Sales slump hits Unilever

UNILEVER today admitted to a dismal fall in sales of its core brands, leaving the key plank of its Path To Growth plan a distant memory.

Outgoing chairman Niall FitzGerald originally set a sales growth target of 5% to 6% in its top-selling brands at at the outset of the project five years ago.

But today the group admitted sales of such brands fell 0.2% in the second quarter of the year compared with 1.3% growth of the previous three months.

Chief financial officer Rudy Markham said of the latest three months: 'Disappointing, in a word.'

Unilever blamed poor sales of its Lipton ice tea range and pointed to problems at SlimFast, the diet range savaged by the popularity of the Atkins fad.

A new low-carbohydrate version of SlimFast has been launched, but analysts remain unconvinced about its appeal as one of the main attractions of Atkins is that it rules out the need for other diet systems.

SlimFast has suffered a loss of market share, as has its Prestige fragrances division, which includes brands such as Calvin Klein. Prestige has undergone some major restructuring in the past year, but the benefits are yet to be seen. Meanwhile the boss of SlimFast recently left.

As well as losing market share to rivals - particularly a resurgent Procter & Gamble in India - Unilever has seen overall shop prices for its products fall 0.3% on last year, especially home and personal care goods.

The rise of discount supermarkets in Europe has continued to hit Unilever's pricing power.

Meanwhile, Markham pointed out the poor summer weather in Western Europe, compared with last year's heatwave, had a huge impact on sales of ice cream and cold drinks, as much as a 2% fall in sales of leading brands.

Second-quarter pre-tax profits were e1.17bn (£770m) against e985m a year earlier, on turnover down from e11.16bn to e10.8bn. On an underlying basis, operating profits slid 2% to e1.6bn.

The coming months will see Unilever ramp up its programme of promotions and marketing activity to support its key brands in the tough environment.

Sales of food products were strong, particularly its spreads businesses such as the pro.activ brand aimed at health-conscious shoppers.

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