Braun Weakness Overseas Shaves Gillette Stock Price

Gillette Co. shares fell 4.6 percent after the company said sales and profit at its Braun household appliance unit will fall short of expectations because of weak economies in Japan and Germany.

Shares in the world’s leading maker of razors fell $4.06-1/4 to $85.87-1/2 in trading of 5.14 million shares, quadruple the three-month daily average.

Sales of Braun’s higher-priced products, such as its small appliances and electric shavers, have been hurt by economic conditions in Japan and Germany, two markets that generate more than half of Braun’s business. Braun accounted for $1.78 billion, or 18 percent, of Gillette’s sales last year, according to a report by PaineWebber Inc. analyst Andrew Shore.

“The weakness is really in the shaver category,” said J.P. Morgan analyst Michael Grant. “Their market share is holding but the size of the market is contracting.”

Japan also recently raised its value-added tax to 5 percent from 3 percent, hurting revenue, he said. Grant estimated that Braun’s total revenue for the quarter ended in June will fall 5 percent from the same period a year earlier. Those quarterly results will be reflected in Gillette’s third-quarter report.

Other household products companies also fell on Gillette’s news as the Dow Jones Industrial Average plunged 247.37 to 7694.66, its second-biggest point loss ever.

Still, the issues affecting the consumer stocks are short-term occurrences rather than structural problems, said Tim Drake, an analyst at Banc One Investment Advisors, which owned 758,651 Gillette shares at the end of March.

“There aren’t major changes in the growth outlooks for these companies,” said Drake. While J.P. Morgan’s Grant lowered his estimate for the year to $2.55 a share from $2.58, he maintained a “buy” rating on the stock.

Some stocks that moved substantially or traded heavily Friday:

NYSE

Sealed Air, up 6-9/16 at 53-1/8

W.R. Grace, up 2-1/2 at 72.

W.R. Grace agreed to sell its packaging business to Sealed Air Corp. for $5 billion in cash and stock and spin off its specialty chemicals operations to shareholders. Sealed Air, best known for its Bubble Wrap packaging, will absorb W.R. Grace’s packaging business.

Pep Boys - Manny Moe & Jack, down 6-1/16 at 27.

Several analysts downgraded the automotive parts chain after the company conceded it was “extremely disappointed” with second-quarter earnings released late Thursday, the Dow Jones News Service reported. Among the analysts downgrading the stock were Everen, Janney Montgomery Scott, Lehman Brothers and Merrill Lynch.

NASDAQ

Memtec Ltd., down 3-7/16 at 21-13/16.

The maker of water filtering and other industrial products reported disappointing earnings. The company said losses, restructuring charges and asset write-downs totaling $2.6 million, or 16 cents a share, were due to changes at its Filterite operations in France.

DSP Technology, up 3-5/32 at 9-9/32.

The maker of computer-automated instruments reported doubled earnings, which it attributed to lower expenses and higher demand for its data acquisition products. DSP is based in Fremont, Calif.

Geron, up 7-1/2 at 14.

The Menlo Park, Calif., biopharmaceutical company said it cloned the gene for the human telomerase catalytic protein, along with researchers from the University of Colorado at Boulder. The gene is believed to affect the aging of cells and could lead to anti-cancer drugs.