Wrapup 1: Consumers shun candles, barbecue kits as budgets tighten
20/07/2022 20:54
By Doyinsola Oladipo
NEW YORK, July 20 (Reuters) - Whether they make strawberry
pound cake-scented candles or $300 brisket barbecue delivery
meal kits, U.S. companies are telling investors to expect
consumers to cut back on discretionary spending with inflation
settling into 40-year highs.
Stuck at home during the pandemic, consumers who liberally
splurged on assorted goods and services may be cutting back,
causing U.S. companies to re-evaluate their quarterly revenue
estimates and expansion plans.
"People are cutting back across the board. They're driving
less, they're spending proportionately less at the grocery
store. And they're getting rid of subscriptions they don't
need," said Yahya Mokhtarzada, chief revenue officer at
Truebill, a service that helps 3.4 million customers manage
their bills.
Investors looking for hints to the direction the U.S.
economy might take need only look at company statements
predicting job cuts, delays in factory expansions and lower
revenue estimates.
Wood pellet grill maker Traeger Inc COOK.N said on
Wednesday it will halt its barbecue meal kit delivery service
and postpone plans for a factory in Mexico as well as cut its
labor force in an effort to reduce costs. urn:newsml:reuters.com:*:nL4N2Z12ZW
Shopping mall soap, fragrance, and candle retailer Bath &
Body Works Inc BBWI.N on Wednesday lowered its revenue
estimate for the second quarter, citing "inflationary pressure"
affecting its customers and business. urn:newsml:reuters.com:*:nASA03GXZ
Both companies declined to comment.
In another example of consumers cutting back on shopping,
research firm D.A. Davidson lowered its price targets for Etsy
Inc ETSY.O and Shopify Inc SHOP.TO , citing "elevated
inflation" and "a shift in near-term discretionary spending to
travel and away from e-commerce."
Even so, subscription analytics firm Antenna chief executive
officer Jonathan Carson said his company is not seeing inflation
having an impact on premium video subscription services.
He said consumers keen to save money may opt for pizza and
streaming at home over dinner and a movie out.
"Consumers' perceived value of video streaming and other
home entertainment services is increased when there is
more pressure on household budgets," Carson said.
Video streaming subscription service Netflix Inc NFLX.O
said on Tuesday it lost 970,000 subscribers from April through
June but predicted it would return to customer growth during the
third quarter. urn:newsml:reuters.com:*:nL1N2Z02DH
"If anything, inflation is tilting people towards
subscriptions," said Tien Tzuo, chief executive officer at
subscription software company Zuora ZUO.N .
"But there is something about separating winners from losers
and the winners are the ones that become indispensable to their
subscribers."
(Reporting by Doyinsola Oladipo; Editing by Anna Driver and
Howard Goller)
((Doyinsola.Oladipo@thomsonreuters.com;))