Finding the Details on Margin Pressures
Today we return to tariffs, which continue to be a vexing issue for companies and financial analysts alike. What are companies paying for tariffs? How much are tariffs squeezing margins? How much money might companies recoup from tariff refunds, if any at all? Consumer products giant Procter & Gamble ($PG) provided a fascinating example of what companies are disclosing in its latest quarterly report, filed on April 24 . In the Management Discussion & Analysis section, tucked away on Page 19, of the filing, Procter & Gamble disclosed that gross margin decreased 150 basis points to 49.5 percent of net sales for the quarter. Then came a long list of bullet points for why gross margins were getting squeezed (emphasis ours): 180 basis points of decline from unfavorable product mix, 100 basis points of product and packaging investments, 50 basis points of higher restructuring costs, 50 basis points of higher costs from tariffs, 20 basis points of other items and round...