Procter & Gamble’s (PG) struggles continue as the the company lowered its earnings guidance for the current quarter as well as for the 2013 fiscal year. The problems aren’t just from a lackluster global economy but instead are also market share related. The company announced that they are going to cut spending in emerging markets for growth, until they resolve their market share issues. I don’t like when companies take steps like this deviating from their core focus due to short term problems. I’d rather see PG take a bigger hit to earnings this year and maintain their growth initiatives, while working to resolve market share related issues.
Procter & Gamble should be taking a 10 year view on capital allocation decisions and shouldn’t be worried about pandering to Wall St. quarterly results. At the same time the company seems to have lost track. When the economy was strong their focus was on increasing price points to squeeze out higher margins on added features, and when things got worse across the globe P&G lower prices hurting their brand value. These decisions seem to be made on a shorter term basis and I think that they are indicative of weak management. The stock is more interesting in the high 50’s, and I’d likely be a buyer below $55 as I believe the problems are manageable.