What Are You Talking About?
Just yesterday, we talked about Walmart’s warning for the retail industry that scared the economy. Signs pointed to consumer spending weakening as inventories were skyrocketing, and prices needed to be cut. That provided the environment for retailers like Walmart and Amazon along with appliance companies like Weber who faced the same problem. However, Tuesday morning provided us with more earnings from other blue-chip stocks that let us see how other industries are paring with consumer demand.
McDonald’s and Coca-Cola were two of many that announced results on Tuesday. Their results showed a completely different picture, with the companies raising their prices to cope with the high demand. With production, material, and labor costs rising, they aren’t being pushed to unprofitable grounds by having to lower prices because consumers are still buying up their products even with prices so high. Global sales for McDonald’s rose by 10 percent, and the company said that the value items on their menu were the driving force of this. The fast-food business is going well as restaurants and high-end dining are suffering from inflation, and consumers aren’t fazed by price increases yet as they are still affordable in relation to earnings. Consumer sentiment is decreasing, as shown by polls and surveys, but it hasn’t affected these areas of the economy yet. Executives from Kimberly-Clark said that their volume decreased, but it was compensated by higher prices on products. Multiple CEOs have said that even with this, consumers are slowly starting to make their way to private-label brands that are often priced lower, which goes for the retail industry too. The effect on retail is likely going to come to these industries sometime in the next few quarters, but for now, their stocks enjoyed good results.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.