P&G posts surprise sales drop on slowing demand for face lotions, diapers

FE Team | Published: October 21, 2024 23:39:49

Tide maker Procter & Gamble reported a surprise drop in quarterly sales for the second time in a row, as consumers in the United States, its biggest market, bought fewer name brand products and Chinese shoppers shunned them, reports Reuters.
P&G's CFO Andre Schulten sought to reassure investors, saying on Friday there were "no indications that the consumer is not with us."
Analysts and investors said economic uncertainty in the US market - which accounts for nearly half of P&G's total sales - has prompted some lower-income consumers to turn to rivals offering discounts, and cheaper private-label brands.
Growth in P&G's first-quarter organic sales in North America slowed to 4 per cent from 7 per cent seen a year earlier, as its reliance on price hikes faltered, while volumes rose.
The company's baby, feminine and family care segment, housing iconic diaper brand Pampers, saw a 2 per cent fall in sales during the quarter while its beauty segment, which includes troubled Japanese skincare brand SK-II, saw a 5 per cent drop.
"Consumers aren't feeling good out there after the bout of inflation we've had over the recent years, so we need an improvement in sentiment...for a company like this to do better," said Don Nesbitt, senior portfolio manager at F/m Investments, which has a stake in P&G.
The company maintained its forecast for the upcoming year.
"Pricing initiatives by the company didn't fully translate into the quarterly sales growth the street expected," said Louise Dudley, portfolio manager at P&G investor Federated Hermes. "P&G is seen as the bellwether for consumer habits and the company delivered roughly in line with expectations, with results and outlook suggesting little has changed."
Another barometer of consumer sentiment, packaged food maker Nestle on Thursday noted a weak demand environment would continue, flagging pressure from weaker economies such as Latin America, and cut its annual sales forecast.