The Reckitt Benckiser share price falls after sales leap. Do I buy Reckitt?

UK consumer-goods giant Reckitt Benckiser (LSE: RKT) released its first-quarter results yesterday morning. Unfortunately, despite sales growth continuing into 2021, the Reckitt Benckiser share price slid again.

Down goes the Reckitt Benckiser share price

On Tuesday, the Reckitt Benckiser share price closed at 6,586p (almost £66). However, following the results announcement on Wednesday, the stock headed south right from the off. After falling early morning, the shares continued to decline all day. At its low yesterday, the share price dipped to a low of 6,315p, before inching up to close at 6,328p. That marked a fall of 258p, down 3.9%.

What caused the Reckitt Benckiser share price to fall on Wednesday? After all, Reckitt beat sales forecasts, thanks to booming sales of hygiene products used to fight Covid-19. Like-for-like revenues were up 4.1%, ahead of predictions. However, this was well below the 13.3% growth recorded a year ago as Covid-19 infections exploded last spring. Somewhat predictably, sales of Lysol disinfectant and the like surged, with sales of hygiene products soaring by 28.5%.

However, Reckitt took a hit as its health (sales -13%) and nutrition (-7.4%) divisions failed to live up to expectations. With most of the world masked up and in lockdown, cold and flu infections plummeted. This caused a drop of nine-tenths (90%) in sales of medicines such as Mucinex, Nurofen, and Strepsils. Nevertheless, total net revenue topped £3.5bn, while ecommerce sales rose by almost a quarter (24%) to more than an eighth (13%) of total revenues. So why the weak share price?

Reckitt ditches its RB brand

In 2009, Reckitt Benckiser launched a major rebrand as RB, introducing a new logo and dropping its historic monikers. Twelve years later, it has admitted defeat and, last month, it decided to be known as…Reckitt. With another new logo and market ticker (RKT). For a company with origins dating back 207 years to 1814, this branding blather is a waste of management time and effort. Meanwhile, the Slough-based business is aiming to expand through four growth drivers: increased penetration, market share gains, new places, and new spaces. Perhaps this expansion of its customers, product ranges, and markets will help boost the Reckitt Benckiser share price in future?

Would I buy Reckitt today?

Another thing to note is that RB hasn’t enjoyed the post-Halloween market surge fuelled by Covid-19 vaccinations. For the record, here’s the performance of the Reckitt Benckiser share price over various periods:

As you can see, the Reckitt Benckiser share price has been bumping along for years. Notably, it has failed to rise with the wider market surge of the past six months. What Reckitt really needs is a sustained boost to revenues. Yet, although the group aims to increase revenues by 4% to 6% in the medium term, it expects growth of only 0% to 2% in 2021. But would I buy into this business today?

At the current Reckitt Benckiser share price of 6,380p, Reckitt is valued at £45.8bn, making it a FTSE 100 powerhouse. The full-year dividend of 174.6p works out to a dividend yield of 2.7% a year, lower than the Footsie’s yield. Although there is a good, long-established business with decent brands inside Reckitt, it keeps struggling to make progress. For now, I prefer giant rival Unilever to the newly rebranded Reckitt!