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Key takeaways
- The consumer products maker has been seeing a “nervous and cautious” consumer in recent months, Procter & Gamble’s chief financial officer said Tuesday.
- Tariffs and government shutdowns have exacerbated the “tougher context” for sales in the United States, said Andre Scholten, chief financial officer.
Shares of Procter & Gamble (PG) hit a two-year low on Tuesday after the consumer goods giant’s chief financial officer issued a warning about the health of the US economy.
“I think the context in the U.S. is more volatile, probably the most volatile we’ve seen in a long time,” Andre Scholten, Procter & Gamble’s chief financial officer, said when asked at a Morgan Stanley conference about the state of its packaged goods business.
Sales appear to be down “significantly” in volume and value in October, Scholten said, adding that he does not expect November results to be “materially different.”
“We knew the consumer was more nervous and cautious” in the quarter, he said, and that last year’s port strike that prompted customers to stockpile goods would make for tough year-over-year comparisons. The government shutdown and delay of some SNAP benefits also impacted sales.
Why is this important to investors?
Procter & Gamble makes dozens of products in many industries that American consumers use every day, from Dawn dish soap to Tide and Gain laundry detergent and Pampers diapers. The company is in a unique position to comment on the health of the American consumer, considering the range of basics it sells.
Shares fell as much as 3% Tuesday morning to trade at their lowest level since December 2023. The stock pared losses and ended the session down 1.1%.
Procter & Gamble has made a slew of changes this year. It announced restructuring efforts in June, which will include layoffs of 7,000 employees and potential exits from certain sectors, and appointed a new CEO in July.
Last month, Scholten said the company saw most of the sales growth at the low end of its product lines, suggesting that higher-income households were “trading up” to premium products, while middle- and lower-income consumers expanded budgets and opted for cheaper brand-name products.
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