P&G to Raise Prices on Staples as Supply Problems Hit

The maker of Tide detergent and Gillette razors said it would start charging more for certain beauty, oral care and grooming products such as razors. The price increases come in addition to earlier moves to start charging more for staples from diapers to toilet paper.

P&>, which released quarterly financial results on Tuesday, said the moves, along with increased demand for its products, should help offset added costs.

U.S. inflation is at its highest level in a decade as price increases from pandemic-related labor and materials shortages ripple through the economy.

“We do not anticipate any easing of costs,” P&> Finance Chief Andre Schulten said in an interview. “We continue to see increases week after week, though at a slower pace.”

P&> said organic sales, a measure that strips out deals and currency moves, increased 4% in the quarter ended Sept. 30. Profit fell slightly. The company said core earnings per share fell 1% to $1.61.

Costs are rising faster than P&> forecast. P&> now expects to spend $2.1 billion more on transportation and raw materials such as pulp and resin for the fiscal year ending June 2022. The company in July predicted a $1.9 billion increase.

Mr. Schulten said the company’s higher spending is wide ranging, particularly as it works to ensure it has products in stock as consumers increasingly encounter sparse shelves at stores.

He said P&> is enlisting backup suppliers, changing up shipping routes to get around bottlenecks, reformulating products and, in some cases, limiting how much any one retailer can buy at a time to avoid stockpiling.

“To the consumer, it looks like we’re in good supply,” he said.

Despite the higher expenses, P&> maintained its sales and profit outlooks for the year, saying increased revenue and cost reductions will enable the company to stay on track.

Demand remains high for pandemic hot sellers such as cleaners, paper towels and toilet paper even as more people return to work and school, Mr. Schulten said. Organic sales rose in every segment last quarter, with consumers buying P&> products in higher quantities and paying more, both because of price increases and because they favored higher-end mainstays, from pricey razors to premium diapers.

The biggest sales increase was in P&>’s healthcare unit, driven by higher demand for respiratory remedies as more people contracted colds and other bugs, compared with a year ago when people in many parts of the world were locked down as a result of the coronavirus pandemic.

During the latest quarter, P&>’s net sales rose 5% to $20.3 billion, higher than the consensus forecast of $19.8 billion from analysts polled by FactSet.

Write to Sharon Terlep at [email protected]