Gillette Ousts CEO as Sales Remain Flat

Gillette Co. abruptly removed Chairman and Chief Executive Michael Hawley on Thursday, saying the company needed new leadership to live up to its full potential as a global brand name.

The maker of Mach3 razors and blades, Oral B toothbrushes and Duracell batteries also said its third-quarter earnings edged down 1% to $350 million, or 33 cents a share, meeting Wall Street’s lowered expectations, as a weak euro and lagging sales at Duracell plagued the firm. Sales were virtually flat at $2.32 billion.

Hawley’s departure, less than two years after being named to the top job, comes amid signs of frustration on the part of board members at the company’s inability to snap a two-year string of earnings disappointments.

“We think he’s an exceptionally able executive. We don’t think he’s the best person that could be in that job,” said Warren Buffett, a Gillette board member and one of the company’s largest shareholders. “The company is well ahead of where it was a few years back, but I think it could be even further ahead.”

Hawley, 62, who became chairman and chief executive in 1999, will be replaced temporarily by two men. Gillette President Edward DeGraan, 57, was named acting chief executive and Richard R. Pivirotto, 70, the nonexecutive chairman of the board.

The company said it would immediately embark on a search for a new chairman and chief executive and that it would look at internal and external candidates.

William Steele, an analyst at BofA Montgomery, said Hawley’s removal caught him by surprise, especially since Gillette’s balance sheet showed recent signs of improvement.

Investors reacted well to Hawley’s ouster, boosting Gillette shares up $4.56 to close at $32.88 on the New York Stock Exchange.