American manufacturer Church & Dwight Co. recently increased prices on 30 percent of its products, Fortune is reporting. Church & Dwight Co. is behind many popular household products such as Arm & Hammer baking soda and cat litter and OxiClean products — which are all seeing a price increase. Church & Dwight’s CEO Matthew Farrell stated last week that the company is discussing with retailers whether to spike prices for even more products, namely personal care items.
Why the rise? Reportedly, the company’s gross margin for the last quarter didn’t quite meet their goal. This could be due to the rapidly growing number of household businesses in the industry, as well as U.S. tariffs affecting the cost of the raw materials needed to make the products and the transportation of those materials. Even if you don’t typically purchase Church & Dwight Co. products, you could still be in danger of seeing a price increase on the household products you do use. According to Wells Fargo Securities analyst Bonnie Herzog, many other companies have decided to raise the prices of their own products to compete with Chuck and Dwight Co. products.
While prices may be higher, the company also plans to introduce some new products too. They are preparing to market more Arm & Hammer cat litter options, new OxiClean laundry detergents, and the first combined flossing toothbrush.
“Innovation continues to be a big driver of our success,” said Farrell.
“In support of our long-term strategy to drive revenue and earnings growth, we are pleased to announce 2019 new product launches in several categories.”
Church & Dwight (NYSE: CHD) celebrating their 2019 Analyst Day https://t.co/rkQ7DQJhQu pic.twitter.com/JwNfttwrg6
— Bob Googli (@googli_bob) February 6, 2019
While Church & Dwight Co. did see success in raising prices on some things last year, it remains to be seen whether 2019’s price hike will see the same — or better — results. The higher prices could actually result in decreased sales and an overall decreased revenue and gross margin. An article from the Wall Street Journal detailed that competitors are respinding with their own price hikes. One buyer shared that after he saw Procter & Gamble’s Charmin products being sold at a higher price, he decided to go with the Costco brand of the same product instead due to it being cheaper.
“I am a fairly loyal consumer of Charmin, but I will not pay $23 for the pack,” said Tyler Aftab, a 35-year-old teacher in New Jersey. “I will wait until those prices come down,” she added.
Still, Church & Dwight Co. are expecting their price hikes to ultimately bring the company success.
“We expect full year 2019 sales growth to be approximately 3.5 percent reflecting strength in all three of our businesses with exciting new product introductions across our most important categories,” said Farrell.
