Economic bellwether Proctor & Gamble is seeing its shares slide in the pre-market after missing earnings by a penny, and offering an outlook for earnings that are below estimates.This line stands out from the announcement:
Operating margin contracted 210 basis points primarily driven by lower gross margin. Gross margin declined 140 basis points due to higher commodity costs and unfavorable geographic and product mix, which more than offset manufacturing cost savings, pricing and volume scale leverage. Selling, general and administrative expenses (SG&A) as a percentage of net sales increased 70 basis points behind foreign currency impacts and investments to support the Company’s innovation and market expansion plans, partially offset by a reduction in overhead spending as a percentage of sales.
Higher commodity prices have been anticipated to be an earnings killer for a while now, and it hasn’t really happened, at least not across the board this quarter. P&G stands out like a soar thumb.