Fincredible MacroTalk December 1: Demand for Consumer Goods Still Strong
Quotes on consumer goods demand from earnings calls of $TGT $AMZN $WMT $TSN $JWN $DKS $AEO $URBN $BBY $HD $HPQ $DELL.
Consumer goods in the US are still in high demand. With the end of the stimulus checks, higher consumer prices, and the reopening of the economy, many expected demand for consumer goods to be weak this year. However, companies are reporting the opposite. Sales are up, discounts are down, and the US consumer appears to be in a very strong position.
Over the past month, dozens of retailers reported strong sales and earnings, with supply chain factors, not consumer demand, being their main roadblock to achieving higher sales. In this post, we’ve highlighted quotes from major retailers on the consumer demand they’re seeing.
All quotes are sourced from Fincredible.
Mass Retail and Convenience Goods
The largest retailers in the US are still seeing strong broad-based demand for goods, despite a shift in spending towards travel and services, as well as the end of some government stimulus programs.
"Third quarter comparable sales grew 12.7%, reflecting double-digit growth in every one of our core merchandising categories. Even within those core categories, sales strength was broad-based, and virtually every area of the business grew over last year. This shows the power of our multi-category assortment in driving guest relevance and affinity for Target."
Brian C. Cornell, CEO
“Consumers have started to return to pre-pandemic spending patterns, increasing the mobility and spending more on travel and services in Q2 and Q3 but we are appreciative that the incremental demand that came our way during the pandemic has remained, and that we are continuing to grow on top of that.”
Brian T. Olsavsky, CFO
“Obviously, there are some parts of the stimulus that have wound down in Q3. Things like child care credits that kept going through Q3. But demand is really strong. Unit demand is strong. So in our stores, they're crowded. So we continue to see good demand. And I think as you comment -- your question stated almost, as we get further and further away from stimulus, I think it makes us feel better and better about the demand for what we're doing.”
M. Brett Biggs, CFO
“We delivered double-digit sales and earnings growth in a challenging year. Our performance was supported by continued strength in consumer demand for protein. Our retail core business lines, which include our iconic brands, Tyson, Jimmy Dean, Hillshire Farm and Ball Park have driven strong share growth in the retail channel, delivering 13 quarters of consecutive growth. Continued recovery in the foodservice channel, led by QSRs, also supported our strong results. Overall, we saw our volume recover in the second half from the pandemic lows to finish the fiscal year only slightly down.”
Donnie D. King, CEO
Durable Goods / Home Improvement
Demand for durable goods is an important sign of the health of the economy. When consumers are weak, they tend to push out large expenses like electronics. However, according to big-box retailers like Best Buy and Home Depot, the demand has not dropped off from the previous year.
“We continue to capitalize on strong customer demand as more people sustainably work, entertain, cook and connect at home. And Domestic comparable sales growth was up 2% on top of 23% last year. From a merchandising perspective, the biggest contributors to our comparable sales growth in the quarter were appliances, home theater and mobile phones.”
Corie Sue Barry, CEO
“Home improvement demand remains strong. Our customers remain engaged with projects around the home, and we continue to focus on delivering the best experience in retail. As we mentioned last quarter, we continue to see customers taking on larger home improvement projects as evidenced by the continued strength with our Pro customer, which once again outpaced the DIY customer.”
Craig A. Menear, CEO
“We continued strong demand, especially from commercial customers. As we share there as companies are reopening offices, getting employees back to work, they're investing to improve the experiences and therefore, they're investing in PCs, they're investing in notebooks and desktops. We also are seeing consumer demand as the holiday season comes. We are seeing demand behaving as per plan.”
Enrique J. Lores, CEO
“What we're seeing and why we're encouraged about the demand environment that we've called out and you see it in our performance is our focus being in commercial PCs, premium consumer, gaming and professional workstations, that's where the demand is. That's our strength. That's been our focus. And when we think about the trends that are underway, the do-from-anywhere, work-from-home, learn-from-home, buy-from-home, game-from-home, entertain-from-home, the change in the usage pattern of hybrid workers, what we think is now a reentry of workers back into the office, the addition of Windows 11 and the ability now to move to more mobile platforms and an aged installed base all set up for the demand environment we're seeing today, we believe, continues into next year.”
Jeffrey W. Clarke, Co-CEO
Clothing
Clothing retailers reported very strong sales despite inventory issues. Both formal and casual wear are seeing high demand. And while there is some possibility that this is partly due to pull-forward demand, some companies like Dick’s believe that is not the case.
“Dresses, men's suiting and dress shirts, dress shoes and makeup all showed sequential improvement during the third quarter, and we are closing the gap to '19 sales levels. However, we experienced inventory shortages in the quarter, especially in certain core categories such as women's apparel and shoes where demand came back stronger and faster than we expected. We responded by trying to increase supply as quickly as possible but weren't able to land as much product as we needed in certain core categories and missed an opportunity to capture incremental sales as a result.”
Peter E. Nordstrom, President
“As for consumers pull forward demand, so far, in Q3, we didn't think that was the case. We don't think that's the case. Obviously, we have Thanksgiving this weekend. Anecdotally, the news is buzzing about lack of product availability across every single retailer, so I imagine there will be some pull forward.”
Lauren R. Hobart, CEO
“We are extremely pleased to see sustained momentum across our brands and channels which posted growth versus 2020 and pre-pandemic 2019 levels. Casual wear remains in high demand, and AE and Aerie are perfectly positioned to benefit.”
Jay L. Schottenstein, CEO
“Consumer demand remains powerful despite the various sentiment reports that would suggest otherwise. The customer is shopping early and often, selecting both apparel and home products. Sweaters, dresses and denim seem to be the apparel items of choice this year, while candles, trim and holiday decor top the home list. Fashion newness remains more important than price.”
Richard A. Hayne, CEO
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