(AP) Procter & Gamble Co., the maker of such iconic household products as Crest toothpaste, Tide detergent and Charmin toilet paper, is seeing shoppers cut back some of their purchases as they push back on price hikes.
The company said Thursday that sales slipped 1% in the latest quarter ended Dec. 31, the first quarterly sales decline since mid-2017. Meanwhile, the number of products it sells globally fell 6% in the quarter — half of that was because shoppers reduced purchases, while the rest was due to cutbacks in Procter & Gamble’s portfolio in Russia and retailer inventory reductions in places like China, the company said.
Profits also fell 7% in the quarter.
Procter & Gamble, like many consumer product companies, enjoyed a sales surge during the height of the pandemic as shoppers stocked up on essentials. And even as consumers faced higher prices on everything from food to rent in recent months, they have remained fairly resilient when it came to essentials like laundry and shampoo compared to discretionary items like trendy clothing. P&G has also made sure to offer lower-priced versions in its portfolio to hold on to price-sensitive shoppers.
But Thursday’s results show that the constant barrage of higher prices on everyday essentials is wearing down its consumers. P&G said it had to hike prices by 10% in the latest quarter and will keep raising prices as it seeks to offset higher costs in transportation, labor and other areas.
Economists and analysts are closely monitoring shopping behavior amid a challenging economy. The government reported on Wednesday that retail sales fell in December, marking the second consecutive monthly decline and the biggest monthly drop for 2022.
P&G executives acknowledged that there’s a lot of uncertainty for 2023, but the U.S. consumer is still intact, and the company upgraded its sales outlook, helped by higher prices.
“The consumer is holding up remarkably well in the U.S.,” P&G finance chief Andre Schulten told reporters on a call Thursday. He noted that he doesn’t see any significant shifts that are notable even in private label.
P&G reported earnings of $3.93 billion, or $1.59 per share, for the quarter. That compares with $4.22 billion, or $1.66 per share, in the year-ago period.
The results were slightly above Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $1.58 per share.
The company said that beauty product prices increased on average by 9%, while fabric and home care prices were up 13%.
The world’s largest consumer products maker posted revenue of $20.77 billion in the period, down from $20.95 billion in the year-ago period. Eight analysts surveyed by Zacks expected $20.61 billion.
In its key market China, which is lifting its stringent zero COVID-19 policy, P&G executives said it expects consumption to rebound to mid-single digits. But P&G said it’s hard to predict when that will happen.
P&G now projects total sales for the current fiscal year to a range from a 1% drop to unchanged, better than its previous range of a decline of 1% to 3%. The company maintained its full-year earnings outlook but said profits could fall at the lower end of guidance because of higher commodity and material costs.
In late afternoon trading, shares were down close to 2%, or $2.48, to $143.02.