Demand for beauty products falls Procter & Gamble (PG.US) sales growth is weak for two consecutive quarters

The Zhitong Finance App notes that P&G (PG.US)'s sales growth was weak for the second consecutive quarter due to too small price increases and weakness in key areas such as skin care and baby care. According to financial reports, P&G's revenue for the first quarter of fiscal year 2025 was US$21.74 billion, down 0.6% year on year, falling short of market expectations; adjusted earnings per share were US$1.93, exceeding market expectations of US$1.90.

In the first fiscal quarter ending September 30, P&G organic sales increased 2%. Analysts had expected an increase of nearly 2.1%. P&G's price increased by an average of 1% during this period, the same as the previous quarter, and far lower than the increase in the same period last year.

The company's unexpected decline in the beauty product category was mainly driven by skincare products. Sales of such products fell sharply and sales also declined due to the weak performance of its high-end brand SK-II sold in China. This decline was partially offset by P&G's textile and home care products (including stain remover) outperforming expectations in the face of increased sales.

Financial reports show that compared with the previous quarter, the company's performance was stable, and the increase in the previous quarter was far lower than Wall Street's expectations. The company reaffirmed its revenue and profit targets for the current fiscal year, including achieving organic sales growth of up to 5%, which indicates that the company expects growth to accelerate over the next few quarters.

Growth faces challenges

Chief Financial Officer Andre Schulten said in an interview: “This quarter's revenue was relatively weak.” He also said that weakness in China and the Middle East also dragged down performance. The war in the Middle East sparked boycotts and weakened consumption. “These two factors are really holding back here, but the core of the business is still strong,” Schulten said.

P&G has always wanted to improve performance through high-end products such as full-body deodorants and shavers for different body parts. New products and features provide greater flexibility at higher prices. Schulten said that more expensive products such as the Oral-B electric toothbrush are performing well, and P&G is launching a new low-cost version to attract more consumers.

Despite unfavorable commodity costs, the adjusted gross margin for the first quarter was in line with expectations.

Although the rate of price increase has slowed significantly, Schulten said he doesn't think prices will begin to fall. “Cost changes will not make deflationary adjustments necessary for us or the industry as a whole,” he said.