Key Moments
- Procter & Gamble reported net sales of $22.21 billion for the quarter ended December 31, missing the $22.28 billion analyst consensus.
- Second-quarter volumes declined 1%, with growth limited to the beauty segment, where volumes rose 3%.
- Adjusted earnings per share came in at $1.88, above analyst expectations of $1.86, as the company maintained its full-year outlook.
Mixed Quarter as Top Line Disappoints
Procter & Gamble (P&G) posted a modest revenue miss in its second quarter, as softer demand in key U.S. categories offset strong performance in beauty. Net sales for the three months ended December 31 increased about 1% to $22.21 billion, slightly below the average analyst estimate of $22.28 billion, based on data compiled by LSEG.
The shortfall came despite adjusted earnings surpassing expectations, marking a mixed set of results for the U.S. consumer goods bellwether. The company’s performance is closely watched as a gauge of the broader consumer products landscape.
U.S. Consumer Strain Weighs on Core Categories
P&G’s sales were pressured by weakened consumer spending in staple product lines, including U.S. laundry detergent and toilet paper. These declines overshadowed resilience in beauty, which continued to attract consumer demand.
Lower-income consumers have been tightening their budgets, cutting back even on everyday essentials as they contend with elevated prices, a subdued labor backdrop, and the effects of wider geopolitical uncertainty.
Customer spending was further dampened by a U.S. government shutdown, which is particularly significant given that the United States is P&G’s largest market. The shutdown delayed food assistance payments in October and November. P&G finance chief Andre Schulten said in early December that sales were down across categories in the United States due to the shutdown.
Volume Trends and Management Commentary
Overall volumes fell 1% in the second quarter, well below what Schulten described as the typical U.S. category volume growth rate of about 3% to 4%. He attributed the weaker performance to both macro and company-specific factors.
“Consumers are in periods of less certainty, sometimes skimping a little bit on consumption,” said Schulten on a call with journalists, adding that the revenue miss was also a result of pantry and retail loading in the year-ago period due to a U.S. port strike and hurricane.
Guidance, Leadership, and Market Reaction
Despite the softer topline, P&G held its annual core profit and sales forecasts. New CEO Shailesh Jejurikar, who assumed the role on January 1, said in a statement that the company remained on track to complete the year within its targeted ranges, even amid a challenging consumer and geopolitical backdrop.
In premarket trading, shares of P&G, described as the world’s largest consumer goods company by market capitalization, were down about 1%.
Margins Under Pressure and Category Performance
P&G’s core gross margin declined for the fifth consecutive quarter. Management cited the impact of tariffs and stepped-up investments in varied pack sizes aimed at appealing to increasingly price-sensitive shoppers.
Sales volumes decreased in three of the company’s five reported product categories. The only area to post volume growth was beauty, which has stood out over the past year as consumers continued to purchase self-care offerings.
| Metric | Result | Additional Detail / Benchmark |
|---|---|---|
| Net sales | $22.21 billion | Analyst estimate: $22.28 billion (LSEG) |
| Net sales growth | About 1% | Year-over-year, quarter ended December 31 |
| Volume change (total) | -1% | Second quarter |
| Beauty volume change | +3% | Category accounts for about 18% of total sales |
| Core gross margin | Down | Fifth straight quarterly decline |
| Adjusted EPS | $1.88 | Analyst estimate: $1.86 |
| Share price (premarket) | Down about 1% | On the day of the report |
Beauty Segment Outperforms
Within beauty, which accounts for about 18% of P&G’s total sales, higher prices and some product innovation in hair and personal care supported demand. That portfolio includes Pantene and Olay brands. These factors helped lift beauty volumes by 3% during the quarter, bucking the broader volume decline across the company.
Pricing Actions and Tariff Impact
P&G has been using price increases to mitigate rising costs. During the quarter, the company lifted prices by about 1% across categories on some products to help offset the impact from U.S. President Donald Trump’s import tariffs.
The company has also revised its expectations for tariff-driven cost increases. An earlier projection of about $1 billion to $1.5 billion, communicated early last year, was reduced to about $400 million in October, and P&G reaffirmed that $400 million figure.
Earnings Beat Despite Headwinds
Excluding one-off items, P&G reported earnings per share of $1.88, topping analysts’ expectations of $1.86. The combination of pricing, cost management, and strength in beauty helped deliver the earnings beat even as volumes softened in other categories and gross margin remained under pressure.
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