Wells Fargo spotlighted the pulse of the U.S. consumer on Tuesday morning, as the financial institution highlighted what certain companies are saying about overall purchasers, as some see a slow-down while others remain confident.
“Continuing a trend we have seen in recent quarters, lower- and middle-tier consumers are becoming more selective and are trading down while becoming more value-oriented… That said consumers are willing to spend where they find real utility or value,” Wells Fargo stated.
The financial institution also highlighted what some prominent consumer focused companies have stated in recent earnings call notes. See what some companies had to say about the overall status of the consumer:
- McCormick (MKC): “Consumers continue to exhibit value-seeking behavior. Financial anxiety remains elevated, particularly in the US, and especially with mid-to-low income households, due to the compounding impact of inflation…”
- Walgreens (WBA): “…Q3 reflected significant challenges in the US retail pharmacy business, stemming from a worse-than-expected consumer environment and challenging pharmacy industry trends… Our customers have become increasingly selective and price-sensitive in their purchases…”
- Darden Restaurants (DRI): “Transactions from households with incomes below [$75k] were lower than last year, and that’s more pronounced with consumers below $50k in income.”
- Carnival (CCL): “We closed yet another quarter delivering records across revenues, operating income, customer deposits, and booking levels, exceeding our guidance on every measure.”
- Nike (NKE): “This quarter we saw softer traffic in our [North American] factory stores, highlighting increasing pressure being felt by the value consumer.”
- Deckers Outdoor (DECK): “Q4 performance was driven by HOKA and UGG, which saw increases of 34% and 15%, respectively. The HOKA brand delivered its first-ever $0.5B quarter…”
- Costco (COST): “It’s a very healthy environment from what we see from our members right now. Take a category such as our meat department, which is growing very nicely. A lot of volume being driven in ground beef and our new everyday lower price on boneless skinless chicken breasts, while Wagyu beef and prime are growing at a great clip for us as well. So we’re seeing that benefit from both sides of the consumer…”
For investors looking to track the status of the consumer, they can look towards both consumer discretionary and consumer staples exchange traded funds to further monitor the sector’s overall performance.
Consumer Discretionary ETFs: (NYSEARCA:XLY), (VCR), (FXD), (FDIS), (RSPD), and (RXI).
Consumer Staples ETFs: (NYSEARCA:XLP), (VDC), (IYK), (FSTA), (KXI), and (RSPS).