Procter & Gamble recently reported mixed quarterly results, highlighting the challenges the company is facing in bringing back shoppers after implementing price hikes across its product portfolio. The company’s prices were up by 3% compared to the same period last year, with Chief Financial Officer Andre Schulten clarifying that there were no nationwide price increases during the quarter. Despite disappointing sales, the consumer giant raised its full-year earnings growth outlook, which resulted in a 1% decrease in premarket trading of the company’s shares.
When compared to Wall Street expectations, Procter & Gamble’s performance in the fiscal third quarter did not meet analysts’ estimates. The company reported earnings per share of $1.52, surpassing the expected $1.41, while revenue stood at $20.2 billion, below the expected $20.41 billion. The net income attributable to the company for the quarter was $3.75 billion, or $1.52 per share, reflecting positive growth from the previous year. However, the net sales only rose by 1% to $20.41 billion, with organic sales showing a 3% increase.
Despite efforts to regain customer trust, Procter & Gamble’s quarterly volume remained flat for the second consecutive quarter. The company is yet to win back many customers who were deterred by the price increases over the past two years. However, three of P&G’s divisions reported volume growth. The beauty segment witnessed a 1% volume increase, driven by innovation in personal care, while the grooming business and fabric and home care division each saw a 2% and 1% volume growth, respectively. On the other hand, the health care, baby, feminine, and family care divisions experienced a decline in volume due to higher prices and a weaker cold and flu season.
Procter & Gamble faced market challenges in different regions. In China, the company’s second-largest market, softer demand was observed for high-end products like SK-II skincare. Moreover, geopolitical tensions in regions such as the Middle East led to retailers scaling back on promotions. In the U.S., the company’s largest market, volume grew by 3%. Schulten emphasized that American consumers are maintaining their shopping habits and are unwilling to compromise on product quality.
Looking ahead, Procter & Gamble has revised its full-year outlook, projecting core net earnings per share growth between 10% to 11%, an increase from the previous forecast. The company also adjusted its unadjusted earnings growth projection to a range of 1% to 2%, demonstrating a more positive outcome compared to earlier expectations. Procter & Gamble maintained its sales growth forecast of 2% to 4% for 2024 and anticipates a $900 million benefit from favorable commodity costs, indicating a shift from the negative impact of commodity costs in previous fiscal years.
Procter & Gamble’s struggle with price hikes and its impact on customer behavior and sales performance presents a complex challenge for the company. While there are areas of growth in certain product divisions, the overall picture indicates a need for strategic adjustments to win back customers and improve financial performance in the future.