Procter & Gamble Warns That American Consumers Are Starting to Crack Under Inflation


Procter & Gamble warned on July 29 that consumers are beginning to buckle under the weight of inflation, prompting shoppers to look for discounted brands.

The Cincinnati-based company, which makes a wide range of personal care and hygiene products, including Pampers, Pantene, and Tide, forecast full-year earnings below analysts’ estimates in its fourth-quarter and fiscal-year 2022 results.

Procter & Gamble forecast average fiscal 2023 earnings per share of $5.93, below analysts’ expectations of $6.02, adding that it expects headwinds of $3.3 billion after-tax from “unfavorable foreign exchange, higher commodity costs, and higher freight costs.”

The company said net sales rose 3 percent, to $19.52 billion, in the fourth quarter, beating analysts’ estimates of $19.41 billion.

That was due to the higher pricing of its health care, baby, feminine, and family care products, as well as home-care products and detergents, which the company said was due in part to China’s COVID-19 lockdowns and reduced operations in Russia following that country’s invasion of Ukraine.

However, P&G Chief Executive Jon Moeller warned in an interview with The Wall Street Journal that consumers are beginning to shift to cheaper, non-branded alternatives in an effort to stretch their dollars.

Moeller called the shift “small but meaningful,” noting that there is “no inherent reason why people are just going to stop buying modestly priced consumer products, daily-use essentials, where performance matters.”

‘Using Up Stockpiles’

He added the company is now using up products that it previously stockpiled during the COVID-19 pandemic or, in some cases, not replenishing supplies.

Earlier this week, for example, retail giant Walmart also slashed its quarterly and full-year profit outlook, citing a change in consumer behavior amid price hikes.

For the three months ended June 30, P&G reported a net income of $3.05 billion, or $1.21 per share, narrowly missing out on analysts’ estimates of $1.22 per share.

Looking forward to the fiscal year 2023, the company said it expects organic sales to be up 3–5 percent, compared with 7 percent in 2022, evidence of slowing consumer demand. Meanwhile, earnings per share are expected to be flat to up 4 percent.

“Fiscal year 2022 was another strong year,” said Moeller. “The P&G team’s execution of our integrated strategies delivered strong top-line growth, earnings growth, and significant cash return to shareowners in the face of severe cost and operational headwinds.”

“As we look forward to fiscal 2023, we expect another year of significant headwinds. We remain committed to our integrated strategies of superiority, productivity, constructive disruption, and an agile and accountable organization structure. They remain the right strategies to step forward into the near-term challenges we are facing and continue to deliver balanced growth and value creation.”

Shares of Procter & Gamble were down 3.6 percent in pre-market trading on Friday immediately following the earnings release.

Reuters contributed to this report.


Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.


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