consumer_earnings_header_under_100kb

From groceries to lipstick: seven companies test the consumer

Equities 5 minutes to read

Key takeaways

  • Walmart, Target and TJX can show whether shoppers are cutting back or simply becoming more selective.

  • Home Depot and Klarna test appetite for larger purchases when confidence and borrowing costs still matter.

  • Carlsberg and Estée Lauder show whether small indulgences remain resilient across different markets.


US retail sales fell 0.6% in July, while consumer sentiment weakened again in early August. That sounds gloomy, but economy-wide data hides an important distinction. Households rarely stop spending everywhere at once. They change what they buy, where they buy it and how they pay.

This week offers an unusually broad test. Home Depot and Klarna report on 18 August. Target, TJX, Carlsberg and Estée Lauder follow on 19 August, with Walmart on 20 August. Together, they cover everything from groceries and discounted clothing to renovations, credit, beer and beauty.

The basket matters more than the bill

Walmart, Target and TJX provide the cleanest comparison. Walmart is heavily exposed to groceries and essentials. Target sells more discretionary goods such as clothing and homewares. TJX specialises in off-price retail, selling branded products at discounts.

Strong Walmart and TJX results alongside softer Target sales would suggest consumers are still spending, but leaning harder towards value. If Target also improves, the signal becomes broader: households may be comfortable enough to move beyond necessities again.

For investors, the useful clues are traffic, product mix, promotions and guidance rather than one headline sales figure. Strong sales bought with heavy discounting tell a different story from customers arriving willingly and paying close to full price.

Big purchases need confidence

Home Depot tests a more expensive part of the wallet. Home repairs cannot always wait, but kitchens, bathrooms and other large renovation projects often can. Its previous quarter showed only modest underlying sales growth, so larger projects remain the more revealing signal.

Klarna adds the financing angle. The digital bank lets shoppers spread payments over time. It entered this quarter with rapid growth and relatively stable credit losses. Rising payment volumes with steady repayment behaviour would suggest healthy usage. Faster borrowing paired with worsening credit performance would be much less comforting.

Small luxuries can travel further

Carlsberg and Estée Lauder broaden the test beyond US retail. Carlsberg’s first quarter showed growth in premium beer, alcohol-free drinks and soft drinks. Estée Lauder has been recovering in prestige beauty, including better momentum in mainland China.

They test a familiar habit: people may postpone a sofa before abandoning every small pleasure. If premium drinks and beauty hold up while larger purchases soften, the consumer is not disappearing. The consumer is prioritising.

Risks: one week is not an economy

Weather, promotions, calendar shifts and company execution can distort one quarter. July’s weak US retail-sales report was also affected by Amazon moving Prime Day into June. The better approach is to look for patterns across companies, especially whether value-seeking, delayed big purchases and stable credit quality appear together.

The consumer is not one person

This week matters because it turns a vague debate about “the consumer” into something more useful. Walmart can test essentials, TJX the hunt for value, Target discretionary recovery and Home Depot bigger commitments. Klarna shows how much spending needs financing, while Carlsberg and Estée Lauder reveal whether small indulgences still travel.

The message will probably be more nuanced than strong or weak. Households can feel cautious and still spend when something feels necessary, affordable or worth it. That is the receipt investors should read. The total matters, but what sits inside the basket tells the better story.

This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.

The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

Disclaimer

Confidentiality and Usage:
You may not reproduce, distribute, or transmit this material or any portion thereof without prior written permission from Saxo.

Nature of Information:
The information provided herein is based on current market conditions and analysts' opinions, which may reflect personal views of the author, and are subject to change without notice. This material does not include a record of any trading prices, or an offer of, or solicitation for, or endorsement to enter into any transaction in any investment product. Any forecast on the economy, markets and economic trends of the markets provided is not necessarily indicative of the future or likely performance of the investment product subject of this material.

Responsibility and Liability:
Saxo accepts no liability for any use that may be made of these comments or for any consequences that arise from such use. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

The information provided in this material is solely for information only. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Accordingly, it should not be relied on or treated as a substitute for specific advice concerning specific situations of any person. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase an investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether any investment product mentioned in this publication is suitable for you.

Notwithstanding the above, insofar as any information provided herein contains research analyses or reports concerning any investment product authored by any foreign research house and is issued or promulgated to a person in Singapore who is not an accredited investor, expert investor, and/or institutional investor, Saxo Capital Market Pte. Ltd. accepts legal responsibility for the contents of this material to the extent required by law. Recipients of such material are to contact Saxo Capital Markets Pte. Ltd. in respect of any matters arising from, or in connection with, this material.

Risk Disclosure:
Trading in investment products involve significant risk, including the risk of losing your entire investment. Historical returns are not a guarantee of future returns. Prices can both rise and fall, and there is a risk that you will not get back the money you invested.

Conflicts of interest:
The author may hold positions in the investment products mentioned. The author does not own positions in the underlying investment product exceeding 0.5% of its market capitalisation, save as otherwise declared. The author is not permitted to trade the mentioned investment products within the first 24 hours after the publication of this article.

Saxo maintains partnerships with companies that compensate Saxo for promotional activities conducted on its platform. Additionally, Saxo has agreements with certain partners who provide retrocession contingent upon clients purchasing specific investment products offered by these partners. While Saxo receives compensation from these partnerships, all content is conducted with the intention of providing clients with valuable options and information.

Publication details:
If any listed companies are the subject of the material, the content has not been submitted to the companies in question prior to publication.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Saxo is part of the J. Safra Sarasin Group.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.