Consumers shun candles, barbecue sets as budgets tighten According to Reuters

© Reuters. FILE PHOTO: Products are displayed in the L Brands Inc. retail store, Bath & Body Works in Manhattan, New York, US, May 13, 2016. REUTERS / Brendan McDermid / File Photo

By Doyinsola Oladipo

NEW YORK (Reuters) – Whether they make pound cake scented candles with pounds of strawberries or $300 brisket meal delivery kits, American companies are telling investors to expect consumers cut discretionary spending as inflation is at a 40-year high.

Stuck at home during the pandemic, consumers freely splurging on goods and services may be cutting back, prompting US companies to reevaluate quarterly revenue estimates and open plans. wide.

“People are cutting back across the board. They’re driving less, they’re spending proportionally less at the grocery store. And they’re getting rid of subscription packages,” said Yahya Mokhtarzada, Truebill’s chief revenue officer. sign they don’t need”, a service that helps 3.4 million customers manage their bills.

Investors looking for hints about the direction the U.S. economy could take need only consider company statements predicting job cuts, factory expansion delays and low revenue estimates. than.

Wood pellet machine maker Traeger Inc said on Wednesday it would suspend barbecue tableware delivery and postpone plans to build a factory in Mexico as well as cut its workforce in an effort to reduce costs. fee.

Shopping center soap, perfume and candle retailer Bath & Body Works Inc on Wednesday lowered its revenue estimate for the second quarter, citing “inflationary pressures” affecting customers and operations. their business.

Both companies declined to comment.

In another example of consumers cutting back on shopping, research firm DA Davidson lowered its price targets for Etsy (NASDAQ: Inc) and Shopify (NYSE: Inc), citing “high inflation.” and “a shift in short-term discretionary spending to travel and away from e-commerce.”

Even so, chief executive officer Jonathan Carson of subscription analytics firm Antenna said his company does not see inflation having an impact on premium video subscription services.

He said consumers looking to save money can choose to eat pizza and stream it at home after dinner and a movie.

“Consumer perceived value of video streaming and other home entertainment services is increased as there is more pressure on household budgets,” Carson said.

Video streaming subscription service Netflix Inc (NASDAQ:) said on Tuesday it lost 970,000 subscribers between April and June but predicts it will return to customer growth in the third quarter. .

“If anything, inflation is leaning in favor of subscribers,” said Tien Tzuo, managing director at subscription software company Zuora (NYSE:). “But there’s something about separating winners from losers, and winners are the ones who become indispensable to their subscribers.”

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