{"id":44696,"date":"2023-08-05T00:57:54","date_gmt":"2023-08-05T04:57:54","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/greedflation-is-not-letting-up-heres-what-companies-are-saying-about-it\/"},"modified":"2023-08-05T00:57:56","modified_gmt":"2023-08-05T04:57:56","slug":"greedflation-is-not-letting-up-heres-what-companies-are-saying-about-it","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=44696","title":{"rendered":"Greedflation is not letting up. Here\u2019s what companies are saying about it."},"content":{"rendered":"

The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.<\/p>\n

\u201cGreedflation,\u201d or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as inflation readings have come down and as some acknowledge that their input costs are falling.<\/p>\n

\n

At the same time, companies continue to emphasize on earnings calls that their customers are showing signs they are weary of higher prices and are shopping more frequently at more stores, while spending less per trip. <\/p>\n

See: <\/strong>Consumers are shopping in more stores than ever before to save money<\/p>\n

\u201c<\/em>Across industries, we\u2019ve seen the same story over and over the last two years,\u201d said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.<\/p>\n

\u201cCEOs claim outside forces made them gouge consumers, then turn around and give themselves raises and boast of record profits and billions in new investor handouts,\u201d she said, referring to the billions of stock buybacks and dividend payouts the same companies have made. <\/p>\n

See:<\/strong> U.S. inflation slows again, CPI shows, as Fed weighs another rate hike<\/p>\n

Also read:<\/strong>\u00a0U.S. wholesale inflation slows to a crawl, PPI shows<\/p>\n

Procter & Gamble Co.
\n PG,
\n -1.10%<\/bg-quote>,<\/span>
\n for example, said it raised prices by up to 9% in its latest quarter, after raising them up to 10% the previous quarter and up to 10% in the same quarter in 2022. <\/p>\n

On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company\u2019s innovation pipeline, which is creating must-have products.<\/p>\n

\u201cIf you look back historically, pricing has been a positive contributor to our top-line growth for something like 48 out of the 51 last quarters and again as we strengthen our innovation program even further, that will provide opportunities to continue to benefit from modest pricing,\u201d said Moeller, according to a FactSet transcript. <\/p>\n

See also: <\/strong>Colgate to keep raising prices as inflation slows to boost margins and profit<\/p>\n

The company blew past earnings estimates with adjusted per-share earnings of $1.37, ahead of the $1.32 FactSet consensus, and sales of $20.6 billion, versus the $20 billion FactSet consensus.<\/p>\n

Gross margin increased 380 basis points from a year ago, driven by 340 basis points of pricing benefit and 290 basis points of productivity savings.<\/p>\n

Coca-Cola Co.
\n KO,
\n -1.51%<\/bg-quote>
\n also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company\u2019s adjusted operating margin rose to 31.6% from 30.6% a year ago.<\/p>\n

Conagra Brands Inc.
\n CAG,
\n -0.62%<\/bg-quote>
\n raised prices by up to 17%, which Chief Executive Sean Connolly described as \u201cinflation-justified.\u201d The parent of brands such as Birds Eye, Duncan Hines, Hunt\u2019s, Orville Redenbacher\u2019s and Slim Jim\u00a0also reported that its customers are buying less food to stretch their budgets. <\/p>\n

For more, see: <\/strong>Consumers are now \u2018hunkering down\u2019 rather than \u2018trading down\u2019 on groceries, Conagra says<\/p>\n

Oreo cookie maker Mondelez International Inc.
\n MDLZ,
\n -1.82%<\/bg-quote>
\n raised prices in North America by 10.4 percentage points in the second quarter and raised prices for all developed markets by 12.4 percentage points. That\u2019s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.<\/p>\n

The company\u2019s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat. <\/p>\n

At Campbell Soup Co.
\n CPB,
\n -1.05%<\/bg-quote>,<\/span>
\n sales for its fiscal third quarter were up 5%, led by \u201cfavorable net price realization,\u201d as the company disclosed as the very first bullet point in its release. Campbell raised prices of meals and beverages by 9% and if snacks by 15%, after raising them by 15% and 13%, respectively, in the second quarter.<\/p>\n

However, volumes were down in the third quarter as shoppers proved sensitive to higher prices. <\/p>\n

Kraft Heinz Co.
\n KHC,
\n -0.82%<\/bg-quote>
\n on Tuesday said it too has lost business because it raised prices more than its competitors, but it\u2019s not planning to cut prices to try to get those customers back anytime soon.<\/p>\n

\u201c[W]hile we did lose share in the quarter, as price gaps have stayed wider for longer than we would have liked, we are managing the business for the long term and still generated mid-single-digit top-line growth within the range of what we expected,\u201d Chief Executive Miguel Patricio said. <\/p>\n

The company, parent to brands including Kraft Mac and Cheese, Heinz Ketchup, Jell-O and Lunchables, indicated on the post-earnings conference call with analysts that rather than increasing discounting, or just cutting prices, it will remain focused on protecting margins, which has been allowing it to accelerate investment in the business, particularly in marketing, research and development and technology.<\/p>\n

Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft\u2019s prices and those of competitors are not getting worse. \u201cIf anything, they are slightly getting better,\u201d Maciel said, according to an AlphaSense transcript.<\/p>\n

Considering the market-share losses and with inflation coming down, \u201cdo you think you took too much price, given you said you took price ahead of competitors, and they have not followed?\u201d UBS analyst Cody Ross asked on the conference call.<\/p>\n

CEO Miguel Patricio\u2019s answer was simple: \u201cNo.\u201d<\/p>\n

\u201cI mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it\u2019s our role as leader to try to compensate \u2026 this inflation with price increases,\u201d Patricio said. \u201cSo I would do everything again. I mean we can always go back on price if we think we have to or when we have to.\u00a0But we had to lead price increases.\u201d<\/p>\n

All of that leaves families to foot the bill for higher food prices, said Accountable.US\u2019s Zelnick.<\/p>\n

The Consumer Staples Select Sector SPDR\u00a0exchange-traded fund
\n XLP
\n has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
\n XRT
\n has gained 10.3%. The S&P 500
\n XRT
\n has gained 17%. <\/p>\n

Tomi Kilgore contributed.<\/em><\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away. \u201cGreedflation,\u201d or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as […]<\/p>\n","protected":false},"author":1,"featured_media":44697,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-44696","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nGreedflation is not letting up. 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