Today I am explaining why I believe Unilever‘s (LSE: ULVR) (NYSE: UL.US) ongoing asset shedding drive should boost its long-term earnings outlook.
Brylcreem barged through the exit door
Unilever has undergone a period of significant transformation in recent times, a strategy that has been predominantly focused on cutting down the size of its Foods division. So the firm’s decision late last month to put male styling icon Brylcreem up for sale raised many a perfectly groomed eyebrow.
The brand has been a stalwart of men’s bathroom cabinets across the world since its launch way back in 1928, and now boasts a variety of gels, waxes and clays — on top of its original paste formula — in a bid to remain relevant in a market of increased competition and consumer spending power.
Unilever took the brand on in late 2010 after acquiring the Personal Care and European Laundry divisions of Sara Lee, a move that also 
gave it access to the Radox shower cream and Biotex laundry product labels.
But the household goods leviathan is looking to shoo Brylcreem out of the door in order to concentrate on developing a core stable of its so-called ‘Powerbrands’ — encompassing the likes of Dove soap and VO5 hair products — as well as to create a more streamlined and cost-efficient entity in the light of enduring sales weakness in key markets.
Still, Brylcreem still boasts terrific marketability, meaning that it is likely to fetch a princely sum from any potential suitor. Sporting icon and oft-controversial former England cricket captain Kevin Pietersen is the brand’s current ambassador — following in the footsteps of other sporting alumni including David Beckham — a synergy that cements the brand’s popularity across the lucrative, and cricket-bonkers, markets of Asia.
Unilever is apparently on the cusp of concluding the essential downsizing of its disappointing Foods division after the $2.15bn sale of its Ragú and Bertolli pasta sauce labels in North America in May.
And with sales in this area now apparently grinding to a halt, Unilever has switched its attention to cutting loose a number of other non-core and underperforming personal care brands in addition to Brylcreem, a strategy designed to boost the balance sheet and concentrate investment in other more important earnings drivers.
Given the huge degree of group downscaling conducted over the past year or so, and with more in the offing, I believe that Unilever is in much better shape to deliver robust earnings growth now and in the future.
