From About One Hundred Brands to About Sixty-FiveNarrow moat

Procter & Gamble (PG) — moat facet

P&G cut its portfolio from about 100 brands to about 65 after 2014, and its return on capital more than doubled.

P&G's modern portfolio was built by subtraction. In August 2014 it announced a plan to divest, discontinue or consolidate about 100 non-strategic brands, leaving a portfolio of about 651. Pet care was sold in fiscal 2015, batteries (Duracell) in February 2016, and 41 beauty brands went to Coty in October 201623.

P&G net sales ($M)83,062FY2014 as reported74,401FY2014 restated65,058FY201787,032FY2026P&G Forms 10-K FY2019 and FY2026; restated for discontinued operations
Smaller first, then bigger again.

The effect on the reported numbers was large. Fiscal 2014 net sales, first reported as $83,062 million, were restated to $74,401 million once the sold businesses were moved to discontinued operations4. Net sales then fell to $65,058 million in fiscal 2017 before growing back to $87,032 million in fiscal 202656.

The point was focus. P&G kept the categories where it leads and where performance drives brand choice7, and gave up those where it was a follower or where the brand did less work. Return on invested capital rose from 7.4% in fiscal 2015 to 19.9% in fiscal 20268.

Pruning continues on a smaller scale. The current restructuring includes brand and market exits9, and P&G expects discontinued brands and product forms to take 30 to 50 basis points off fiscal 2027 sales growth10.

The first years after the pruning were lean. Net sales were $65,299 million in fiscal 2016 and $65,058 million in fiscal 201711, and did not pass the restated fiscal 2015 level of $70,749 million until fiscal 202012. The smaller company took five years to grow back to the size of the one it replaced.

The portfolio that remains is narrower and better. The falsifier is the operating margin that the smaller portfolio was supposed to protect, about 22.7% in fiscal 202613; if it slips back toward 20% in a normal year, the pruning will have bought a decade of margin rather than a permanent one.

Moat trajectory: Holding steady

Operating margin 22.7% in FY2026; small exits continue.

The number that tests this moat
Moat Explorer calc
Operating margin, FY2026
About 22.7% (24.3% in FY2025)

Whether the focused portfolio keeps its margin; a normal year near 20% would undo the case for the pruning.

How it's calculated: Operating income ($19,748M) divided by net sales ($87,032M), P&G FY2026 10-K.
Source: Moat Explorer calculation from P&G filings ↗
⚠ Threats to the moat
⚠ THREAT 01
Discontinuations Cost 30 to 50 Basis Points
P&G expects brands and products it is dropping to take up to half a point off fiscal 2027 growth.
References
  1. ReportedIn August 2014 it announced a plan to divest, discontinue or consolidate about 100 non-strategic brands, leaving a portfolio of about 65.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  2. ReportedPet care was sold in fiscal 2015, batteries (Duracell) in February 2016, and 41 beauty brands went to Coty in October 2016.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  3. ReportedPet care was sold in fiscal 2015, batteries (Duracell) in February 2016, and 41 beauty brands went to Coty in October 2016.
    Procter & Gamble Form 10-K for fiscal 2017 - completion of the Beauty Brands transaction with Coty ($11.4 billion of value, $5.3 billion after-tax gain). — FY2017 · publ. August 2017 · source ↗
  4. ReportedFiscal 2014 net sales, first reported as $83,062 million, were restated to $74,401 million once the sold businesses were moved to discontinued operations.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  5. ReportedNet sales then fell to $65,058 million in fiscal 2017 before growing back to $87,032 million in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  6. ReportedNet sales then fell to $65,058 million in fiscal 2017 before growing back to $87,032 million in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  7. ReportedP&G kept the categories where it leads and where performance drives brand choice, and gave up those where it was a follower or where the brand did less work.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1 business and Item 2 properties: employees, manufacturing sites, customers, channels, competition and strategy. — FY2026 · publ. 4 August 2026 · source ↗
  8. Moat Explorer calcReturn on invested capital rose from 7.4% in fiscal 2015 to 19.9% in fiscal 2026.
    Moat Explorer calculation from SEC EDGAR XBRL for CIK 80424: return on invested capital 7.4% (FY2015), 9.6% (FY2016), 10.4% (FY2017), 12.3% (FY2018), 5.1% (FY2019, Gillette impairment), 16.3% (FY2020), 19.3% (FY2021), 19.2% (FY2022), 18.9% (FY2023), 19.0% (FY2024), 20.5% (FY2025), 19.9% (FY2026). — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Operating income x (1 - effective tax rate; 35% default before fiscal 2018 and 21% where pre-tax income is untagged) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method; after fiscal 2019 the cash tag is CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents. A 7% hurdle is assumed.
  9. ReportedThe current restructuring includes brand and market exits, and P&G expects discontinued brands and product forms to take 30 to 50 basis points off fiscal 2027 sales growth.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  10. ReportedThe current restructuring includes brand and market exits, and P&G expects discontinued brands and product forms to take 30 to 50 basis points off fiscal 2027 sales growth.
    Procter & Gamble fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1, with fiscal 2027 guidance - fiscal 2027 guidance. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  11. ReportedNet sales were $65,299 million in fiscal 2016 and $65,058 million in fiscal 2017, and did not pass the restated fiscal 2015 level of $70,749 million until fiscal 2020.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  12. ReportedNet sales were $65,299 million in fiscal 2016 and $65,058 million in fiscal 2017, and did not pass the restated fiscal 2015 level of $70,749 million until fiscal 2020.
    Procter & Gamble Form 10-K for fiscal 2022 - segment shares of sales and earnings, Walmart share 2020-2022, top-ten customers and share repurchases. — FY2022 · publ. August 2022 · source ↗
  13. Moat Explorer calcThe falsifier is the operating margin that the smaller portfolio was supposed to protect, about 22.7% in fiscal 2026; if it slips back toward 20% in a normal year, the pruning will have bought a decade of margin rather than a permanent one.
    Moat Explorer calculation from Procter & Gamble's reported figures ($ millions unless stated; fiscal years end 30 June). Net debt: FY2026 11,296 + 22,842 - 9,942 = 24,196; 24,196 / 54,311 = 0.45 times equity; 24,196 / 19,556 = 1.24 years of operating cash flow; debt due within one year 11,296 / (11,296 + 22,842) = 33% of debt; FY2025 9,513 + 24,995 - 9,556 = 24,952; FY2024 7,191 + 25,269 - 9,482 = 22,978. Capital spending 4,409 / 87,032 = 5.1% of net sales. Adjusted free cash flow over dividends 15,835 / 10,232 = 1.55 times. Dividends paid over net earnings attributable: 10,232 / 16,046 = 63.8% (FY2026); 9,872 / 15,974 = 61.8% (FY2025); 9,312 / 14,879 = 62.6% (FY2024). Buybacks 5,028 / 11,009 = 45.7% of the FY2021 peak. Peer market values on 25 September 2026 ($bn): 132.99 + 68.60 + 34.19 + 34.18 + 32.74 + 22.86 + 10.13 = 335.69, against P&G 339.64; P&G / Clorox 339.64 / 10.13 = 33.5 times. P/E: 339.64 / 16.046 = 21.2 (now); 394.82 / 14.879 = 26.5 (December 2024 over FY2024). Free cash flow yield 15,835 / 339,640 = 4.7%. Goodwill plus Gillette brand 41,276 + 12,800 = 54,076; 54,076 / 126,521 = 42.7% of total assets. Segments (five reportable, excluding Corporate): FY2026 sales 16,023 + 6,918 + 12,456 + 30,314 + 20,401 = 86,112; net earnings 2,672 + 1,529 + 2,404 + 5,632 + 3,930 = 16,167; FY2025 net earnings 2,715 + 1,577 + 2,440 + 5,848 + 4,013 = 16,593; 16,167 / 16,593 - 1 = -2.6%. Segment net earnings changes FY2026: Beauty 2,672 / 2,715 - 1 = -1.6%; Grooming 1,529 / 1,577 - 1 = -3.0%; Health Care 2,404 / 2,440 - 1 = -1.5%; Fabric & Home Care 5,632 / 5,848 - 1 = -3.7%; Baby, Feminine & Family Care 3,930 / 4,013 - 1 = -2.1%. Fabric & Home Care share of segment net earnings 5,632 / 16,167 = 34.8%. Pre-tax margins FY2026: Beauty 3,473 / 16,023 = 21.7%; Grooming 1,966 / 6,918 = 28.4%; Health Care 3,163 / 12,456 = 25.4%; Fabric & Home Care 7,290 / 30,314 = 24.0%; Baby, Feminine & Family Care 5,145 / 20,401 = 25.2%. Net margins FY2023: Beauty 3,178 / 15,008 = 21.2%; Health Care 2,125 / 11,226 = 18.9%; Fabric & Home Care 4,828 / 28,371 = 17.0%; Baby, Feminine & Family Care 3,545 / 20,217 = 17.5%. Three-year growth FY2023-FY2026: Health Care sales 12,456 / 11,226 - 1 = 11.0%; Health Care net earnings 2,404 / 2,125 - 1 = 13.1%; Grooming sales 6,918 / 6,419 - 1 = 7.8%; Baby, Feminine & Family Care sales 20,401 / 20,217 - 1 = 0.9%. Segment capital spending over sales FY2026: Grooming 540 / 6,918 = 7.8%; Baby, Feminine & Family Care 1,520 / 20,401 = 7.5%; Health Care 592 / 12,456 = 4.8%; Fabric & Home Care 1,250 / 30,314 = 4.1%; Beauty 415 / 16,023 = 2.6%. Geography FY2026 ($bn): international 45.3 / 87.0 = 52.1%; United States 41.7 / 87.0 = 47.9%. Walmart about 16% x 87,032 = 13,925, about $13.9 billion. Top ten customers less Walmart (rounded percentages): FY2017 35 - 16 = 19; FY2020 38 - 15 = 23; FY2023 40 - 15 = 25; FY2026 43 - 16 = 27. Dividend per share 4.2589 / 4.0763 - 1 = 4.5% (FY2026); 4.0763 / 3.8286 - 1 = 6.5% (FY2025). Market exit charges after tax 1,200 + 131 = 1,331. P&G / Unilever market value 339.64 / 132.99 = 2.6 times. Restructuring charges FY2024-FY2026 659 + 1,114 + 1,230 = 3,003. Gillette write-downs 8.3 + 1.3 = 9.6 billion. Operating margin 19,748 / 87,032 = 22.7% (FY2026); 20,451 / 84,284 = 24.3% (FY2025) - growth rates, margins and charges. — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Procter & Gamble's Forms 10-K, results releases, earnings slides and market data; operands shown in the source line.
Sources
Generated September 26, 2026