P&G (NYSE: PG) announces first big layoff in 13 years

Procter & Gamble (NYSE: PG), the maker of Tide laundry detergent and Gillette razor blades, has announced it will drop 7,000 workers, or 15% of its non-manufacturing workforce.

The cutback comes amid sluggish consumer demand for P&G’s premium-priced products and concern about inflation as tariffs ramp up. In addition to the layoffs, P&G says it will dump some of its extensive product portfolio.

The company’s sales fell 2% in the fiscal 2025 third quarter ended March 31 from a year earlier. And it cut its estimate for organic sales growth to 2% for the year ending June 30 from its previous estimate of 3% to 5%.

The payroll reduction represents the first major layoff since 2012, when P&G axed 5,700 workers to streamline a bloated array of products and personnel. More came after that. From 2012-2016, Procter rid itself of 34,000 jobs, or 26% of its workforce, through buyouts, layoffs, attrition and brand sales.

Historical comparison

It’s interesting to compare the economic and stock-market backdrop of that period to the present. The economy averaged annual growth of 2.3% from 2012 to 2016. That’s the same number as the last three years—2022-2024 (figures for 2020-21 were distorted by the Covid pandemic).

Looking at the stock market, the S&P 500 index climbed 74% from 2012-16. That compares to 55% over the last five years. 

It’s difficult to come to any conclusion about what these equity and economic numbers mean going forward. That’s mainly because the economic environment is completely different now from 2012-16. 

During that period, the economy and stock market were rebounding from the 2008 financial crisis. However, now the big issue is what impact tariffs will have on the economy and financial markets. So what will happen from here is anyone’s guess.

Stock price still slumped

As for P&G, the 2012-16 cuts weren’t enough to move the stock much. P&G shares climbed 5.9% in 2016, well behind the 9.5% gain for the S&P 500. That led legendary activist investor Nelson Peltz and his Trian Fund Management firm to take a stake in the company in 2017.

He convinced the company to slash its bureaucracy, but the stock didn’t respond much. Since 2017 it has appreciated 94.5%, compared to 169% for the S&P 500.

Procter’s stock has dropped 2.6% over the past year, lagging far behind the S&P 500’s 12.5% gain and the 9.3% increase for the S&P 500 Consumer Staples index.

Yet Morningstar analyst Erin Lash still believes in the company. Sales have been sluggish in recent quarters, she acknowledged in commentary. 

“However, we don’t believe this suggests cracks in the firm’s competitive prowess. After rightsizing its category and geographic reach by shedding around 100 brands beginning about 10 years ago, P&G also embraced a more holistic approach to brand investing…. Its brands should maintain clout with retailers and consumers.”