To executives, price hikes are unavoidable during this time. To liberals, companies that are raising prices for beer, chicken, toys, gasoline and medicine are just using inflation as an excuse to pad record profits and to reward Wall Street.
approached 100 percent, said refusing to raise prices or cut spending in response to rising input costs would cripple a company.Growing profits mean funds for research, new product development, marketing and wages, he said. Shrinking profits mean less money for all of that — and greater pressure to reduce costs, including by laying off workers.
As supply chains were overwhelmed during the first year of the recovery, the company’s annual costs ballooned by $2.8 billion. Raw materials and shipping were the chief culprits, coupled with unfavorable foreign exchange movements.Chief financial officer Andre Schulten told investors in February that the price hikes were “tailored” to conditions governing product categories, geographic markets or even individual “SKUs,” the bar codes that designate specific items.
“They’re pricing to protect profits, not to increase profits,” Lauren Lieberman, consumer products analyst for Barclays, said. Bahnsen dismissed the idea that consumers are hurt by the company’s shareholder focus. Customers stick with the consumer products giant out of “brand loyalty,” he said. If P&G increases prices unreasonably, it risks driving its customers into the arms of brand-name competitors or less expensive private-label store brands.
But a limited number of players is not the same as a lack of competition, according to Jeffrey Meli, head of research for Barclays. Diapers, he said, represent “a cutthroat market that is still contested.”
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