Colgate-Palmolive Company (NYSE:CL) is reportedly exploring the sale of several mass-market personal care brands, including Softsoap, Irish Spring and Speed Stick, in a portfolio reshaping effort that could generate more than $1 billion. The company is working with Goldman Sachs on the potential divestiture. Personal care accounted for roughly 17% of Colgate-Palmolive’s 2025 net sales, or about $3.5 billion, while oral care remains the company’s largest business.
The move comes as Colgate faces pressure in its North American business. Although the company recently reported a 4.9% increase in net sales, organic sales in North America declined 3%, highlighting competitive pressure in a mature market. The strategy is also consistent with a broader consumer-goods shift toward simplifying portfolios and concentrating capital on higher-growth categories. Unilever, Nestlé, and other major consumer companies have similarly been selling slower-growing or non-core businesses.
Divestitures Could Strengthen Capital Allocation
The biggest positive is that Colgate-Palmolive Company could become a more focused and potentially higher-quality business. Selling brands that no longer fit its highest-priority growth areas would allow management to concentrate capital, marketing spending, and management attention on oral care, pet nutrition, and other businesses where Colgate has stronger competitive advantages. The company’s decision would therefore be less about abandoning personal care altogether and more about improving the quality of the remaining portfolio.
A sale could also unlock meaningful shareholder value. If the divestitures generate more than $1 billion, Colgate would have additional capital that could be used for debt reduction, share repurchases, acquisitions, or investment behind its strongest brands. In a mature consumer-staples company, disciplined capital allocation can have an outsized impact on earnings growth and shareholder returns. There is also evidence that portfolio simplification is becoming increasingly attractive across the consumer-goods industry. The Wall Street Journal has highlighted how companies such as Unilever and Nestlé are shedding businesses that add complexity without providing sufficient growth. The underlying argument is that the benefits of owning a very broad portfolio have diminished as consumer preferences become more fragmented and smaller brands become better at responding to trends.
Most importantly, the divestiture could improve Colgate-Palmolive Company’s strategic focus at a time when North American competition is challenging. Rather than allocating resources to defend slower-growing personal-care brands, management could direct investment toward categories and geographies with better long-term growth prospects. That could ultimately support margins and organic growth even if the immediate revenue base becomes smaller.
A Smaller Portfolio Does Not Guarantee Growth
The main risk is that Colgate-Palmolive Company could be selling brands simply because they are underperforming rather than because they are genuinely non-core. Softsoap, Irish Spring, and Speed Stick are established consumer brands with significant distribution and customer recognition. Once sold, Colgate would give up the future cash flows from those businesses and may struggle to replace them with equally attractive growth.
There is also a risk that the company receives a disappointing valuation. The reported potential proceeds of more than $1 billion may sound significant, but the brands involved collectively represent a meaningful portion of Colgate’s personal-care business. If buyers perceive the assets as mature or declining, Colgate could be forced to accept a relatively modest price. In that scenario, the company would sacrifice future revenue for a limited one-time financial benefit.
The broader consumer environment is another concern. Rising commodity and energy costs are putting pressure on consumer-goods companies, while higher living costs are making consumers more price-sensitive. Reuters has noted that major consumer companies are already facing a difficult combination of weaker demand and higher input costs. If Colgate is selling brands during a difficult market rather than at the peak of their earnings potential, the timing could work against shareholders.
Finally, portfolio restructuring does not automatically solve Colgate-Palmolive Company’s underlying growth problem. If North American organic sales are already declining, simply selling personal-care brands could make the company more concentrated without necessarily making it faster-growing. Investors will ultimately want to see stronger organic growth, better margins, and sustainable market-share gains, rather than just a smaller portfolio.
Conclusion
The divestitures are moderately bullish if Colgate can sell the brands at attractive valuations and reinvest the proceeds into higher-growth businesses or return capital to shareholders. However, the move will create limited value if it is primarily being used to offset weak growth.
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This article is originally published at Insider Monkey.
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