PG · 10-K · 2026A · Full report

Gross Margin Drivers

PROCTER & GAMBLE Co · 2026-08-04 · Importance 49 · Surprise 32 · No source text

Consolidated gross margin declined 100 basis points to 50.2% of net sales in fiscal 2026. Unfavorable product mix reduced gross margin by 120 basis points, product and packaging investments by 70 basis points, higher restructuring costs by 60 basis points, net tariffs by 30 basis points, commodities by 20 basis points and foreign exchange by 10 basis points. Manufacturing productivity savings contributed 180 basis points and higher pricing contributed 40 basis points, partially offsetting the cost pressures. Beauty gross margin declined 100 basis points, Grooming declined 90 basis points and Health Care declined 30 basis points, primarily because of product mix and commodity impacts.

Key facts

• Gross margin decreased 100 basis points to 50.2% of net sales (from 51.2%). source
• Gross margin decreased 140 basis points driven by unfavorable product mix and higher commodity costs, partially offset by productivity savings. source
• Baby, Feminine & Family Care gross margin decreased 40 basis points due to unfavorable category mix, partially offset by lower commodity costs and productivity savings. source
• Gross margin decline components included 120 basis points from unfavorable product mix. source
• Gross margin decline included 70 basis points of product and packaging investments. source
• Gross margin decline included 60 basis points of higher restructuring costs. source
• Gross margin decline included 30 basis points of net tariff impact from higher costs and recognized recoveries. source
• Gross margin decreases were partially offset by 180 basis points of manufacturing productivity savings. source

Impact estimates