Retail Stock Under Pressure: Procter & Gamble Co (NYSE: PG)

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Procter & Gamble Co (NYSE:PG) stock fell 0.8% in the pre-market session of Jan 21st, 2021 (Source: Google finance) post the second quarter of FY 21 despite decent results.

The household products group predicted that sales of brands including Ariel, Bounty, Tampax, Pampers and Head & Shoulders would remain strong even after the rollout of coronavirus vaccines. The trend for consumers to stay inside is leading them to wash and cook at home more often than usual. The phenomenon has boosted demand for a wide range of staples, from dishwashing tablets to toilet paper. Further, the concern about the spread of coronavirus has also made consumers more hygiene-conscious, suggesting lasting benefits for companies in the sector including Reckitt Benckiser of the UK and Kleenex maker Kimberly-Clark, as well as Procter & Gamble.

PG in the second quarter of FY 21 has reported the adjusted earnings per share of $1.64, while reported the adjusted revenue growth of 8 percent to $19.7 billion in the second quarter of FY 21. This is due to fact P&G was able to increase prices by 1 per cent, while volumes rose 5 per cent. Second quarter core gross margin expanded by 150 basis points, up 200 basis points, excluding currency impacts. Adjusted free cash flow productivity was of 113%, returning $5 billion of cash to shareowners, $2 billion of dividends paid and $3 billion of stock repurchase.

Moreover, US organic sales up 12%, Greater China, up 12%, Focus markets up 10% and enterprise markets, which are significantly impacted by the COVID pandemic, up 3%. Segment wise, Home Care up around 30%; Oral Care and Family Care, up double digits; Fabric Care up high singles; Personal Health Care, Feminine Care, Hair Care, Skin & Personal Care and Grooming up mid singles; and Baby Care up low-single digits. E-commerce sales up about 50% for the first half. Aggregate market share growth was of 20 basis points this quarter.

Looking into the second half of the group’s fiscal year, which ends in June, Procter & Gamble expects organic sales growth to be between 5% and 6%, up from a prior range of 4% to 5%, as well as core earnings growth to be in the range of 8% and 10%.

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