Sterling Household Essay

Words: 4640
Pages: 19

For the exclusive use of W. Jingcheng, 2015.

APRIL 30, 2013


Sterling Household Products Company
January of 2013 brought a new year and an important new opportunity to the management team of Sterling Household Products Company. Sterling manufactured and marketed a wide line of consumer goods, including laundry products, soaps, cosmetics, toilet preparations, and cleaning, disinfecting and sanitizing products, which were sold domestically and internationally, and were used every day in millions of households around the world. Sterling’s family of quality products included many highly regarded brand names, and the company had consistently delivered impressive sales and profits to
…show more content…
Jingcheng, 2015.
913-556 | Sterling Household Products Company

manufactured a wide variety of consumer products in more than 20 countries and marketed these products in more than 100 countries. As presented in Exhibit 1, Sterling’s well-regarded laundry products, soaps, cosmetics, toilet preparations, and cleaning, disinfecting and sanitizing products combined to generate nearly $3.3 billion of sales and $323 million of net income in 2012, producing a net profit margin of 9.8% of sales. This high profit margin reflected the income statement success of
Sterling and its products, and with year-end 2012 total assets equal to nearly $2.7 billion (Exhibit 2), the company produced a rate of return on assets of 12% in the most recent year. Sterling’s financial results in the preceding years were just as robust; by any financial measure the company was successful year after year.
Analysis of Sterling’s income statements through time, however, revealed the company’s biggest challenge. Between 2010 and 2012 sales grew from $3.14 billion to $3.281 billion, a total increase of
4.5%, representing a compounded annual growth rate of only 2.2%. Although the company had excellent products and was well-positioned in the industry, growth opportunities were limited and its business was under constant pressure. The company’s annual sales volume in units had increased by just less than 1% per year, constrained by weak growth in overall demand and strong competition