Core Insights - Procter & Gamble Company's (PG) fourth-quarter fiscal 2025 results indicate steady margins despite global volatility, showcasing the effectiveness of its premiumization strategy [1][8] - The company achieved a 150-basis point expansion in core operating margin, driven by productivity improvements and disciplined reinvestment in innovation [1][8] - PG's core EPS grew by 6% year over year, reflecting its focus on product superiority and value across all tiers [1][2] Performance Drivers - PG's commitment to "irresistible superiority" across product, packaging, brand communication, retail execution, and holistic value has been a key driver of performance [2] - Successful product launches, such as Pampers in China and the SK-II LXP line, have gained significant market share by offering clear performance benefits [2] - The company's restructuring program aims to simplify its portfolio, optimize supply chains, and enhance organizational agility, creating room for further investment in its premium strategy [3] Competitive Landscape - In a challenging macroeconomic environment, peers like Colgate-Palmolive Company (CL) and Church & Dwight Co., Inc. (CHD) are also leveraging premiumization to maintain profitability [4] - Colgate maintained a gross margin of 60.1% in Q2 2025, benefiting from premium innovations and a favorable product mix [5] - Church & Dwight offset a 40-basis point decline in adjusted gross margin through productivity gains and strategic brand investments, reinforcing profitability [6] Valuation and Estimates - PG's shares have declined by 8.8% year to date, compared to a 5.6% dip in the industry [7] - The company trades at a forward price-to-earnings ratio of 21.73X, higher than the industry average of 19.46X [9] - The Zacks Consensus Estimate indicates year-over-year EPS growth of 2.3% for fiscal 2025 and 6.3% for fiscal 2026, although estimates have moved downward recently [10]

Core Insights - The iShares U.S. Consumer Staples ETF (IYK) is a passively managed ETF launched on June 12, 2000, designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market [1] - The ETF has amassed assets over $1.36 billion and seeks to match the performance of the Dow Jones U.S. Consumer Goods Index [3] - The ETF has a 12-month trailing dividend yield of 2.49% and annual operating expenses of 0.4% [4] Sector Overview - Consumer Staples - Broad is ranked 15 out of 16 in the Zacks Industry classification, placing it in the bottom 6% [2] - The ETF has a heavy allocation in the Consumer Staples sector, accounting for about 87.5% of the portfolio, with Healthcare and Materials rounding out the top three sectors [5] Holdings and Performance - Procter & Gamble (PG) accounts for approximately 14.82% of total assets, with the top 10 holdings making up about 66.57% of total assets under management [6] - The ETF has a return of roughly 6.81% and is up about 3.67% year-to-date as of August 7, 2025, with a trading range between $63.29 and $72.42 over the last 52 weeks [7] Risk and Alternatives - IYK has a beta of 0.54 and a standard deviation of 12.32% for the trailing three-year period, indicating a medium risk profile [7] - The ETF carries a Zacks ETF Rank of 3 (Hold), suggesting it is a reasonable option for investors seeking exposure to the Consumer Staples sector [8] Competitors - Other notable ETFs in the Consumer Staples space include Vanguard Consumer Staples ETF (VDC) with $7.67 billion in assets and Consumer Staples Select Sector SPDR ETF (XLP) with $16.25 billion in assets [9]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRUE For the Fiscal Year Ended June 30, 2025 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 False For the transition period from to Commission File No. 1-434 THE PROCTER & GAMBLE COMPANY Indicate by check mark whether the registrant (1) has filed all reports required to be filed b ...

Economic Overview - Recent economic data has raised warning signals, confirming concerns among U.S. corporate executives and consumers regarding the economic situation [1] - The non-farm payroll data released last Friday indicated a much worse labor market condition than previously reported, with a downward revision of nearly 260,000 jobs for May and June [3] - The average job growth over the past three months was only 35,000, marking the worst level since the pandemic [3] Consumer and Business Impact - Many U.S. businesses have paused investments and hiring due to uncertainty surrounding Trump's economic policies, particularly tariffs [4] - Consumer spending has decreased due to rising debt levels, leading to reduced consumption of non-essential goods [4] - Economic growth is expected to be steady but lower than in previous years, with forecasts predicting a 1.5% growth for 2023 and 1.7% by 2026 [4] Inflation and Pricing Pressure - Companies like Procter & Gamble have noted that economic uncertainty is suppressing consumer demand, with CFO Andre Schulten indicating a noticeable slowdown in consumption trends [5] - Prices for frequently imported goods, such as furniture and appliances, have risen, suggesting that companies are passing on higher tariff costs to consumers [5] - Economists anticipate that import tariffs will further increase prices in the coming months [5] Federal Reserve's Position - Federal Reserve Chairman Jerome Powell acknowledged the downward risks in the labor market while describing it as "robust," also noting the slowdown in consumer spending [9] - The housing market continues to be a drag on economic growth, with total spending on residential and non-residential projects down 2.9% year-over-year in June, marking one of the most severe annual declines since early 2019 [9] Employment Data Revisions - The recent large-scale revision of employment data revealed that the number of new jobs added in May and June was 258,000 less than previously reported, shifting the labor market from robust growth to near stagnation [12] - Despite a slowdown in hiring, most companies have not resorted to layoffs, and the unemployment rate rose to 4.2% in July, remaining relatively low [12] - The decline in non-farm employment and rising unemployment will significantly suppress consumer spending, particularly affecting low-income groups reliant on wages [12]

Core Insights - Procter & Gamble (P&G) announced a leadership change with COO Shailesh Jejurikar set to become the first Indian-American CEO starting January 1, 2026, succeeding Jon Moeller, who will transition to Executive Chairman [1][8][9] - The company reported a net sales figure of $84.284 billion for the fiscal year 2025, showing a slight increase from $84.039 billion in the previous year, with organic sales growth of 2% [2][4] - P&G's organic sales growth rate for fiscal year 2025 was the lowest in recent years, with a notable decline in the beauty segment, which saw a 2% drop in net sales [8][6] Financial Performance - For fiscal year 2025, P&G's net profit increased by 7% to approximately $16 billion, while gross profit remained relatively stable at $43.12 billion [2][3] - The company experienced a slight decrease in gross margin, down 0.2% to 51.2% [2] - The productivity plan announced in June aims to improve cost structure and competitiveness, with expected restructuring costs of $1 billion to $1.6 billion over the next two years [4][14] Segment Performance - The Fabric & Home Care segment generated net sales of $29.617 billion, remaining stable year-over-year, with a net profit increase of 3% to $5.848 billion [5][7] - The Beauty segment reported a 2% decline in net sales to $14.964 billion and an 8% drop in net profit to $2.715 billion [6][7] - The Health Care segment saw a 2% increase in net sales to $11.998 billion, with net profit rising by 8% to $2.440 billion [6][7] Market Trends - The Greater China region experienced a 5% decline in performance for fiscal year 2025, although there was a 2% growth in the most recent quarter [1][13] - P&G plans to raise prices on approximately 25% of its products in the U.S. due to tariff impacts, with an average price increase of about 2.5% across the portfolio [13][14] - The company anticipates a pre-tax cost increase of $1 billion due to tariffs, with specific impacts from imports from China and Canada [13][14]

Group 1 - The U.S. economy is experiencing a price surge driven by tariffs, affecting a wide range of products and businesses, leading to a significant economic impact [2][9] - The Consumer Price Index (CPI) for June shows a 1% increase in home goods prices, with textiles rising by 4.2%, and appliances up by 1.9%, indicating widespread inflation across various sectors [3] - Companies like Procter & Gamble and Mohawk Industries are raising prices due to increased costs from tariffs, with Procter & Gamble announcing an average price increase of 2.5% on about a quarter of its products [3][5] Group 2 - A survey by HSBC reveals that 72% of small and medium-sized enterprises in the U.S. are forced to increase operational costs, with 81.5% planning to raise prices [5] - The fluctuating tariff rates have created uncertainty for businesses, with some companies unable to plan effectively due to drastic changes in tax rates [5] - The shipping volume at the Port of Los Angeles has decreased by 15% compared to the previous month, as retailers are reducing order cycles to avoid tariffs [5] Group 3 - Federal Reserve Chairman Jerome Powell warns that the impact of tariffs is more severe than anticipated, creating a conflict between maintaining price stability and ensuring employment [6] - Economists predict that tariffs could increase inflation by approximately 1 percentage point over the next 12 months, indicating a potential rise in consumer prices [6] - The current economic situation is characterized by stagnant growth and high inflation, leading to concerns about stagflation, which poses challenges for the Federal Reserve's monetary policy [6][9]

Core Viewpoint - The current earnings season for U.S. consumer stocks has led to an unusual sell-off, despite strong earnings reports, indicating deep-seated market concerns about the sustainability of consumer strength [1][2]. Group 1: Earnings Performance - 83% of the 317 S&P 500 companies that have reported earnings exceeded expectations, yet stock prices generally fell post-announcement [1]. - Companies like Procter & Gamble (PG) and PepsiCo (PEP) experienced initial stock price increases after reporting strong earnings, but ultimately saw declines in the following days [3]. Group 2: Market Sentiment - The prevailing market environment suggests a tactical "sell-the-news" approach, with investors opting to take profits rather than establish new long positions [2]. - Negative earnings surprises have led to significant stock price drops, with companies like Philip Morris International (PM) and Chipotle Mexican Grill (CMG) facing severe sell-offs following disappointing results [4]. Group 3: Exceptions to the Trend - A few companies managed to resist the broader sell-off, including Las Vegas Sands (LVS), Wingstop (WING), and Builders FirstSource (BLDR), which showed resilience due to specific business strengths [5]. - Despite these exceptions, the overall sentiment in the consumer sector remains pessimistic, with investors wary of future economic uncertainties [5].

Investment Rating - The report suggests a positive outlook for domestic brands and a recovery for international beauty brands in the Chinese market, indicating potential investment opportunities in the cosmetics and medical beauty sectors [2][3]. Core Insights - The cosmetics and medical beauty sector underperformed the market, with the Shenwan Beauty Care Index declining by 3.3% from July 25 to August 1, 2025, while the Shenwan Cosmetics Index fell by 2.6% [3][4]. - Domestic brands showed strong growth during the off-season, with notable increases such as Han Shu up 58%, Proya up 23%, Marubi up 72%, and Kefu Mei up 28%, indicating resilience in the market [7][17]. - International beauty brands, represented by L'Oréal, are recovering in the Chinese market, with a 3% growth in Q2 2025, supported by promotional events like the 618 shopping festival [7][24]. - The report highlights the success of Lin Qingxuan, a high-end domestic skincare brand, which saw revenue grow from 690 million yuan in 2022 to 1.21 billion yuan in 2024, showcasing the potential of domestic brands [13][14]. Summary by Sections Industry Performance - The beauty and medical aesthetics sector has shown weaker performance compared to the overall market, with specific indices declining [3][4]. - The report notes that the cosmetics market is transitioning from quantity to quality, with a significant increase in e-commerce sales, which accounted for 47% of cosmetics sales in 2024, up from 22% in 2016 [9][30]. Key Company Highlights - L'Oréal's sales in China for H1 2025 reached approximately 186.19 billion yuan, with a 3% year-on-year increase, indicating a recovery in the Chinese market [24]. - Procter & Gamble reported a record net sales of approximately 604.95 billion yuan for the 2025 fiscal year, with the beauty segment achieving a net sales of approximately 107.66 billion yuan, reflecting a 2% growth [25]. - Lin Qingxuan's product matrix includes 188 SKUs, with a focus on high-quality natural ingredients, and it has established a strong supply chain and distribution network [14][16]. Market Trends - The report emphasizes the growing market for high-end skincare products, with the market size expected to increase from 749 billion yuan in 2019 to 1,144 billion yuan by 2024, indicating a compound annual growth rate (CAGR) of 13.8% [14][15]. - The domestic brands are gaining market share, with the top ten brands in the skincare market now evenly split between domestic and international brands, reflecting a shift in consumer preferences [30][31].

Investment Rating - The report maintains a "Weaker than Market" rating for the U.S. stock market [1] Core Insights - The U.S. stock market experienced a sudden pullback influenced by non-farm employment data, with the S&P 500 declining by 2.4% and the Nasdaq by 2.2% [3] - Among sectors, large-cap value stocks outperformed large-cap growth and small-cap stocks, indicating a preference for stability in turbulent market conditions [3] - The report highlights that three sectors saw gains while 21 sectors faced declines, with utilities, food and staples retailing, and media and entertainment being the only sectors to rise [3] Summary by Sections Price Trends - The S&P 500 fell by 2.4% and the Nasdaq by 2.2% this week, with large-cap value stocks declining by 1.8% compared to a 3.1% drop in large-cap growth stocks [3] - Utilities (+1.6%), food and staples retailing (+0.9%), and media and entertainment (+0.2%) were the only sectors to increase, while transportation (-5.9%), materials (-5.1%), and retail (-4.8%) faced the largest declines [3] Fund Flows - The estimated fund flow for S&P 500 constituents was -$16.95 billion this week, a significant increase from the previous week's -$2.2 billion [4] - Media and entertainment (+$1.59 billion), utilities (+$0.27 billion), and food and staples retailing (+$0.042 billion) saw inflows, while healthcare equipment and services (-$3.47 billion) and financials (-$4.15 billion) experienced the largest outflows [4] Earnings Forecast - The report indicates a 0.6% upward adjustment in the 12-month EPS forecast for S&P 500 constituents, with 18 sectors seeing an increase and 5 sectors experiencing downgrades [5] - Retail (+3.3%), media and entertainment (+2.0%), and technology hardware (+1.5%) led the upward revisions, while healthcare equipment and services faced a significant downgrade of -3.6% [5]

Group 1: Market Overview - Recent financial reports from international beauty leaders like L'Oréal and Procter & Gamble indicate a sequential improvement in growth rates for overseas brands in the Chinese market, particularly in functional skincare and medical aesthetics [1] - The beauty sector is experiencing significant changes, with a notable rise in domestic brands, highlighting a clear growth trend and increasing brand differentiation [1] Group 2: L'Oréal Performance - L'Oréal reported a sales figure of €22.47 billion for 1H25, reflecting a year-on-year growth of 3.0%, with Q1 and Q2 growth rates of 2.6% and 3.7% respectively [2] - The net profit for L'Oréal reached €3.783 billion, showing a 1.0% year-on-year increase [2] - The professional hair division led growth with a 6.5% increase, while mass skincare, premium cosmetics, and skin science segments grew by 2.8%, 2.0%, and 3.1% respectively [2] - The Chinese market showed a 3% year-on-year growth in Q2, with skin science and professional hair products performing particularly well [2] Group 3: Procter & Gamble Performance - Procter & Gamble's Q2 sales amounted to $20.889 billion, a 2% year-on-year increase, with net profit rising by 15% to $3.626 billion [3] - The beauty segment saw a slight increase of 0.2% year-on-year, while net profit in this division grew by 4% [3] - The skincare business in China continued to grow, although this was offset by a decline in North America, resulting in flat overall sales for the skincare segment [3] Group 4: Galderma Performance - Galderma reported a net sales figure of $2.448 billion for 1H25, marking a 12.2% year-on-year increase, with Q2 growth at 15.8% [4] - The company raised its full-year sales guidance to 12-14%, up from the previous 10-12% [4] - The injection aesthetics, daily skincare, and skin treatment segments grew by 9.8%, 7.7%, and 26.9% respectively, with botulinum toxin sales increasing by 14.7% [4] - Strong performance was noted in key markets such as Brazil, Canada, and mainland China, particularly in the injection aesthetics business [4]