Tag: stressed

NEW YORK/LONDON, July 26 (Reuters) – Some global consumers are showing signs of cracking, as shoppers stressed by record inflation stick to buying basics like food, bleach and cheap burgers, while those with bigger bank accounts are snapping up $3,000 Louis Vuitton handbags.

Investors are closely watching second quarter corporate results for signs economies are headed toward a recession. But so far consumers are sending mixed signals. There is weakness seen in those that have been hit hardest by record fuel and food prices. Meanwhile, credit card and other data shows some are still spending on travel and other high-end pursuits. read more

Walmart (WMT.N) sounded a warning shot on Monday, issuing a rare profit warning. Its US customers, who tend to come from lower-income households, are buying food and other essentials while skipping aisles filled with clothes and sporting goods. read more

“The results overnight indicate that the US consumer is now much more focused on the staples element of shopping where we’ve got double-digit food inflation coming through in some of these retailers,” said Nicola Morgan-Brownsell, fund manager at Legal & General Investment Management.

US consumer confidence fell for a third straight month in July amid persistent worries about higher inflation and rising interest rates. read more

Sales at luxury group LVMH Moet Hennessy Louis Vuitton SE (LVMH.PA) climbed 19% in the second quarter, slightly lower than earlier this year. Handbag and high-end liquor sales in Europe and the United States helped offset slowdowns stemming from COVID-19 lockdowns in China. read more

And payment processor Visa (VN) said cross-border volume jumped 40% reflecting a summer travel boom and some consumer resilience. read more

But softer consumer demand hits video gaming revenue at Xbox maker Microsoft (MSFT.O), which posted a 7% drop in Xbox-related revenue and expects a further contraction this quarter. Microchip maker Texas Instruments (TXN.O) saw weaker demand from consumers for personal electronics.

BUYING, BUT FOR HOW LONG?

Consumer giants Coca Cola Co (KO.N), McDonald’s Corp (MCD.N) and Unilever Plc (ULVR.L) all said on Tuesday that their products are still selling, even at higher prices.

Unilever, which has 400 brands including Hellmann’s mayonnaise, Knorr stock cubes and Domestos bleach, raised its full-year sales guidance after beating first-half underlying sales forecasts as it hiked prices. read more

So far consumers are buying, but there is a question around how long that can last.

“We see price increases when we go out to do a weekly shop. The question is: how much more accepting can the consumer be on those price increases?” said Ashish Sinha, portfolio manager at Unilever and Reckitt (RKT.L) shareholder Gabelli.

McDonald’s which operates nearly 40,000 restaurants, said its global same-store sales jumped almost 10%, much better than the expectation for an increase of 6.5%. read more

Even so, the Chicago-based company said it is considering whether to add more discounted menu options because soaring inflation, particularly in Europe, is leading some lower-income consumers to “trade-down” to