Image: A.G. Lafley
Al Behrman  /  AP
Procter & Gamble said Tuesday A.G. Lafley, pictured, will step down as chairman Jan. 1.
updated 12/8/2009 9:56:04 AM ET 2009-12-08T14:56:04

Procter & Gamble Co. announced Tuesday that the A.G. Lafley era is coming to a close at the world's largest consumer products maker.

Lafley, who stepped aside July 1 as CEO after nine years, will also hand over the chairman's title Jan. 1 to his CEO successor, Bob McDonald.

When Lafley, 62, gave way as CEO to McDonald, 56, the former operating chief who's been with P&G since 1980, he said he would stay on as a full-time chairman to help McDonald's transition as president and CEO.

Lafley said in a statement Tuesday he is "retiring with confidence" effective Feb. 25 after 32 years at the Cincinnati-based company that dates to 1837.

Lafley, who took over amid profit warnings and diving stock prices in June 2000, helped right P&G by emphasizing innovation and a "consumer is boss" focus, which included spending more time in personal observation and interviews with consumers. He also pulled off the blockbuster $57 million acquisition of the Gillette Co. in 2005, expanding P&G reach into male-oriented products with Gillette's shavers and razors.

The maker of Tide detergent, Pampers diapers and Pantene shampoo built its key brands — it now has 22 with sales of at least $1 billion, up from 10 in 2000 — and sold off slower-growth ones such as Comet cleanser, Sure deodorant and Folgers coffee. The company has also increasingly targeted emerging markets such as China and India for sales growth.

McDonald took over with P&G sales struggling in the recession, but the company turned in better-than-expected first-quarter results in October and forecast a better outlook for the full year.

McDonald has pledged to aggressively win back market share from lower-priced competitors and store brands; P&G has cut prices across its broad portfolio, stepped up advertising focused on offering value, and added both cheap versions of its products and new premium-priced items.

Lafley said Tuesday that the strategies are working, and it's time to complete the management transition.

"A.G. has worked side-by-side with me and our leadership team before and since I became CEO," McDonald said in a statement. "He has been one of the greatest chairmen and CEOs in P&G history. He cannot be replaced, but I am honored to succeed him."

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