At P&G and PepsiCo, tariff fallout is showing up in fewer laundry loads, heightened consumer anxiety
Add PepsiCo and Procter & Gamble, two of the largest consumer products makers, to the list of companies getting smacked by the Trump administration's tariff saga.
P&G, the maker of dozens of brands such as Tide detergent, Gillette grooming products and Charmin toilet paper, on Thursday cut its annual sales and profit forecasts, in large part because of tariffs and volatility in consumer demand. P&G CEO Jon Moeller told CNBC, "tariffs are inherently inflationary" and that higher prices on many of its products are likely soon. In an earlier forecast, P&G said it expected organic sales growth to be 3% to 5% for the fiscal year ending in late June. But now it expects that to be only 2%.
Over at PepsiCo, the company no longer expects its earnings per share to rise this year, blaming costs rising because of tariffs and consumer anxiety. It had previously said it expected them to rise by mid-single-digit percentage growth. 'We expect more volatility and uncertainty, particularly related to global trade developments, which we expect will increase our supply chain costs,' Chief Executive Ramon Laguarta said.
Clearly that uncertainty is dinging consumer-facing companies' stocks more than others. PepsiCo was down 3% in morning trading, while P&G slipped 4%. The Dow Jones Industrial Average was up slightly.
Both companies are scrambling to mitigate the impact of tariffs on their businesses, efforts made more difficult with the frequent changes to tariffs by the Trump administration.
P&G's finance chief Andre Schulten said, however, that before hiking prices, P&G would try moving sourcing around or change formulations, according to Bloomberg. Moreover, P&G would seek to accompany any price hike with a product improvement. The company is already seeing consumer behavior changing, reminding it to be cautious. CEO Moeller told Yahoo Finance that Moeller said consumers are doing fewer laundry loads each week to conserve detergent.
As for PepsiCo's Laguarta, he suggested that the beverage and food maker would be careful to avoid creating chaos in its operations even as it looked for ways to handle tariffs, saying the goal was "tominimize disruption to our operations, our consumer and customer relationships, and the long-term health of our business."
Like most CEOs, P&G's Moeller avoided faulting the Trump administration. He even told CNBC that administration has been 'very open to dialogue' but that P&G has been spending a 'fair amount of time' trying to determine what direction the economy and consumer spending were taking.
This story was originally featured on Fortune.com
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