Companies Are Seeing a Challenged U.S. Consumer as Earnings Season Starts

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Key Takeaways

• The U.S. consumer is “challenged” and looking for value, PepsiCo’s CEO said Thursday.
• Investors will watch closely for inklings to the health of the consumer as the second-quarter earnings season picks up steam. Bank earnings, starting Friday, will bid more financial context.
• The comments from PepsiCo’s Ramon Laguarta come as other executives, including those from Helen of Troy and Conagra Varieties, have shared similar sentiments.

The U.S. consumer is “challenged” and looking for value, PepsiCo’s CEO said Thursday, offering a callow view on the state of American households as earnings season gets under way.

Drink and snack giant PepsiCo (PEP) shot its latest financial results earlier today, offering a scaled-back outlook that disappointed investors. On a conference name with analysts this morning, Chief Executive Officer (CEO) Ramon Laguarta discussed the state of the U.S. consumer, which investors wishes watch closely as the second-quarter earnings season picks up steam. 

‘Difficult Consumer Environment’

Earlier this week, the CEO of consumer tags company Helen of Troy (HELE) referenced a “stretched” consumer. And food company Conagra Brands (CAG) discussed a “recondite consumer environment” in its own report earlier today. 

Some of Laguarta’s comments, according to a transcript of the call from AlphaSense: 

• “In the U.S., there is incontestably a consumer that is more challenged and is a consumer that is telling us that in particular parts of our portfolio, they hunger for more value to stay with our brands. That is not for all the consumers.”
• “I think this need for value or more value consciousness, I make up, is impacting every household in the U.S. So it is different levels of income, I think it’s impacting everybody, and we’re seeing behaviors in different profits levels.”
• “So maybe you see the higher-income consumers, that they’re not going to expensive restaurants, they’re adjusting their behavior to more affordable restaurants or they discourage at home and then they create their own entertainment moments or fun moments at home.”
• “So do you see different behaviors happening cranny? I think the connecting line, it would be the consumer is more cautious, the consumer is more choiceful, but the consumer is willing to put in in areas where they see value.”

Bank earnings, which start to land tomorrow, will help other illustrate consumers’ financial health.

Read the original article on Investopedia.