Welcome to the "not great, but stable" consumer economy, as P&G sees it
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Welcome to the "not great, but stable" economy, according to Procter & Gamble.
Why it matters: With a wide range of consumer products such as Pampers diapers, Bounty paper towels and Head & Shoulders shampoo, P&G has unique insights into the state of the American consumer.
State of play: P&G Friday reported better-than-expected quarterly sales, powered by a 4% increase in organic volume for its beauty category, which includes products like Old Spice deodorant and Gillette razors.
- But the company also reported a 2% organic volume decline in its health care category, which includes the Vicks and Pepto Bismol brands, and a 2% decline in its fabric and home care segment, which includes the Tide and Gain laundry brands.
- "The consumer environment is not great, but stable," CFO Andre Schulten told reporters, according to CNBC and Bloomberg.
That may sound like how you'd describe the condition of a hospital patient, but that's how the company is describing the state of the American consumer.
Zoom in: Shoppers are becoming "a bit more careful in terms of purchase decisions and consumption," Schulten said on an earnings call.
- Which means competitors are ramping up promotions, particularly in the fabric care and baby care segments, he added.
The good news for the consumer conglomerate is that multiple cost hurdles are receding.
- "The commodity headwinds" are "coming down," Schulten said on the earnings call, particularly with energy costs.
- And the company expects a tariff impact of about $400 million, down from a previously estimated $800 million.
The bottom line: "U.S. consumers living paycheck to paycheck are looking to stretch their money further by using every bottle of detergent or shampoo to the last drop and exhausting their pantry inventory before shopping for more, according to Schulten," as CNBC reported.
