P&G Restores Organic Sales Growth After a Stalled Quarter

The Tip Desk · October 22, 2026 · 5 min read

Organic sales rose 4.0% in the July–September quarter as volume and mix returned, and the company kept its fiscal 2027 organic-sales and core-EPS ranges intact.

The Procter & Gamble Company (PG) reported first-quarter fiscal 2027 net sales of $23.3 billion, up 4.0% from a year earlier, and organic sales of the same 4.0% pace after the metric was unchanged in the immediately preceding quarter and up 3% in the quarter before that.

Organic sales, which exclude foreign exchange and acquisitions and divestitures, were driven by a 2% increase from volume and a 1% increase from favorable mix. Pricing had a minor positive impact. In the April–June quarter, volume, pricing and mix had a neutral impact on sales growth.

Diluted net earnings per share were $1.97, up 1% versus the prior year, as the increase in net sales was partially offset by an increase in operating costs. Core earnings per share were $2.00, up 1%. Currency-neutral Core EPS was unchanged versus the prior year. Net earnings were $4.8 billion.

Reported gross margin decreased 160 basis points versus the prior year. Core gross margin and currency-neutral Core gross margin decreased 150 basis points and excluded incremental restructuring charges. The company said the Core decline was driven by 140 basis points of higher commodity costs, 140 basis points of product reinvestments, 50 basis points of unfavorable mix and 10 basis points of rounding and other items, partially offset by 120 basis points of gross productivity savings, 50 basis points of tariff-related lower costs and recognized recoveries and 20 basis points of increased pricing.

Reported selling, general and administrative expense as a percentage of sales declined 90 basis points versus year ago. Core SG&A as a percentage of sales decreased 80 basis points and 70 basis points on a currency-neutral basis. The company attributed the Core SG&A decline to 130 basis points of productivity savings and 100 basis points of net sales growth leverage, partially offset by 120 basis points of reinvestments and 40 basis points of rounding and other items. Reported operating margin decreased 70 basis points versus the prior year; core operating margin decreased 80 basis points and 90 basis points on a currency-neutral basis and included 250 basis points of gross productivity savings.

Beauty organic sales increased 5%, with net sales of $4.41 billion up 6.4%. Hair Care organic sales increased mid-single digits on innovation-based pricing in North America and Latin America, favorable product mix and higher unit volume. Personal Care organic sales increased mid-single digits on volume in Greater China and Europe and favorable mix, partially offset by trade investments. Skin Care organic sales increased mid-single digits on favorable premium mix and a unit-volume increase in North America.

Grooming organic sales increased 5% on innovation-based pricing, primarily in North America and IMETA, and favorable product mix; volume was a 0.4% drag. Health Care organic sales increased 3%. Oral Care organic sales increased low single digits on premium mix and innovation-based pricing, partially offset by a unit-volume decline. Personal Health Care organic sales increased low single digits on higher pricing, primarily in North America and Latin America, and favorable mix, partially offset by a unit-volume decline.

Fabric and Home Care organic sales increased 5% on volume increases in North America and Europe and favorable geographic and product mix. Baby, Feminine and Family Care organic sales increased 3%. Baby Care organic sales increased mid-single digits on unit volume, primarily in Greater China and North America, and favorable premium mix, partially offset by lower pricing, primarily in North America. Feminine Care organic sales increased low single digits on favorable mix and innovation-based pricing, primarily in North America, partially offset by a unit-volume decline in Europe. Family Care organic sales increased low single digits on a unit-volume increase, partially offset by merchandising investments.

Operating cash flow was $5.8 billion, and free cash flow productivity was 93%. The company returned $3.9 billion of cash to shareowners via $2.6 billion of dividend payments and $1.3 billion of share repurchases.

P&G updated its fiscal 2027 all-in sales growth guidance to 2%–4% versus the prior year, reflecting the acquisition of Thorne as of October 1, 2026. It maintained organic sales growth of 1%–3%, including a 30–50 basis-point headwind from brand, product-form and go-to-market discontinuations. Diluted EPS growth guidance remained 1%–5% versus fiscal 2026 diluted EPS of $6.62. Core EPS growth remained in-line to 3% versus fiscal 2026 Core EPS of $6.89, a range of $6.89 to $7.11 with a $7.00 midpoint, or about 1.5% growth.

The company now expects a $1.4 billion after-tax commodity-cost headwind from higher raw materials, energy and transportation costs, $300 million after-tax from higher net interest expense, $150 million after-tax from lower non-operating income and $50 million after-tax from unfavorable foreign exchange, a combined $0.79 a share headwind or an 11% drag on Core EPS growth. It now expects a Core effective tax rate of 20%–21%, capital spending of 4.5%–5.5% of net sales, free cash flow productivity of 85%–90%, over $10 billion in dividends and approximately $5 billion of share repurchases in fiscal 2027.