Story Stocks^®

Proctor & Gamble (PG) is a bit Downy today despite wrapping up FY25 with a solid EPS beat and in-line revs. The consumer goods giant that owns brands such as Pampers, Crest, Downy, and Gillette, also provided in-line guidance for FY26 with core EPS growth of +0-4% and sales growth of +1-5% (organic sales growth of +0-4%). But maybe the bigger news was P&G naming a new CEO.

• Shailesh Jejurikar, currently COO, will succeed Jon Moeller as Procter & Gamble's President and CEO, effective January 1, 2026. Moeller will become Executive Chairman at that time. Jejurikar is a long time insider, having been with the company since 1989. He has held various senior leadership roles and helped build several of P&G's core businesses including global Fabric Care and Home Care and in regions including North America, Europe, Asia and Latin America.
• P&G's share price has been trending lower in recent months given what the company describes as a very dynamic, difficult and volatile environment. P&G is seeing heightened consumer anxiety with tariffs, inflation and interest rates, political and social divisiveness, and immigration and employment status uncertainty. And as it enters FY26, P&G expects the environment to remain volatile and challenging. Issues include rising costs, F/X, consumer anxiety, competitors, retailers and geopolitical dynamics.
• In Q4 (Jun), P&G reported net sales growth of +2% (organic +2%) to $20.89 bln. Its best category was Health Care at +2% organic sales growth, which includes oral care, personal health care, and OTC meds. Brands include Crest, Oral-B, Metamucil. Oral Care organic sales increased low single digits driven by product mix from premium innovation. All of its other segments (Beauty, Grooming, Fabric & Home Care, Baby, Feminine) were up +1% organically.
• Management explained in a WSJ article that American shoppers are slowing down and that consumers are using up their pantry inventory, delaying purchases and shopping at stores less frequently. P&G explained that lower-income consumers are looking for price promotions and smaller pack sizes, while higher-income are also looking for deals. Also, tariffs could add $1 bln to its annual costs.

Overall, we think investors were bracing for another slow quarter from this consumer products giant and they got that with its Q4 result. The commentary about a weak consumer, especially regarding lower income people, was expected. We have heard from many other retailers, from Target to Dollar Tree. What was most discouraging was P&G saying it expects more of the same in FY26. The new CEO brings a wealth of experience within P&G. Hopefully, he can make the right changes and guide P&G well during its ongoing portfolio and productivity plan. Some may argue an outsider with a fresh perspective might have been a better choice, but that's not how P&G operates. It usually promotes from within.