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Kimberly-Clark (KMB) Boosts Portfolio With Thinx Investment
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Kimberly-Clark Corporation (KMB - Free Report) acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category. Kimberly-Clark, a leading provider of menstrual hygiene products, had undertaken an initial minority investment in Thinx during 2019.
The investment in Thinx is in tandem with Kimberly-Clark’s intentions to create a portfolio of period and light bladder leakage solutions. The move will allow Kimberly-Clark to accelerate category growth with its retail partners. The company will continue to support Thinx across direct-to-consumer channels.
Kimberly-Clark is seeing rising consideration for the reusable period and incontinence underwear category as more consumers are staying and working from home. Management highlighted that market trends also affirmed that more consumers are looking out for such products for their period and bladder leak needs. The addition of Thinx is a strategic fit for Kimberly-Clark’s portfolio.
Image Source: Zacks Investment Research
What Else is Working for Kimberly-Clark?
Kimberly-Clark has been committed to its three key strategic growth pillars. These include a focus on improving its core business in the developed markets, ramping up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales. The company is progressing well with these objectives, which have been aiding portfolio and expanding global business. In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The net impact of the Softex buyout along with business exits in conjunction with the 2018 Global Restructuring Program increased sales by almost 1% in 2021.
Cost Hurdles
Kimberly-Clark is battling high input costs for the past few quarters. The trend persisted in fourth-quarter 2021, with the adjusted operating profit amounting to $611 million, down from $767 million in the year-ago quarter. The downside can be attributed to a rise in input costs to the tune of $530 million.
The Zacks Rank #5 (Strong Sell) company expects to keep witnessing a tough operating environment, with escalated input cost inflation, supply chain disruption along with pandemic-induced uncertainty in 2022. For the year, Kimberly-Clark expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to escalate $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share (EPS) of $5.60-$6.00, indicating a 6% year-over-year decline at the mid-point of the range.
While input costs are expected to flare up in 2022, management is focused on undertaking relevant pricing actions to counter inflation and efficiently manage costs. Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its Focus on Reducing Costs Everywhere or FORCE Program. Management expects cost savings from the FORCE program in the range of $300-$350 million in 2022.
Shares of Kimberly-Clark have inched up 0.2% in a year against the industry’s decline of 27.3%.
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The Zacks Consensus Estimate for Flowers Foods' 2022 financial year EPS suggests growth of 3.2% from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 9%, on average.
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Kimberly-Clark (KMB) Boosts Portfolio With Thinx Investment
Kimberly-Clark Corporation (KMB - Free Report) acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category. Kimberly-Clark, a leading provider of menstrual hygiene products, had undertaken an initial minority investment in Thinx during 2019.
The investment in Thinx is in tandem with Kimberly-Clark’s intentions to create a portfolio of period and light bladder leakage solutions. The move will allow Kimberly-Clark to accelerate category growth with its retail partners. The company will continue to support Thinx across direct-to-consumer channels.
Kimberly-Clark is seeing rising consideration for the reusable period and incontinence underwear category as more consumers are staying and working from home. Management highlighted that market trends also affirmed that more consumers are looking out for such products for their period and bladder leak needs. The addition of Thinx is a strategic fit for Kimberly-Clark’s portfolio.
Image Source: Zacks Investment Research
What Else is Working for Kimberly-Clark?
Kimberly-Clark has been committed to its three key strategic growth pillars. These include a focus on improving its core business in the developed markets, ramping up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales. The company is progressing well with these objectives, which have been aiding portfolio and expanding global business. In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The net impact of the Softex buyout along with business exits in conjunction with the 2018 Global Restructuring Program increased sales by almost 1% in 2021.
Cost Hurdles
Kimberly-Clark is battling high input costs for the past few quarters. The trend persisted in fourth-quarter 2021, with the adjusted operating profit amounting to $611 million, down from $767 million in the year-ago quarter. The downside can be attributed to a rise in input costs to the tune of $530 million.
The Zacks Rank #5 (Strong Sell) company expects to keep witnessing a tough operating environment, with escalated input cost inflation, supply chain disruption along with pandemic-induced uncertainty in 2022. For the year, Kimberly-Clark expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to escalate $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share (EPS) of $5.60-$6.00, indicating a 6% year-over-year decline at the mid-point of the range.
While input costs are expected to flare up in 2022, management is focused on undertaking relevant pricing actions to counter inflation and efficiently manage costs. Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its Focus on Reducing Costs Everywhere or FORCE Program. Management expects cost savings from the FORCE program in the range of $300-$350 million in 2022.
Shares of Kimberly-Clark have inched up 0.2% in a year against the industry’s decline of 27.3%.
Looking for Better-Ranked Staple Stocks? Check These
Some better-ranked stocks are Tyson Foods, Inc. (TSN - Free Report) , Pilgrim's Pride (PPC - Free Report) and Flowers Foods (FLO - Free Report) .
Tyson Foods, a meat provider, currently sports a Zacks Rank #1 (Strong Buy). Shares of Tyson Foods have increased 33.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tyson Foods’ current financial year sales suggests growth of 9.5% from the year-ago reported number. TSN has a trailing four-quarter earnings surprise of 32.2%, on average.
Pilgrim's Pride, the provider of frozen, fresh and value-added chicken products, currently sports a Zacks Rank #1. Shares of Pilgrim's Pride have increased 9% in the past three months.
The Zacks Consensus Estimate for Pilgrim's Pride current financial year EPS suggests growth of 16.2% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.
Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 23.6% in the past year.
The Zacks Consensus Estimate for Flowers Foods' 2022 financial year EPS suggests growth of 3.2% from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 9%, on average.