PG · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

PROCTER & GAMBLE Co · 2026-10-22 · Importance 36 · Surprise 40

Gross margin declined 160 basis points to 49.8% of net sales in the quarter ended September 30, 2026. Commodity costs reduced margin by 140 basis points, product and packaging investments reduced it by 140 basis points, and unfavorable product mix reduced it by 50 basis points. Manufacturing productivity savings contributed 120 basis points, lower tariff costs and recognized recoveries contributed 50 basis points, and pricing contributed 20 basis points. Segment gross-margin pressure was especially pronounced in Fabric & Home Care, where gross margin declined 290 basis points, while Health Care gross margin increased 200 basis points.

Key facts

• Gross margin decline components included 140 basis points of product and packaging investments. source
• Gross margin was partially offset by 120 basis points of manufacturing productivity savings. source
• Gross margin decreased 160 basis points to 49.8% of net sales for the quarter (from 51.4% prior year). source
• Gross margin decline components included 140 basis points of higher commodity costs. source
• Gross margin decline components included 50 basis points decline from unfavorable product mix. source
• Gross margin decline components included 10 basis points of higher restructuring costs. source
• Gross margin was partially offset by 50 basis points due to lower tariff costs and recognized recoveries. source
• Gross margin was partially offset by 20 basis points of increase due to higher pricing. source