I hope you’re having a great start to the spring season! As the grass starts to green, I’m pleased to share that our consumption on the business has turned around dramatically, and after some challenges last year, we are back to gaining share in the category for 5 periods in a row. Our consumption interventions are definitely paying off, and we have strength across the board in all categories in the latest 12 weeks. This is a terrific sign, and should start translating to net sales value (NSV) growth by the end of Q2.
Like spring, our fast pace is off to a slower start this year than we had hoped. Though we’re tracking well, we are off plan as a result. We’re targeting the end of P6 to be back to growth, and deliver our plan by Q4. This does not give us a lot of room for error so it’s critical to improve our pacing and match our consumption offtake as we accelerate into the second quarter.
Here’s a little more on why we’re where we are and what we’re doing about it to get back on track to growth.
Simply put, we are not hitting our plan for topline. The category has slowed versus our planning stance assumptions (+3% at planning in the fall of 2016, versus 0% latest 12 weeks). This has put pressure on our plan pacing. As well, we’re still digging out from 2 orders that shifted from LCL and Costco into P12, 2016 from P1, 2017. It will take a few periods to burn through that inventory. Finally, we have some activity and innovation we are lapping from last year at this time, and some of our restages have had to be delayed as a result, particularly on the Specialty side in NUTRO and GREENIES. However, once the consumer is voting for us with their wallets, increasing the household numbers that are buying and using our fine brands, we’ll turn this around! We’re actively deploying further interventions in the short term to get us back on track.
We’re keeping our investment in advertising and consumer promotions (A&C) spend strong to preserve and extend our consumption and share momentum. Further, our new dog dry restages will hit the market beginning in period 5, and we are deploying targeted defense/offence plans to protect our oral care leadership, and shore up CESAR dry, as competition has increased dramatically in these two key battlegrounds.
We are also working hard to offset the cost pressure due to the soft topline. Our earnings are right on track thanks in large part to the fine efforts from our Supply folks – thank you BPP! Your work to keep our Affiliate and Domestic business in stock has helped to over deliver on the Affiliate P&L and preserve our overall earnings shape. Overheads are favourable to plan, adding further tailwind to our earnings, and Cash is right where it needs to be.
We have crystal clarity of mission for our 2017 priorities, and I know we can get back to plan if we all keep these objectives in mind as we go about our day to day!