Duracell's 1st Quarter Sales Decrease By 3%, Company Takes Loss

Boston— Sales of Duracell batteries dropped 3 percent in the first quarter, according to parent Gillette, as the battery business recorded a $1 million operating loss.

While Duracell's worldwide volume rose by 6 percent in the first quarter, ended March 31, increased competition in North America led to higher promotional spending and reduced income.

Additionally, a planned shift in product mix to Duracell CopperTop batteries from higher margin Duracell Ultra — plus costs associated with product obsolescence and withdrawal — were significant factors resulting in the first-quarter operating loss.

Ongoing competitive intensity in its battery business, which resulted in higher promotional spending, did much to temper parent Gillette's profit from operations in the first quarter. This was 3 percent above the same three months in 2001, at $328 million, compared with $319 million.

"While the continuing high level of competitive promotional spending in the battery category is troubling," said James M. Kilts, Gillette chairman/CEO, "we are committed to holding our market share as we also invest in building the equity of our Duracell brand. At the end of the day, I have no doubt that Duracell will remain No. 1."

Overall Gillette sales in the first quarter climbed 7 percent, to $1.7 billion, up from $1.6 billion in the year-ago period. Net income rose 23 percent, to $223 million, up from $182 million year over year.