Procter & Gamble (PG)the maker of Tide, Dawn, Bounty and other leading household brands warned on Friday that consumers would cut spending as inflation worries mount.
P&G posted 7% revenue growth for its most recent quarter ended June 30, its strongest growth in years. The company was able to push consumers through higher prices. But its sales volumes were recently down 1% quarter, a sign that consumers are voting back.
The company is forecasting revenue growth of between 3% and 5% for the coming fiscal year, up from 7% last fiscal year.
Speaking to analysts on Friday, P&G executives said that while consumers are still buying household items, they are beginning to change their purchasing behavior.
For example, consumers are not stocking their pantries as much as they were at the beginning of the pandemic, and they are buying more private label, particularly for stationery.
With shoppers “more exposed to inflation generally in the fastest-inflating market in 40 years, it would be naïve to assume consumers aren’t watching their cash spending,” P&G chief financial officer Andre Schulten told analysts.
P&G stock fell about 5% as of Friday afternoon.
The consumer giant is the latest company to warn that consumers are cutting back on spending, an ominous sign for the US economy. The highest inflation in more than 40 years has taken its toll and consumer confidence has fallen for three straight months.Walmart (WMT) and best buy (BBY) said this week that many shoppers have cut spending on durable goods like clothing and electronics to focus on paying for essentials.
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