Earnings calls give us a peek into both the publicly traded company giving the report and the behavior of consumers buying goods and services. They tell us about what has already happened and share a bit of insight into what could happen in the future.
Obviously, it's impossible to know what will happen until it does, and major events can upset a forecast or outlook — just look back early 2020 — but they at least provide some information to help make decisions.
If you listen to a lot of the consumer-focused publicly traded companies, the story they're telling isn't the rosiest.
Airlines have been pulling back their full-year outlooks because domestic demand is down, the Wall Street Journal reported. PepsiCo and other snack and food companies have cut their outlooks as well, according to the New York Times.
“Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now,” said Jamie Caulfield, the chief financial officer of PepsiCo, during a first-quarter earnings call.
Chipotle Mexican Grill reported same-store sales dropped for the first time since 2020.
“It was all around this idea of saving money, economic uncertainty — they’re eating at home more frequently than they’re eating out,” Chipotle CEO Scott Boatwright said in an earnings call.
The buzzword we're all using, or possibly overusing, is uncertainty. It's a good catchall word that covers quite a lot of what's going on. It's the culmination of so many things, and the prudent thing to do seems to be to hold back. People, and in turn businesses, don't want to overextend or further overextend themselves, so they're slowing down and looking at their options.
What that all means yet, I don't know, but it's important to at least keep up with any signals about how consumers are behaving and where they're prioritizing their spending.
It would make sense for consumers to make sure they're taking care of their necessities: the mortgage or rent, groceries, utilities, childcare-related expenses, etc. Travel for most will fall under discretionary spending, so lower on the list of priorities.
On the plus side, however, once consumers feel confident enough again with their own financial situation, they'll still likely be more inclined to prefer spending on travel and experiences over material goods, continuing that trend we've seen in recent years.
In the meantime, keep an eye on those earnings calls, especially the hotel brand and real estate investment trust calls coming up. For some idea of what to expect from those, check out CoStar News' Natalie Harms' story with industry analysts running on Monday.
You can reach me at bwroten@hotelnewsnow.com as well as on LinkedIn.
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