By Matt Andrejczak

SAN FRANCISCO (Dow Jones) -- Procter & Gamble Co., the household products giant, warned Friday sales growth is stalling as consumers rein in spending, weakening the company's traditional strength as a defensive play when the worldwide economy stumbles.

P&G shares fell 4% to $55.88 in late morning trading.

"If consumer confidence around the world continues to drop, we would expect consumption in more discretionary categories to be further impacted," Chief Financial Officer Jon Moeller said in a conference call.

The consumer giant lowered its June fiscal year financial targets. P&G said sales growth will be flat to down 4%, compared to its old forecast for growth of 1% to 3%. It pegged earnings between $4.20 and $4.35 a share. P&G had expected to earn up to $4.38 a share.

Even though it cut its profit target, P&G said it's comfortable with the current analyst consensus for fiscal 2009 profit of $4.29 a share.

P&G (PG) sells everything from cosmetics to shampoos, including Tide detergent, Gillette razors, Pampers diapers and Crest toothpaste. It said it plans to emphasize a "value" message in its advertising and through coupons and other consumer promotions.

P&G warned last month sales would fall short of internal growth targets because retailers were keeping inventories tight to blunt weak consumer spending as job losses grow around the world.

This hit shipments for the quarter ended Dec. 31. P&G said volume fell 3%. Notable declines came from Tide, Prestige Fragrances, Braun shaving items, and Gillette Mach3 razors.

P&G Chief Executive A.G. Lafley has remarked that his company is "recession-resistant but not recession-proof." P&G shares have reflected that. The stock has been one of the best performers in the Dow Jones Industrial Average, declining just 10% over the past 12 months. Other Dow stock-stalwarts are Wal-Mart, McDonald's, Kraft Foods and Johnson & Johnson.

On Friday, P&G said its fiscal second-quarter net income rose 53% to $5 billion, or a $1.58 a share, boosted by a 63-cent gain from the sale of the Folgers coffee business. The profit matched the analyst target of $1.58 a share, according to Thomson Reuters.

P&G earned $3.27 billion, or 98 cents a share, in the year-earlier period.

With retailers hoarding cash, sales at P&G slipped 3% in the quarter to $20.37 billion.

So far in this current round of earnings reports, it has been a mixed bag for household-products makers who face some fear from investors that consumers will trade down to less expensive items or even pare spending on staple items if possible.

Baby-diaper and tissue maker Kimberly-Clark (KMB) gave a conservative full-year forecast, while toothpaste provider Colgate-Palmolive (CL) offered a bright outlook.

P&G is facing currency headwinds as the rising strength of the U.S. dollar against foreign currencies is making the company's overseas sales less valuable than recent years. On the flip side, P&G should pay less to manufacture its goods as a host of commodities have come down in price since surging to record-levels last summer.

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