Gillette razors, a brand owned by Procter & Gamble, is seen for sale in a store in Manhattan, New York City, U.S., June 29, 2022.
Gillette razors, a brand owned by Procter & Gamble, is seen for sale in a store in Manhattan, New York City, U.S., June 29, 2022. Reuters / ANDREW KELLY

Procter & Gamble Co delivered quarterly earnings that missed estimates on Friday and forecast lower sales growth, citing surging transportation and commodity costs, consumer cutbacks and retailer reluctance to hike prices.

P&G shares fell as much as 6% in the morning as the company missed quarterly earnings estimates for the first time in at least five years, according to Refinitiv data.

Chief Financial Officer Andre Schulten warned in a call with media that P&G, a bellwether for consumer products, is seeing "some resurgence" of shoppers buying cheaper store brand items in some categories. Private label brands in Europe are stronger, he said in a call with analysts.

Consumers are also buying less after rounds of price hikes the company has taken to cover its costs and protect profit margins.

"You see consumers maybe scrimp for a period of time, use up inventory, and that's what we're seeing," Schulten said.

Schulten added that retailers' reactions to price increases announced in July were "what you would expect."

"Nobody is pleased about the continued inflationary trends that we're seeing," he said, adding that discussions remain "constructive."

One of P&G's biggest retail customers is Walmart, making up about 15% of its sales as of last year. The retailer has warned it will make much less this year than it once expected.

Waves of the pandemic, clogged shipping ports and the Russia-Ukraine war have snarled global supply chains and led to a jump in prices of commodities including pulp, resin and polypropylene, pinching profits of consumer goods makers.

"As we look forward to fiscal 2023, we expect another year of significant headwinds," P&G Chief Executive Officer Jon Moeller said in a statement.

P&G, maker of an extensive roster of products including Pampers diapers, Tide laundry detergent, Bounty paper towels and Charmin toilet paper, forecast average fiscal 2023 earnings per share of $5.93, below analysts' view of $6.02. It estimated a hit of about $3.3 billion from a stronger dollar and higher commodity and freight costs.

A stronger greenback typically reduces profits of companies such as P&G that have sprawling global operations and substantial sales in foreign currencies.

On an adjusted basis, the company earned $1.21 per share in the fourth quarter ended June 30, missing analysts' estimates of $1.22 per share, according to IBES data from Refinitiv.

P&G said net sales rose 3% to $19.52 billion, beating analysts' estimates of $19.41 billion, as it benefited from higher prices.

Prices across P&G's brands, from Crest to Old Spice, rose on average about 8% in the fourth quarter, while sales volumes fell about 1%.

"One of the things that hurt them this quarter, is they didn't want to or couldn't push price as much," said Andrew Choi, a portfolio manager at P&G investor Parnassus Investments.

Analysts at Alliance Bernstein wrote in a research note that store brand cleaning products and paper goods like toilet paper are gaining traction, threatening P&G. The company also lost market share in laundry products, the analysts wrote.

The company forecast fiscal 2023 organic sales growth of 3% to 5%, compared to over 7% in 2022, signaling a slowdown in consumer demand.