Retail news that keeps industry pros in the know
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As prices stay high, consumers continue to buy, at least according to the latest round of retail earnings results.
Procter & Gamble bumped up prices by 10% last month, but reported its organic sales rose 7%, and subsequently raised its annual forecast on its fiscal third quarter earnings call last week. CFO Andre Schulten noted on the call that “the US consumer is holding up well.”
- Kleenex maker Kimberly-Clark, which has raised its prices by 10% for two straight quarters, also recently reported rising sales.
PepsiCo also boosted its annual forecast, this week reporting that a 16% price bump in Q1 led to strong results for the quarter. Coca-Cola also saw rising sales, which it attributed to both higher prices and volumes, though chairman and CEO James Quincey said it foresees “pricing moderating” this year.
- Nestlé, which increased prices by nearly 10% in the quarter, said this week its sales rose 5.6%, with a small 0.5% volume decline. CFO François-Xavier Roger said that in relation to higher pricing, “demand elasticity and consumer downtrading remained limited.”
This consistent consumer demand could contribute to continued high prices, Dhruv Grewal, professor of marketing, commerce, and electronic business at Babson College, told Retail Brew last month. It gives companies “less of an incentive to want to back down to a lower price” because they’ve yet to see a hit to their bottom lines, he said.
But, but, but: While McDonald’s same-store sales increased by more than 12% in Q1, president and CEO Chris Kempczinski noted this week that the fast food giant is seeing a bit of pricing pushback as items-per-order dropped slightly in the quarter.
“We are seeing, in some places, resistance to pricing, more resistance than we saw at the outset,” he said.