So far, Procter & Gamble (PG) is seeing little resistance from shoppers to inflation-driven price increases it has taken in recent months.
"Our price elasticities are 20% to 30% lower than we were expecting. Typically at this point in the cycle, there's a shift down to private label [products] which we're not yet seeing," P&G CEO Jon Moeller said on Yahoo Finance Live. Moeller hinted P&G may take a short-term pause before considering future price increases.
"We've announced price increases in the majority, I think nine out of 10 categories. Some of those price increases have not yet come to the shelf. So we're going to work through that before we take the next step," Moeller added.
On Wednesday, P&G reported volume gains in all five of its business lines for its second fiscal quarter. Volume increases were led by an 8% increase in the company's fabric care segment. Sales rose faster than volume in all segments, reflecting P&G's recent price increases and consumers not balking too much at the hikes as suggested by Moeller.
Here is how P&G performed compared to Wall Street estimates for its second fiscal quarter:
Net Sales: $21 billion vs. $20.35 billion
Organic Revenue Growth: +6% vs. +3.97%
Diluted EPS: $1.66 vs. $1.65
Fiscal Year Outlook
Organic Revenue Growth: +4% to +4% (was +2% to +4%) vs. +4.1%
Core EPS Growth: +3% to +6% (was +3% to +6%) vs. +4.4%
Shares of P&G are up 4% Wednesday morning following the results. The Dow Jones Industrial Average component's stock has gained 17% over the past year, slightly outperforming the Dow's 16% advance.
The Street will likely cheer the company's reiterated earnings outlook in a red-hot inflationary backdrop.
"We applaud recent momentum at P&G, and see enduring prospects for long-term top- and bottom-line growth (ahead of peers) — led by the U.S. and China. Although near-term challenges from elevated year-ago revenue growth comparisons and building FY22 cost/supply inflation do present risks (especially in Baby, Family, and Home Care categories), we see a robust innovation pipeline, superior in-market execution, advantaged pricing power, and refocused productivity capable of surmounting them —protecting market shares and bottom-line/FCF results alike," said Deutsche Bank analyst Steve Powers in a pre-earnings research note.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit