PG reported 4Q22 earnings after the close yesterday. They were disappointing. The stock is down by about 5% as I’m writing this. The company has filed its earnings release with the SEC but has scheduled the associated conference call for 4pm today.

To be clear, I know very little about today’s PG. And my guess is that this isn’t the time for defensive stocks. Several things struck me about the release, though.

–a conference call on Friday after the market close. Maybe this is normal for PG, but my experience is that this mostly happens when a company is revealing bad news and/or wants to duck hard questions

–PG lists current headwinds in this order: currency, commodity costs, transportation. The Wall Street convention is to put the most important item first, with the others in descending order of importance. It looks to me as if this is the case here. If I’m reading the release correctly (I’m only putting this caveat in because the number is so high), foreign currency weakness is set to clip over 20% off what PG had thought it would earn in the 2023 fiscal year. Ouch! On the other hand, this shouldn’t come as an overwhelming surprise, since one of the key characteristics of the Staples group in general is very large non-US exposure. A second group trait is the defensive character (meaning relative stability in good times and bad) of its products. As the world crawls out of its pandemic funk, defensiveness won’t be a virtue and exposure to weak foreign currencies will be seen as an increasing negative

–two trends PG has observed that negatively affect current sales are that customers are beginning to run down the stockpiles they amassed during the pandemic, and that, to a minor degree, consumers are beginning to trade down to less expensive offerings in a given product line. The second is a sign of recession; the first I’d call common sense. Yes, both reduce GDP, but the PG story is, so far, much more benign than an overall business cycle downturn

–the fact that currency shifts are a major component of current earnings (bad for a US company, great for a European one) seems to have escaped the notice of the few financial press analyses I’ve glanced through that look at PG vs. peers.