[ad_1]
Procter & Gamble
Co.
stated that he was raising prices for some of his biggest brands, a strategy shift after the consumer goods giant has announced another quarter of revenue growth mediocre. More than a year of efforts to combat weak demand with lower prices on commodities like detergents Tide and Gillette, the leaders said Tuesday that the company would change course and try to push up the layers of Pampers and Bounty paper towels. P & G is only the last big American company to raise its prices in a strong US economy and healthy consumption. But unlike some manufacturers or food brands such as Coca-Cola Co., P & G has not highlighted any tariffs or commercial disruptions for its change. On the contrary, the leaders emphasized the dynamics of the market.
U.S. Household incomes and spending both rose at a healthy pace in June, the Commerce Department reported Tuesday, indicating that consumers have the capacity to generate economic output gains. The low unemployment rate, the increase in wages and consumer spending in the spring helped propel overall economic output by 4.1% in the second quarter.
This gives P & G and some of its rivals the opportunity to raise their discount prices to boost demand when their premium strategy has declined during the 2008 recession. P & G and its rivals lowered prices as consumers became less prone to paying big price for branded household items and established brands faced competition from cheap online start-ups.
Jon Moeller,
stated that price increases "will restore the structural economy" and could impact the industry as competitors respond. He said that other products beyond these names could see increases.
"The price introduces uncertainty and will have an impact on demand and volume," he said during a conference call Tuesday morning with reporters. "We will follow closely and adjust on a dynamic basis."
P & G indicated that it was increasing the price of its Pampers brand in North America by 4% on average and increasing its prices by 5% on its Bounty, Charmin and Puffs brands. The increases will come into effect later this year or early in 2019. As a major player, P & G tends to generate price increases across the industry
. 1st of July. P & G announces organic sales growth of 2% to 3% over the year, compared to 1% last year. Organic sales omit factors such as acquisitions, divestitures and currency fluctuations.
P & G has informed retailers of these increases, which affect products with higher production costs, said a spokesman for P & G. The company may raise prices on d & # s; 39 other products and reduce others. Luvs layers, for example, will be cheaper.
Colgate-Palmolive
Co.
also promised higher prices. On Friday, Colgate executives announced that they were raising prices in emerging and developed markets in the second half due to rising raw material costs. "Given the current promotional activity, we may not see competitors immediately follow, and we intend to remain rational, but we also understand the need to protect our market share," said the president of Colgate.
Ian Cook
says on the call.
Household items seem to be slightly more expensive. According to data provided by Nielsen, prices for the top 50 US household and personal care products rose 2.2% over the four-week period ended July 14th.
Wells Fargo
.
U.S. inflation is gradually on the rise. The Commerce Department said on Tuesday that the price index for personal consumer spending, the Federal Reserve's preferred inflation measure, was up 2.2% in June compared to the year before. 39, previous year and 0.1% compared to May. This marks the fourth consecutive month that the tonnage has met or exceeded the Fed's 2% target from one year to the next.
Separately, the Labor Department reported the cost of employment index, a measure of wages and benefits for civilian workers. rose 2.8% in June, the largest gain since the third quarter of 2008. This indicates that historically low unemployment is exerting upward pressure on the labor costs of employees. companies.
P & G, who added activist investor
Nelson Peltz
to its board of directors earlier this year after a disputed proxy vote, has been under pressure to show that it can win back buyers who have turned to low-cost and up-and-coming brands, or reduce purchases altogether.
Rising prices, but the bump might be short-lived, said SunTrust analyst William Chappell. If others do not follow, or if buyers reduce purchases, P & G will likely have to rely on promotions to recover sales. "I think most investors are waiting for this to happen, but it is too early to say."
In the fourth quarter ended June 30, P & G's profit decreased by 15 $ 1.89 billion, or 72 cents per share. The total business figure increased 3% to $ 16.5 billion, boosted by currency fluctuations.
The company announced organic growth of 1%, lowering prices in four of its five major product segments offsetting volume gains. P & G said prices fell overall by 2% during the quarter. In tissue and home care and the grooming division, price declines were more pronounced, falling 3%.
In the grooming segment of Gillette, organic sales fell by 3%. Sales of organic products increased 7% in the beauty division, which includes hair care products, and 2% in fabrics and home care.
P & G Chief Executive
David Taylor
sales remain too weak. "I am confident that the interventions are working," he said during a call to analysts.
The company's shares, down 13% since the beginning of the year, rose 0.5% on Tuesday morning.
Write to Sharon Terlep at [email protected]
