Tide parent P&G sees its slowest sales in years as private-label store brands thrive
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Stuck on diaper duty… Shares of Procter & Gamble dropped 5% after the Pampers maker posted its worst sales growth in six years. P&G is a consumer-staples bellwether that owns dozens of household brands, including Crest, Charmin, Pantene, and Tampax. Though it beat Wall Street’s expectations, P&G’s quarterly profit fell 7% to $3.1B as demand cooled for its baby-care lines (like Luvs diapers) and luxury Japanese skincare brand SK-II. Organic sales in China (P&G’s No. 2 market) fell 9% as the country grapples with a slowdown in consumer spending. Yet it wasn’t all bad:
Cleaned up: P&G’s sales volume rose for the first time in over two years, thanks to stronger growth in hair, home care, and grooming (think: Gillette and Venus razors).
Checked out: P&G said its prices grew only 1% for the quarter — the lowest increase in nearly three years — as companies try to lure back inflation-weary shoppers.
KitKat copycats… After years of price increases, companies have recently eased on hikes as folks start cutting back on brand-name products. Last week, Gerber and Purina owner Nestle lowered its annual sales forecast after prices came down. Kleenex and Scott TP maker Kimberly-Clark also missed sales expectations, partly because retailers were stocking up on store-brand versions of tissue products. Private-label sales hit a record $236B last year, up more than 30% from prepandemic levels.
Staples aren’t as sticky as usual… In uncertain economic times, investors tend to look to “safe haven” consumer staples because folks always need essentials like toothpaste, TP, and dish soap. But after brand-name inflation, spending has shifted: 65% of US shoppers said they’re choosing cheaper private labels over national brands. Retailers are listening: in May, Target said it’d cut prices on 5K+ products, and Walmart rolled out its first new private store brand in two decades.