(Bloomberg) — Procter & Gamble Co. organic sales surpassed estimates on higher volume, a change from earlier quarters where most of the company’s growth came from price hikes.
Organic sales rose 3% in the three months ended Dec. 31, P&G said Wednesday, the biggest increase in three quarters. Most of that was due to higher volume, meaning retailers bought more essentials like Dawn dish soap and Gillette razors to restock their shelves. Prices were unchanged compared with the year-earlier quarter.
Shares was up 2.6% at 7:03 a.m. in Wednesday premarket trading. The stock rose 14% last year, while the S&P 500 index gained 23%.
The results suggest that the era of endless price hikes may be waning. Companies are under pressure to slow inflation as President Donald Trump takes office. In an executive order issued Jan. 20, Trump said consumers are facing a “cost-of-living crisis” and that it’s “critical to restore purchasing power to the American family.”
“We see consumers trading up,” Andre Schulten, P&G’s chief financial officer, said in an interview. “They’re trading into either bigger pack sizes or they’re trading into higher-value items.”
P&G said innovation helped drive growth in its grooming and oral-care businesses. The company has been creating new products that it can charge more for, including all-over body deodorant and razors for different body parts. P&G has also been trying to get its products on more end caps in retail stores to encourage more impromptu purchases.
“The more we innovate, the more consumers see the value in that innovation,” Schulten said. “These are categories where consumers really value performance.”
Sales were also bolstered by P&G’s fabric and home care segment — the company’s largest business which includes the Tide and Swiffer brands — and double-digit gains in the segment that makes Bounty paper towels and Charmin toilet paper. Meanwhile, the beauty division was hurt by volume declines in Greater China, where P&G has said lower consumer confidence is weakening the business.
Schulten said organic sales in China were down 3% for the quarter.
The company reiterated its guidance for sales and profit in the current fiscal year, which goes through the end of June.
P&G is among the first consumer companies to report earnings in the US. The company gets roughly half of its revenue from North America.
Like other consumer-staples companies, shares of P&G have underperformed the broader market over the past year. The stock had gained less than 10% in the 12 months ended Jan. 21, compared with a 25% increase in the S&P 500.
(Updates with shares.)
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