Retail earnings and consumer data paint a picture of a weakening economy
Earnings from the world’s largest retailer Walmart and consumer goods giant Kimberly Clark painted a picture of a weaker economy and consumer.
Deteriorating economic conditions continue to have a significant impact on retailers.
- Kimberly Clark is still a victim of inflation — expecting input costs to stay high for the rest of the year.
- Walmart saw a spending shift towards less-profitable food items and other necessities — hurting its bottom line.
Walmart — known for low-priced goods — is seeing more shoppers as consumers turn more price conscious. Same-store sales are rising, but even with the increased volume, Walmart’s earnings have fallen as it offers discounts on overstocked goods.
Retail warning: Walmart gave a second profit warning in just over two months — adding to the many retailers who have already lowered earnings forecasts.
- Struggles from Walmart — one of the stronger retailers — are a worrying sign for other retailers.
- Per Vital Knowledge Founder Adam Crisafulli — “Non-food retail is under a mountain of stress right now” (BBG).
But McDonald’s and Coca-Cola posted strong earnings from higher price increases and international growth — a sign consumers are still spending, just with other priorities.
Feeling pessimistic: July’s Consumer Confidence Index numbers came in yesterday — falling to 95.7 compared to 98.4 in June. A falling number indicates lower spending and slower economic growth.