Higher food and gas prices and several quarters of sticky inflation have forced lower-income consumers to tighten spending and seek cheaper alternatives for some pantry staples.
P&G's shares fell about 3% in premarket trading on Wednesday.
The Tide maker expects fiscal 2027 total net sales to grow in the range of 1% to 3%, compared with 3.3% growth in 2026. At the mid-point, the forecast was slightly below analysts' average estimate of 2.7% growth.
The company expects fiscal 2027 adjusted earnings per share between $6.89 and $7.11, with a midpoint slightly below estimates of $7.04, according to data compiled by LSEG.
"Fiscal 2026 was a year of foundation building," said P&G CEO Shailesh Jejurikar, who took charge of the consumer goods bellwether in January.
The company also named Jejurikar as chairman from August 1 and said executive chairman and former CEO Jon Moelle will retire on August 14.
MARGINS UNDER PRESSURE
P&G's core operating margin dropped 130 basis points, its third straight quarter of decline as the company ramps up investment in marketing and deals with higher commodity costs as a fallout of the U.S. war in Iran.
The company stuck to its expectation of a roughly $1 billion profit impact in fiscal 2027 from higher raw material, energy and transportation costs due to surging oil prices.
A P&G spokesperson said there was some uncertainty around how long the costs would remain high and how prices would fluctuate.
Consumer-facing companies such as PepsiCo (PEP.O) have flagged higher input costs in the back half of the year.
P&G's overall fourth-quarter organic volumes were flat, falling in three of its five reported segments. Its pricier hair care and personal care products were once again a bright spot, with volumes rising 3% in the beauty category even as it kept prices broadly unchanged in the fourth quarter.
In contrast, rival Unilever (ULVR.L) posted its best quarter by volumes in over a decade as it shifts focus to beauty and wellness products.
The category has bucked broader spending weakness with consumers continuing to buy nice-to-have self-care items and giving companies the room to raise prices for newer launches for products such as shampoos and skin care products.
Procter & Gamble's fourth-quarter adjusted earnings per share of $1.43 narrowly beat estimates of $1.41. Its net sales rose 1.5% to $21.20 billion but missed expectations of $21.38 billion.
