P&G CEO John Mohler believes that American shoppers are becoming more discerning, but that no one is completely tightening their purse strings.
“That’s not the case. There’s definitely some shoppers becoming more cautious, and that makes sense,” Mueller told me on Yahoo Finance about whether consumers are tightening their purse strings.
Mr. Moeller said sales of private-label products relative to P&G brands have been “steady,” which he uses as a proxy for measuring consumers downsizing for economic reasons. He noted that U.S. sales have also shown growth over the past five quarters.
But the company’s fourth-quarter earnings, released Tuesday, did reveal some more cautious shoppers.
Organic sales growth of 2% fell short of consensus estimates, as did total sales.
Sales at the beauty, grooming and baby products businesses were slightly below analyst expectations.
P&G shares were down about 5% in premarket trading. The stock was the top on Yahoo Finance’s “trending ticker” board.
“U.S. consumption is weakening, leaving less room for additional pricing. China could be a variable, but beauty sales trends remain weak and outlook for when growth will return is dim,” Jefferies analyst Kaumil Gajrawala said ahead of the report.
Gajrawala downgraded P&G shares to “hold.”
Revenue Breakdown
Net sales: $20.5 billion, unchanged from the year-ago quarter, versus expectations of $20.74 billion
Organic sales growth: 2% (expected: 3.43%)
Beauty organic revenue growth: $3.7 billion (expected: $3.76 billion)
Grooming organic revenue growth: $1.6 billion (expected: $1.72 billion)
Healthcare organic revenue growth: $2.7 billion (expected: $2.67 billion)
Fabric and Home Care organic revenue growth: $7.3 billion (expected: $7.36 billion)
Baby, Feminine and Family Care organic revenue growth: $5.0 billion (prediction: $5.12 billion)
Gross margin: 49.8% (expected: 49.4%)
Adjusted EPS: $1.40, up 2.1% year over year; expected to be $1.37
Full-year organic sales growth: +3% to +5% (re-accelerating from fourth-quarter performance)
Full-year EPS growth: $6.91 to $7.05 (consensus estimate: $6.96)
P&G Chairman and CEO John Mohler spoke to Yahoo Finance about President Trump’s tax cuts.
On the impact: The tax cuts “have had an incredibly large impact. And, you know, that will become even more of a part of the conversation once the election is over and we start talking about 2025, when some of the tax provisions that were passed in 2017 are going to expire. But if you look at investment in the United States before and after the 2017 bill, there’s been a massive increase in investment, there’s been a massive increase in employment, and more importantly, there’s been a massive increase in taxes paid to the U.S. government. So the tax cuts have led to a lot of economic activity in the United States.”
On if the tax cuts aren’t extended: “There will certainly be an impact. Every decision that we make is based on the present value of discounted cash flows, and that’s after tax. So when you compare, other investments start to look better. So there will certainly be an impact.”
The story continues
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