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.
FILE PHOTO: Products are displayed in L Brands Inc., Bath & Body Works retail store in Manhattan, New YorkNEW YORK - 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.
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. Shopping mall soap, fragrance, and candle retailer Bath & Body Works Inc on Wednesday lowered its revenue estimate for the second quarter, citing "inflationary pressure" affecting its customers and business.In another example of consumers cutting back on shopping, research firm D.A. Davidson lowered its price targets for Etsy Inc and Shopify Inc, citing "elevated inflation" and "a shift in near-term discretionary spending to travel and away from e-commerce.
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.