The Procter & Gamble Company (PG) Stock: Rises Despite Revenue Miss As Beauty Strengths Offsets US Weakness

TLDR

• P&G stock closed at $149.93 after rising 2.65% on mixed results.
• Quarterly net sales rose 1% to $22.21B but missed estimates slightly.
• Beauty and health care posted 5% sales growth, while baby care declined.
• Gross margin fell as product mix and restructuring costs weighed.
• P&G outlined a productivity plan with up to 7,000 job cuts by FY2027.

The Procter & Gamble Company (PG) stock closed at $149.93, up 2.65%, and rose to $150.85 in pre-market trading as investors reacted to the company’s latest quarterly update.

The Procter & Gamble Company, PG

P&G posted slightly weaker-than-expected revenue due to slower growth in the United States, but earnings held up better than feared as premium beauty demand, pricing actions, and global performance helped support results.

In its latest filing and earnings coverage, the consumer goods giant highlighted a challenging environment shaped by pressured consumer budgets, government disruption in its largest market, and persistent cost headwinds. Even so, management maintained its annual sales and profit outlook, signaling confidence in its ability to stay within target ranges.

Quarterly Results Show Modest Sales Growth

P&G reported net sales of $22.208 billion for the quarter, up 1% versus the prior year period. The increase was supported by favorable foreign exchange and higher pricing. For the three months ended December 31, net sales rose about 1% to $22.21 billion, though that result came just below Wall Street’s estimate of $22.28 billion.

Operating income fell 7% to $5.366 billion as lower gross margin and higher SG&A weighed on profitability. Net earnings fell 7% to $4.331 billion, while net earnings attributable to P&G shareholders declined 7% to $4.319 billion. Diluted net earnings per share came in at $1.78, down 5% year over year.

On an adjusted basis, P&G delivered earnings per share of $1.88, slightly above analyst expectations of $1.86, helping support the positive stock reaction.

Gross Margin Pressure Remains A Key Theme

P&G’s gross margin came in at 51.2%, down 120 basis points from the prior year. Management attributed the decline to unfavorable product mix and higher restructuring costs. Reuters also noted that core gross margin fell for a fifth straight quarter, pressured by tariffs and ongoing investments in different pack sizes meant to appeal to more cost-conscious shoppers.

The company raised prices by about 1% across categories during the quarter to offset tariff-related impacts. P&G maintained its view that tariff costs remain around $400 million, after previously reducing its estimate from a higher range earlier last year.

Category Performance Shows Beauty Leading The Pack

Performance across P&G’s portfolio remained uneven. The Beauty Segment led growth with a 5% increase in net sales, driven by a 3% increase in unit volume and positive pricing and foreign exchange effects. Hair care and personal care fueled the volume expansion, keeping beauty as the standout category.

Health Care also reported a 5% rise in net sales, supported by favorable foreign exchange and pricing. Grooming posted a 2% increase in net sales, helped by innovation-driven pricing and currency support, though unit volume declined 2% due to market contraction in North America and competitive activity in Asia Pacific.

Fabric & Home Care net sales rose 1%, reflecting pricing and foreign exchange benefits. Baby, Feminine & Family Care sales declined 3%, largely due to weaker unit volumes. P&G noted that baby care in China is growing at double-digit rates, supported by new premium “silk enhanced diapers.”

US Demand Hit By Consumer Pressure And Shutdown Effects

P&G’s results also reflected softer conditions in its biggest market. Reuters reported that weak spending by US consumers and the effects of a government shutdown delayed food assistance payments in October and November, squeezing lower-income households.

Management said sales were down across categories in the US, with beauty holding up best as consumers continued spending on self-care products even while cutting back on essentials like laundry and cleaning supplies. Total volumes remained below the typical 3% to 4% growth rate across categories, highlighting cautious demand.

Productivity Plan Targets Efficiency Gains

To sharpen execution, P&G announced a focused portfolio and productivity plan expected to generate restructuring costs of $1.5 billion to $2.0 billion over two years. A major element of the plan is a reduction of up to 7,000 non-manufacturing overhead roles by the end of fiscal 2027, aimed at streamlining the business and improving competitiveness.

New CEO Shailesh Jejurikar, who assumed the role on January 1, said the company remains on track to finish within its target ranges despite a difficult consumer and geopolitical backdrop.

Stock Performance Context

P&G shares are up 4.62% year to date, outperforming the S&P 500’s 0.99% gain. Over one year, PG is down 6.59% versus the index’s 13.59% rise. Over three years, PG has returned 12.41%, and five-year performance stands at 29.92%, both trailing the broader market.

For investors, P&G’s latest quarter highlights steady pricing power and beauty resilience, but also reinforces the need to watch margins, US demand recovery, and execution of its productivity plan.

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