American shoppers are tired. These companies are benefiting

Analysis by Bryan Mena, CNN

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Americans are worn down by high inflation and interest rates. Companies that offer bargains and staples are reaping the rewards.

Just ask Ross Stores: America’s largest off-price retailer reported earnings and revenue that beat analysts’ forecasts last week. Company executives said they’re planning on opening about 90 new stores this year.

“There’s clearly a lot of uncertainty in the macroeconomy,” Adam Orvos, executive vice president and chief financial officer at Ross Stores, said in an earnings call. “The silver lining for our business is the customer is seeking value more than ever, and we’re in a position to deliver that.”

TJX, the parent of TJ Maxx, Marshalls and HomeGoods stores, has also benefited. The company recently reported strong revenue in its latest quarter and is also planning to expand its physical footprint — by more than 1,300 stores in North America, Europe and Australia.

And Dollar General last week beat Wall Street’s estimates for sales and reported increased foot traffic in the first quarter.

In contrast, high-end retailers such as Burberry have been sounding the alarm of a broad slowdown in luxury spending. The British luxury chain reported last month that its profits plummeted by 40% in the budget year ending in late March, with comparable store sales in the Americas declining 12% over the year. LVMH Moët Hennessy Louis Vuitton has reported that demand for expensive liquors is down sharply in the US.

“You’re seeing a pullback from consumers on the more discretionary-spending side of things,” Clayton Allison, portfolio manager at Prime Capital Investment Advisors, told CNN.

Allison said US consumers’ more cautious stance will be a boon for retailers that sell essentials such as groceries.

For example, Walmart posted higher-than-expected revenue for the first three months of the year. The country’s biggest retailer said that higher-income consumers are flocking to its store in search of bargains.

“Customers are now making sure they buckle down where they’re spending their money, so that will be a tailwind for those more staple-oriented retailers,” Allison added.

Fast food deals were off the table. Now they’re roaring back

For years, restaurant executives had a confident message for investors: We’re raising prices, and customers don’t care.

Well, now diners do — and fast food chains, especially, are rapidly changing course.
Frustrated diners are complaining online about how expensive fast food has become. Low-income consumers in particular are dining out less often, and spending less when they do. For some fast food restaurants, that means slowing sales and less foot traffic.

To win people back, these chains are returning to a strategy they tried to leave behind: Discounts.

Read more here.

Up Next

Monday: Earnings from GitLab. S&P Global and the Institute for Supply Management release May business surveys gauging economic activity in the US manufacturing sector.

Tuesday: Earnings from CrowdStrike, Hewlett Packard Enterprise and Bath & Body Works. The US Labor Department releases April figures on job openings, quits, hires and layoffs. The US Commerce Department releases April figures on new orders for manufactured goods.

Wednesday: Earnings from Lululemon, Dollar Tree, Brown Forman, Campbell Soup and Five Below. Automatic Data Processing releases its May employment report. The Bank of Canada announces its latest interest rate decision. S&P Global and the Institute for Supply Management release May business surveys gauging economic activity in the US services sector.

Thursday: Earnings from Autodesk, The J.M. Smucker Company, DocuSign, Vail Resorts, Zumiez, Big Lots, Conn’s and Kirkland’s. The European Central Bank announces its latest interest rate decision. The US Commerce Department releases April data on exports and imports. The US Labor Department reports the number of new applications for jobless benefits in the week ending on June 1. China’s customs agency releases May data on exports and imports.

Friday: The US Labor Department releases May data gauging the state of the job market, including monthly payroll growth, wage gains and the unemployment rate.

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