Procter & Gamble Co. (PG) witnessed a sharp decline in its stock price after posting dismal fourth-quarter results on Thursday. The stock closed down 4.5% at $51.46. Over the past 52 weeks, Procter & Gamble has traded between $43.93 and $73.57.
The company’s quarterly net sales and profit dipped 11% and 18%, respectively. Procter & Gamble has lost market share to its competitors and other private-label brands in recent months. Sales volume fell by 5%. Moreover, international sales were hurt as the company raised prices to pass on higher product costs to consumers on the back of a stronger dollar.
Consumers with lower disposable income are also veering towards cheaper substitutes. In order to revive sales and capture the loss market share, Procter & Gamble announced plans to cut prices, expand its retail channels, including online sales, to focus more on lower priced value driven products and simplify its global operations.
For the first quarter of 2010, management expects organic sales growth of 0% to negative 3%. Foreign exchange is expected to hurt sales by approximately 7%. Therefore, net sales are expected to be down 7% to 10% versus the prior year. Earnings are expected in the range of 95 cents to $1.00 per share.
Our recommendation on the stock is Neutral.
Read the full analyst report on “PG”
Zacks Investment Research