From burgers to bleach, stressed consumers buy cheap

NEW YORK/LONDON, July 26 (Reuters) – Some global consumers are showing signs of a meltdown, with shoppers confirming record inflation is sticking to basics like food, bleach and cheap burgers, while larger bank account holders buy $3,000 Louis Vuitton handbags. .

Investors are closely watching corporate results for signs that economies are heading for a recession. But consumers are sending mixed signals so far. There is vulnerability in those hard hit by standard fuel and food prices. Meanwhile, credit card statements and other data show that some are still spending on travel and other high-end activities. Read more

Walmart fired a warning shot on Monday, issuing a rare earnings warning. Her US customers, who come from low-income families, buy food and other necessities, while skipping aisles filled with clothes and sporting goods. Read more

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“The results obtained overnight indicate that the American consumer is now more focused on the commodity component of shopping as we have double-digit food inflation at some of these retailers,” says Nicola Morgan Braunzel, fund manager at Legal & General. “. Investment management.

US consumer confidence declined for the third consecutive month in July amid persistent concerns about rising inflation and higher interest rates. [nL1N2Z71AO]

Sales at luxury group LVMH Moet Hennessy Louis VuittonSE (LVMH.PA) are up 19%, slightly less than at the beginning of this year. Handbags and luxury liquor sales in Europe and the United States helped offset the slowdown caused by the COVID-19 lockdowns in China. Read more

Should eat

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

Unilever, which owns 400 brands including Hellmann’s mayonnaise, Knorr stock cubes and Domestos bleach, raised its full-year sales guidance after beating base sales expectations for the first half as its prices rose. Read more

Consumers are buying so far, but there is a question about how long that could last.

“We see a price hike when we go out to a weekly store. The question is: How receptive is the consumer to these price increases?” said Ashish Sinha, portfolio manager at Jabili, a shareholder of Unilever and Reckitt.

McDonald’s, which operates nearly 40,000 restaurants, said its same-store sales jumped nearly 10%, much better than expectations for a 6.5% increase. Read more

However, the Chicago-based company said it was considering whether to add more discount menu options because high inflation – particularly in Europe – is leading some low-income consumers to “give up” on cheaper items and buy fewer meals. the big one. Chief Financial Officer Kevin Ozan said during a call with investors.

The company said global Coca-Cola sales volumes rose 8% in the second quarter, supported by growth in both developed and emerging markets, while average selling prices rose about 12%. Read more

“Coca-Cola’s results are a testament to the value of its brand because consumers are not willing to give up on other colas, despite the price increases,” CFRA analyst Garrett Nelson said.

slowed forward?

Germany-based shoemaker Adidas AG (ADSGn.DE) has cut its profit target for the year due to the slow recovery of its China business. Read more

General Motors (GM.N) on Tuesday renewed its full-year profit forecast amid an expected surge in demand and said it was curbing spending and hiring ahead of a potential economic slowdown, but a disappointing 40% quarterly net income drop. Send stock less. Read more

The Detroit automaker’s net income fell 40% in the previous year’s second quarter due to crises in the supply chain, including a global shortage of semiconductor chips that hit hard in June. The company’s shares fell 3.5 percent in mid-morning trading.

However, GM is seeing a lot of pent-up demand.

GM Chief Financial Officer Paul Jacobson said Tuesday that despite the hit from the global chip shortage in June that continued into July, GM is still seeing strong prices and demand for its vehicles. The automaker reiterated its earnings forecast for the year, with Jacobson saying the company sees second-half demand making up for any shortfalls in the second quarter.

A GM pickup truck starts around $31,500 for a base Chevrolet model, while a loaded GMC Sierra can run as high as $100,000. Most models come in the $50,000 to $70,000 range.

“We feel good about making up for all that (missing) volume in the second half of the year,” he said.

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(Additional reporting by Medha Singh, Uday Sampath Kumar and Praveen Paramasivam in Bengaluru and Ben Klayman in Detroit; Additional reporting by Jessica Dianapoli in New York. Writing by Anna Driver; editing by Nick Ziminsky

Our Standards: Thomson Reuters Trust Principles.

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