Procter & Gamble (P&G) announced plans to cut 7,000 jobs, or 15% of its non-manufacturing workforce, as part of a broader two-year restructuring program. This move comes as the company faces rising costs, partly driven by President Donald Trump’s tariffs, and concerns over slowing growth in its key markets.
Job Cuts and Restructuring Plans
During a presentation at the Deutsche Bank Consumer Conference, P&G CFO Andre Schulten revealed that the company, which currently employs 108,000 people worldwide, will implement these job cuts as part of its broader restructuring strategy. The layoffs are expected to impact various non-manufacturing roles, aligning with the company’s efforts to streamline operations and adjust its workforce to better align with market conditions.
Impact of Tariffs on P&G
The consumer goods giant has been grappling with the economic impact of trade tensions, particularly the tariffs imposed by the Trump administration. These tariffs have pushed P&G to raise prices on products to offset the higher costs of imported goods. In its fiscal third-quarter earnings report, P&G saw modest growth, with North American organic sales rising only 1%. The company expects tariffs to drag its fiscal fourth-quarter earnings by 3 to 4 cents per share, and estimates a $600 million headwind in fiscal 2026 due to tariffs.
Broader Restructuring Efforts
P&G is also planning to reevaluate its product portfolio, restructure its supply chain, and slim down its corporate organization. The company has signaled that it will provide more details on brand and market exits during its fiscal fourth-quarter earnings call in July. The restructuring program is expected to incur between $1 billion and $1.6 billion in noncore costs before taxes, as the company works to adapt to the changing economic landscape.
Challenges and Future Outlook
Despite the ongoing restructuring, Schulten emphasized that the program is a critical step for ensuring P&G’s long-term growth. However, he acknowledged that the company still faces near-term challenges, including the impact of tariffs and slow growth in the U.S. market. P&G’s stock fell more than 1% following the announcement of the layoffs, continuing a downward trend this year, with shares down 2% as of now.
Industry Context
P&G’s announcement comes on the heels of similar actions by other major U.S. employers, including Microsoft and Starbucks, which have also carried out significant layoffs in response to the economic climate. As tariffs continue to impact corporate earnings, investors are watching closely for signs of broader economic slowdowns, particularly in the job market. Friday’s nonfarm payrolls report for May will provide further insights into the state of U.S. employment.
