CINCINNATI, OH ( TheStreet) -- The chairman Procter & Gamble ( PG), A.G. Lafley, 62, will retire fr0m the company by February of next year.

Lafley will officially step down as chairman in January and will be handing over the reins to Robert McDonald, the president and CEO of P&G. McDonald will serve as chairman, in addition to his other responsibilities.

Lafley had been P&G's president and CEO since June 2000, where he has been credited with steering the leading consumer goods company in a direction that has doubled its sales. Over the years, P&G has built a portfolio of billion-dollar brands and has more than doubled its market capitalization.

P&G's average core earnings-per-share has grown 12% a year and its free cash flow productivity has been 112% a year since 2001.

"I am retiring with confidence in Bob McDonald and his team," Lafley said. "Our strategies and plans are working; the company delivered a strong July-September quarter and we expect sequential improvement over the balance of the fiscal year. P&G is innovating across the business, investing in near- and longer-term growth, and maintaining rigorous cash and cost discipline. This is the right time to complete our management transition."

McDonald succeeded Lafley as CEO in July. He has worked in several positions at P&G since 1980 in the U.S., Canada, Japan, Korea, the Philippines and Belgium. In 2004 he was appointed vice chairman of global operations and was promoted to chief operating officer in 2007. In July, he went on to become the company's president CEO.

McDonald was born on June 20, 1953 in Gary, Indiana, but grew up in Chicago. He graduated from the U.S. Military Academy at West Point in 1975 and received his MBA from the University of Utah in 1978.

Following the announcement, P&G shares slid 1.0% to close at $61.87 Tuesday.

Shares of other major consumer goods companies have also fallen. Johnson & Johnson ( JNJ) stock has fallen 0.4% to $64.10. Colgate-Palmolive ( CL) has fallen 1.4% to $81.80. Stephan's ( TSC) has slipped 1.9% to $2.70.

-- Reported by Andrea Tse in New York.

Follow TheStreet.com on Twitter and become a fan on Facebook.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.