CINCINNATI — Brace yourself for higher prices on Pampers diapers, Tide detergent and Bounty paper towels.
Procter & Gamble Co. told Wall Street analysts Thursday morning that tariffs will add up to $1.5 billion to its annual costs, which will lead to price hikes in the second half of this year.
Chief Financial Officer Andre Schulten said the company will try to find cost savings through productivity improvements and changes in its supply chain.
But in response to an analyst's question, he confirmed that average price increases of 1 to 2 percent are possible.
"It’s important to understand this is an average global number," Schulten said. "The number that you have by SKU, by category, by brand, my market is very different and that’s where the decision needs to be made, right? That’s what the consumer will see."
Schulten said P&G's biggest tariff impacts are on materials used in packaging and finished goods imported to the U.S. from China. Exports from the U.S. to Canada are also seeing higher tariff-related costs.
Beyond the cost impact, Schulten said consumers are changing their buying habits in ways that could impact the company's future growth.
“The consumer has been hit with a lot of volatility," Schulten said. "Market volatility that impacts their portfolios, their 401(k)s, volatility on the economic outlook, uncertainty in the job market, volatility in terms of mortgage rate expectations, all the divisiveness and nationalistic rhetoric that we saw around the world, uncertainty on tariffs and the impact on prices and the availability of goods … That’s a lot to process. So, what we’re seeing is I think a logical response from the consumer to pause.”
P&G shares were down more than 7% by mid-morning, as investors reacted to its third-quarter performance.
The company fell short of Wall Street's expectations on sales and it reduced its profit projections for its 2025 fiscal year, which ends June 30.
It now expects 2-to 4% profit growth for the full year, instead of the 4-to-6% growth rate it previously forecast.
Watch in the video below: We break down the rising costs of baby items, and ways to save.
