The news: Procter & Gamble reported lower quarterly profits and declining sales volumes for the three months ended December 31, per CNBC.
By the numbers: Quarterly results were in line with Wall Street’s expectations. Adjusted earnings per share were $1.59 on $20.77 billion in revenues.
The context: Softening consumer demand is responsible for roughly half of the sales volume decrease; the rest is from reduced business in Russia due to the war in Ukraine, and inventory reductions in China.
The strategy: Despite clear evidence that higher prices are turning off shoppers, P&G plans to continue raising prices to offset higher material costs and supplier inflation, CFO Andre Schulten said on the company’s earnings call.
Tightening the purse strings: Consumers may have been resilient in 2022, but 2023 is shaping up differently. The personal saving rate remains near an all-time low, while nearly two-thirds (63%) of US adults live paycheck-to-paycheck, per a November survey by LendingClub.
Looking ahead: P&G and Unilever are betting that their brand name products are sticky enough to keep shoppers from switching to cheaper alternatives. But that’s a risky bet to take, given consumers’ growing price sensitivities.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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