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Kimberly-Clark, the maker of these products, said Wednesday it is advising retail customers in the United States and Canada that it will increase the prices of certain products by mid-to-high single-digit percentages in June. The increases “are necessary to help offset significant inflation in commodity prices,” Kimberly-Clark said.
The higher prices will take effect in the company’s infant care, adult care and Scott toilet tissue businesses.
Kimberly-Clark (KMB) sells its products to retailers like Walmart (WMT), Target (TGT), Costco (COST), Amazon (AMZN) and others, and chains can either absorb the higher prices Kimberly-Clark plans to charge or pass them on to consumers.
Kimberly-Clark isn’t revealing who her biggest retail customer is, but said in a recent filing that Walmart accounted for 15% of sales last year. Walmart and Amazon did not immediately respond to requests for comment on how they would react to Kimberly-Clark’s move. Costco and Target declined to comment.
Jefferies analyst Kevin Grundy expects retailers to raise prices for consumers on shelves in response. Grundy also predicts that Kimberly-Clark’s rivals, such as Procter & Gamble (PG), will follow suit by raising the prices of their retail customers.
Kimberly-Clark and other manufacturers of consumer products have benefited from increased demand for toilet paper, paper towels and other basic household items during the pandemic. The company’s sales rose 4% last year to $ 19.1 billion from the previous year.
A spokesperson for Kimberly-Clark said in an email that prices for polymer pulp and resin were on the rise, the main raw materials used to make the products. Polymer resin market prices rose 55% in February and January from the previous two months, the spokesperson said.
The company said in January that it projected up to $ 600 million in additional commodity costs in 2021 compared to last year.
Costs are rising for many retail and consumer goods businesses due to increased consumer demand and tensions in the global supply chain.
General Mills (GIS), which makes grains like Cheerios, said last week it faces higher freight and supply chain costs.
“There are higher costs to operating in this high demand environment,” CFO Kofi Bruce said on a call with analysts.
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