%, respectively, each up 110 basis points versus last year.

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, the firm's strategic focus has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously, bringing products to market in just 6-12 months in some cases, down from 18-36 months historically. The prudence of this course is evident, as Colgate has chalked up 20 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent almost 12% of sales on marketing on average the past four years, 120 basis points above the level directed in 2017-19.