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Gillette insists it still has the edge as it strops its war plan for Schick

Gillette Co. is girding for a battle of feminine proportions.

As the world's top razor maker reported a 15 percent jump in second-quarter profit this week, it acknowledged that its Venus line of women's razors is facing a sharp threat from the Intuition, a new three-bladed razor made by rival Schick-Wilkinson Sword, that is shaving points off Gillette's market share.

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Boston-based Gillette, which makes Duracell batteries and razor brands such as the Venus and MACH3Turbo, said Tuesday that its net income climbed $338 million, or 33 cents a share, from $293 million, or 28 cents a share, during last year's second quarter.

Overall sales rose 11 percent to $2.25 billion. The company attributed the increase to sales of the Turbo, which drove its razor and blade sales up 14 percent, and to a weak U.S. dollar, which boosted the value of its sales in Europe.

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But Gillette's share of the overall razor and razor blade market slipped about 4 percent after Schick, a unit of Energizer Holdings Inc. of St. Louis, launched the Intuition in mid-April, according to Information Resources Inc., a retail research firm that surveys supermarkets, drugstores and mass merchandisers.

Eric Kraus, a Gillette spokesman, said the company is taking Schick's bid seriously, but he questioned the IRI data, which do not include sales at Wal-Mart Stores Inc., the nation's largest retailer. Internal studies, he said, show that Venus users prefer the Gillette razor over the Intuition by a 2-to-1 margin.

"They're a formidable competitor, but that being said, we're not going to change our core strategy," Kraus said.

The strategy, Kraus said, is "to introduce and to upgrade." Rather than push new products to market each year, as Schick did with the Intuition, Gillette gives its products new colors and shapes.

In April, the company will introduce Venus Divine, a new version of its women's razor that will retail for about $9.99. In September, it will introduce the $8.99 MACH3Turbo Champion, a red version of Turbo with a racing car theme aimed at younger shavers.

Kraus would not comment on possible endorsement deals. However, a current Maxim magazine promotion offers Gillette shavers a chance to attend the Skip Barber Racing School.

William Steele, an analyst at Banc of America Securities, said Gillette is being cautious. Gillette warned Tuesday that competition from Schick - which plans to introduce a four-bladed razor, the Quattro, in mid-September - could cut into Gillette's earnings by as much as 4 cents a share this year.

"It's just prudent management," Steele said. "Schick is a very viable competitor ... .but it's not going to imperil [Gillette's] earnings momentum this year or next year to any great degree."

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Schick, the No. 2 razor maker, is a long way from challenging Gillette's dominance in the sector. Schick has 15 percent of the overall market for razors, razor blades and disposable razors, to Gillette's 72 percent, according to Information Resources data for the year that ended July 13.

Jacqueline Burwitz, an Energizer spokeswoman, said Schick's recent introduction of innovative products such as the Intuition was a major reason Energizer purchased the unit this year from Pfizer Inc. "In the past five years, Schick has not been as innovative as Gillette," Burwitz said, "but that's changing."

Gillette's quarterly earnings exceeded the expectations of analysts, who had forecast average earnings of 29 cents a share. Officials attributed more than half of the increase to the weakness of the dollar against the euro, which inflates the weight of overseas sales.

Gillette generated about one-third of its sales revenues in Europe.


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