BLOOMBERG, OCTOBER 24, 2020
Gerald Porter Jr. for Bloomberg – Kimberly-Clark Corp.’s business that supplies office buildings looks a lot like corporate America’s prospects of going back to the office: not great.
Sales of commercial tissue-paper rolls and toilet-seat covers for the workplace, which makes up about 15 per cent of the company’s sales, plunged last quarter, the company reported on Thursday. The downturn could drag on for months or even years: Amazon.com Inc. is letting corporate employees work from home until at least next summer, while credit-card provider Synchrony Financial, has said at-home work is permanent.
As companies ask themselves whether big rent bills are justifiable, office-focused businesses like Kimberly-Clark’s K-C Professional are increasingly hurting. Chief Financial Officer Maria Henry told analysts that the unit, which reported a 16% sales decline, is unlikely to see improvement as long as people continue to work from home.
“The macro trends that are affecting the K-C Professional business are not likely to change from what they were in the third quarter,” Henry said.
Other companies reliant on a corporate workforce for large chunks of their sales are also feeling the pinch. ODP Corp., which owns the Office Depot chain, has warned sales in its business-solutions division will be impacted for at least the rest of the year. Uniform providers like Aramark and Lands’ End Inc. are also seeing an impact as many schools remain closed.
While office sales tumbled, Kimberly-Clark’s tissue sales to retail consumers surged 11 per cent in North America, although that pace was slower than the previous quarter.
Kimberly-Clark shares fell 6.9 per cent to US$138.09 at the close in New York, the biggest decline since March 12. The decline erased most of the stock’s year-to-date gain.
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