Gillette Stock Declines 4.6%

Shares of Gillette Co. fell 4.6% on Friday after the company said sales and profit at its Braun household appliance unit will fall short of expectations because of weak economies in Japan and Germany.

Shares in the world’s leading maker of razors fell $4.19 to close at $85.88 on the New York Stock Exchange in trading of 5.14 million shares, quadruple the three-month daily average.

Sales of Braun’s higher-priced products, such as its small appliances and electric shavers, have been hurt by economic conditions in Japan and Germany, two markets that generate more than half of Braun’s business. Braun accounted for $1.78 billion, or 18%, of Gillette’s sales last year, according to a report by PaineWebber Inc. analyst Andrew Shore.

“The weakness is really in the shaver category,” said J.P. Morgan analyst Michael Grant. “Their market share is holding, but the size of the market is contracting.”

Japan also recently raised its value-added tax to 5% from 3%, hurting revenue, he said.

Grant estimated that Braun’s total revenue for the quarter ended in June will fall 5% from the same period a year earlier. Those quarterly results will be reflected in Gillette’s third-quarter report.

Other household products firms fell on Gillette’s news, as the Dow Jones industrial average plunged 247.37 points to 7,694.66, its second-biggest point loss ever. Procter & Gamble Co. fell $7.19 to close at $137.56; Colgate-Palmolive Co. fell $4.94 to $65.25; and Clorox Co. fell $4.94 to close at $132.06. All trade on the New York Stock Exchange.

Still, the issues affecting consumer stocks are short-term occurrences rather than structural problems, said Tim Drake, an analyst at Banc One Investment Advisors, which owned 758,651 Gillette shares at the end of March.

“There aren’t major changes in the growth outlooks for these companies,” Drake said.

Boston-based Gillette has also struggled with the strength of the dollar compared with other currencies, said company spokesman David Fausch.

A stronger dollar reduces revenue from overseas units when the local currency is translated into dollars for reporting purposes.

Other analysts also cut their earnings estimates. Merrill Lynch & Co. analyst Deepak Raj cut his 1997 estimate to $2.55 a share from a range of $2.55 to $2.60. For 1998, Raj expects the company to earn $3 a share, down from $3.10.

PaineWebber’s Shore reduced his 1997 estimate to $2.55 a share from $2.59 and reduced his 1998 estimate to $3 from $3.03.

In the second quarter, Gillette’s net income rose 15% to $318.9 million, or 57 cents a share, from $276.7 million, or 50 cents, a year earlier.

Revenue rose 1% to $2.29 billion from $2.27 billion.