SK-II Sales Decline, P&G Has Only 1% Growth Last Quarter

From the reported data, P&G's overall growth remained low in the last quarter, with even no growth in the beauty and skincare division. Organic sales of skin and personal care products grew in the mid-single digits, but some of the growth was offset by the negative impact of declining SK-II sales.

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On the evening of October 19, P&G Group announced its results for the first quarter of the fiscal year 2023 (July-September 2022). According to the financial report, the Group's net sales in July-September were $20.6 billion, up slightly by 1% year-on-year, and organic sales increased by 7% excluding the impact of foreign exchange, acquisitions, and divestitures, with net profit, reaching $3.963 billion, down 4% year-on-year.

weak response market as prices increased

According to the report, organic sales growth was driven primarily by higher pricing and an aggressively performing product portfolio, although some of the growth was offset by a decline in sales volume. From the reported data, P&G's overall growth remained low in the last quarter, with no growth even in the Beauty & Skincare segment.

Specifically, organic sales in the Beauty & Skincare segment increased by 4% to $3.961 billion in net sales, benefiting from price increases under an innovation-driven strategy. Organic sales of skin and personal care products grew in the mid-single digits, but the growth was partially offset by the negative impact of declining SK-II sales. In addition, organic sales of hair care products increased by mid-single digits driven by higher prices, but this was matched by contraction and sales volume declines in some markets.

Organic sales in the grooming segment increased 5% year-over-year, with net sales of $1.625 billion. While organic sales grew for most products, slower growth in some appliance markets pulled down the overall growth rate.

Organic sales in the Fabric and Home Care segment increased 8% year-over-year, with net sales of $7,082 million. Organic sales went up in all regions of the Home Care business, but the positive impact of price increases was partially offset by a decline in sales due to a weak response in some markets as prices increased.

Organic sales in the Baby, Women's, and Home Care segments increased 6% year-over-year, with net sales of $4.934 billion. Specifically, the division still achieved full price increases across all categories, but the positive impact was partially offset by a lower product mix in Russia and a decline in sales in the home care segment markets.

Lowered sales expectations

P&G CEO Jon Moeller said that P&G still achieved more objective results in a very difficult cost and operating environment. Supported by these results, P&G will maintain an integrated strategy going forward to meet current challenges and continue to achieve the right strategy for balanced growth and value creation. 

It claimed in its earnings report that the outlook for P&G in fiscal 2023 includes unfavorable foreign exchange rates, commodity and cost increases, and higher freight costs, all of which have increased P&G's costs and profit and loss expenses by $3.9 billion. 

In terms of this situation, P&G lowered its guidance range for sales growth in fiscal 2023 by 3% to 1%, maintained its outlook for organic sales growth at 3% to 5% and maintained its expectations for diluted net earnings per share growth in the current fiscal year. It also added that it expects earnings per share results to be near the low end of its guidance range for the current fiscal year given the impact of foreign exchange.