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  • Heineken is the latest Western corporate giant to exit Russia

    Heineken is the latest Western corporate giant to exit Russia

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    Beer giant Heineken N.V. is the latest Western company to exit Russia, announcing Friday the sale of its Russian operations to Arnest Group for one euro.

    Under the terms of the deal, all of Heineken’s
    HEIA,
    +0.77%

    remaining assets, including seven breweries in Russia, will transfer to the new owners, the beer giant said in a statement. The Russian Arnest Group has also taken over responsibility for Heineken’s 1,800 employees in Russia.

    Heineken began the process of exiting Russia in March 2022, following that country’s invasion of Ukraine. The company said it expects to incur a total cumulative loss of €300 million ($324.1 million) as a result of its exit.

    “We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia,” Heineken CEO Dolf van den Brink said in a statement. “While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”

    Related: Unilever CEO vows to look at Russian operations with ‘fresh eyes’ as pressure to exit the country mounts

    A number of major Western corporations, including U.S. giants Apple Inc.
    AAPL,
    +1.26%
    ,
     Alphabet Inc. 
    GOOGL,
    +0.08%

    GOOG,
    +0.21%
    ,
     Amazon.com Inc.
    AMZN,
    +1.08%
    ,
     International Business Machines  Corp. 
    IBM,
    +1.25%

    and McDonald’s Corp. 
    MCD,
    +0.79%
    ,
    have left Russia in response to Moscow’s February 2022 invasion of Ukraine.

    Earlier this week, DP Eurasia, the master franchiser of the Domino’s Pizza Inc.
    DPZ,
    +0.49%

    brand in Turkey, Russia, Azerbaijan and Georgia, also announced its exit from Russia.

    But Heineken is “no hero,” according to Mark Dixon, the founder of the Moral Rating Agency, an organization set up after the invasion of Ukraine to examine whether companies were carrying out their promises of exiting Russia. “It failed to leave Russia for a year and a half,” he told MarketWatch via email. “The explanation that it took longer than expected doesn’t hold water, because of course it’s difficult to find a buyer if you remain so long a pariah state.”

    The Ukraine Solidarity Project said that Heineken’s move should increase the pressure on companies that remain in Russia, such as consumer-goods giant Unilever PLC
    ULVR,
    +0.44%
    .
    “The point here is that major companies, like @Heineken, are and have taken loses of hundreds of millions and billions in leaving the Russian market. It is possible,” the Ukraine Solidarity Project tweeted Friday. “We’re sure @Unilever can do it, too.”

    Related: WeWork, Carl’s Jr., Unilever and Shell among companies slammed by Yale over operations in Russia

    The Ukraine Solidarity Project recently launched a high-profile campaign urging Unilever to get out of Russia, using images of Ukrainian veterans injured in the war with Russia. Last month, activists from the Ukraine Solidarity Project held up a giant poster featuring the veterans outside Unilever’s London headquarters.

    The Moral Rating Agency has also reiterated its calls for Unilever to end its Russian operations. 

    “We have always said we would keep our position in Russia under close review,” a Unilever spokesperson told MarketWatch earlier this month. The spokesperson also directed MarketWatch to a statement on the war in Ukraine that the company released in February 2023.

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  • Foot Locker Slashes Its Outlook and Suspends Dividend. The Stock Sinks.

    Foot Locker Slashes Its Outlook and Suspends Dividend. The Stock Sinks.

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    Foot Locker


    stock plunged on Wednesday as investors kicked around a bevy of bad news. The shoe and sportswear retailer missed expectations for second-quarter sales, slashed its full-year outlook again, and paused its dividend.

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  • U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings

    U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings

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    U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.

    Adding to the gloom, Republic First Bancorp. Inc.’s stock
    FRBK,
    -41.90%

    tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.

    S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.

    And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon
    BK,
    -1.71%
    ,
    State Street
    STT,
    -1.59%

    and Northern Trust
    NTRS,
    -1.73%
    .

    For more, see: Bank asset quality, weaker profits spark Moody’s reviews and downgrades as it weighs potential 2024 recession

    The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.

    Individual bank names are also performing poorly, with Goldman Sachs Group Inc.
    GS,
    -0.94%

    and Citigroup Inc.
    C,
    -1.68%

    down for 10 of the past 11 days and Charles Schwab Corp.
    SCHW,
    -4.84%

    down 11 straight days.

    Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.

    The KBW Nasdaq Regional Banking Index
    KBWR
    is down for 11 straight days. and the KBW Nasdaq Bank Index
    BKX
    is down for seven straight days.

    S&P downgraded Associated Banc. Corp. 
    ASB,
    -4.20%
    ,
     Comerica Inc.
    CMA,
    -3.82%
    ,
     KeyCorp
    KEY,
    -3.58%
    ,
     UMB Financial Corp. 
    UMBF,
    -2.42%

    % and Valley National Bancorp. 
    VLY,
    -4.19%

    by one notch and said the outlook on all five is stable.

    Read also: More challenges await U.S. banks but analysts think the worst may be over for the year

    The rating agency affirmed ratings on Zions Bancorp
    ZION,
    -4.17%

     and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp. 
    SNV,
    -3.37%

     and Truist Financial Corp. 
    TFC,
    -1.36%

     “We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.

    “For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”

    The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.

    The sector has been skittish this year following the collapse of Silicon Valley Bank and other lenders that led to a run on deposits at a number of regional lenders.

    However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.

    The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.

    S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.

    KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.

    As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.


    KeyBank net customer flow (intraday). Source: BondCliQ Media Services

    The next chart shows customer flow over the last 10 days.


    Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services

    The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.


    Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services

    Don’t miss: Capital One confirms roughly $900 million sale of office loans as property sector wobbles

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  • Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

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    Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
    SPX
    and Nasdaq Composite
    COMP.
    That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.

    Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.

    Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.

    “We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.

    Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
    NVDA,
    -0.49%
    ,
    Microsoft
    MSFT,
    +0.94%

    or Meta
    META,
    +0.51%
    .


    Goldman Sachs Investment Research

    “The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.

    While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.

    Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”

    Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.

    “For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.

    Here is a taster of their long-term AI beneficiaries basket:


    Goldman Sachs

    And a few more:


    Goldman Sachs

    Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn

    The markets

    U.S. stocks
    SPX

    COMP
    are trading mixed. The yield on the 10-year Treasury
    BX:TMUBMUSD10Y
    is steady at 4.33%.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    Microsoft
    MSFT,
    +0.94%

    has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
    ATVI,
    +1.09%

    buyout. Activision shares and Ubisoft
    UBI,
    +9.93%

    surged in Paris.

    On the heels of a 7% surge, EV-maker Tesla
    TSLA,
    +2.77%

    is up 1.8%.

    Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat

    Lowe’s shares
    LOW,
    +3.34%

    are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.

    Among Monday’s late earnings news: Fabrinet
    FN,
    +27.25%

    is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
    ZM,
    -4.15%

    is up 4% after reporting an earnings jump and guidance.

    Read: Why Amazon is this analyst’s top internet stock pick

    The world’s biggest miner BHP
    BHP,
    -0.98%

    reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.

    Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.

    Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.

    Best of the web

    ‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

    New video shows the day police raided 98-year old Kansas newspaper owner’s home.

    Hitler’s birth house in Austria will be turned into a police station with a human rights training center.

    The tickers

    These were the top tickers on MarketWatch as of 6 a.m.:

    Ticker

    Security name

    TSLA,
    +2.77%
    Tesla

    NVDA,
    -0.49%
    Nvidia

    AMC,
    -17.31%
    AMC Entertainment

    NIO,
    -1.87%
    Nio

    APE,
    -11.32%
    AMC Entertainment Holdings preferred shares

    TTOO,
    -6.13%
    T2 Biosystems

    GME,
    -3.63%
    GameStop

    AAPL,
    +0.63%
    Apple

    MULN,
    -19.19%
    Mullen Automotive

    AMZN,
    +0.15%
    Amazon.com

    The chart

    Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
    XLK
    :


    @scottcharts

    “It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report. 

    Random reads

    “We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.

    No, Tropical Storm Hilary didn’t flood Dodger Stadium.

    These thirsty beer-drinking thieves are raccoons.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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  • Stock-index futures gain ground after three-week losing streak

    Stock-index futures gain ground after three-week losing streak

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    U.S. stock futures moved higher early Monday, as Wall Street looks to snap a three-week losing streak.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      +0.51%

      rose 15 points, or 0.3% to 4397

    • Dow Jones Industrial Average futures
      YM00,
      +0.36%

      gained 79 points, or 0.2% to 34644

    • Nasdaq 100 futures
      NQ00,
      +0.70%

      rose 86 points, or 0.5% to 14830

    On Friday, the Dow Jones Industrial Average
    DJIA
    rose 26 points, or 0.07%, to 34501, the S&P 500
    SPX
    declined 1 points, or 0.01%, to 4370, and the Nasdaq Composite
    COMP
    dropped 26 points, or 0.2%, to 13291.

    What’s driving markets

    Futures are striving to find their footing as Wall Street comes off a three-week losing streak.

    “Global markets have recently experienced a series of stumbles due to concerns about China’s economy and higher sovereign bond yields. Last week the S&P 500 dropped 2.1 %, worryingly, with every sector ending in the red,” noted Stephen Innes, managing partner at SPI asset management.

    Neither of those factors are providing much succor early Monday. A trimming of interest rates over the weekend by China’s central bank has underwhelmed the market, while the 10-year Treasury yield is up about 4 basis points to 4.29%, holding near 15-year highs.

    The rising borrowing costs have been a particular problems for some of the big technology stocks that tend to lead the market, according to Innes.

    “Last week, several prominent stocks within the S&P 500, such as
    GOOGL,
    -1.89%
    ,

    TSLA,
    -1.70%
    ,

    META,
    -0.65%
    ,

    AMZN,
    -0.57%
    ,

    MSFT,
    -0.13%
    ,

    AAPL,
    +0.28%
    ,
    and
    NVDA,
    -0.10%
    ,
    all underperformed compared to the broader market index. This dip in performance is attributed to the recent surge in interest rates…This upward rate movement has exerted downward pressure on longer-duration assets,” Innes added.

    With that in mind, the reception afforded Nvidia’s results, due on Wednesday, may shape market sentiment for a while. The chipmaker is among the stragglers of an earnings season that has generally beaten forecasts but failed to deliver additional bullish propulsion to the market.

    “This picture simply means that the fear of a further Fed tightening, prospects of higher interest rates, combined [with] the set of bad news from China simply didn’t let investors enjoy the better-than-expected earnings,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

    However, Tom Lee, head of research at Fundstrat, reckons the recent sell-off will be halted at or before Federal Reserve Chairman Jay Powell makes a speech at the Jackson Hole symposium at the end of the week.

    “Over our many conversations with institutional investors in the past week, the vast majority cite the rise in interest rates as the most concerning for equities,” Lee wrote in a note published over the weekend.

    And he thinks the Fed is worried by the surge in 10-year yields, too, because it represents a meaningful tightening of financial conditions for markets, companies and households.

    “I think the Fed likely says something dovish-ish [sic]. Why? Does Fed want to risk another ‘something breaking’ ala Feb 2023? While some look back at August 2022 when Fed Chair Powell’s statement was hawkish and marked the local top in 2022 (stocks fell -19% next 8 weeks), we think the context is the opposite.” Lee concluded

    Zoom video Communications
    ZM,
    +1.42%

    will report results after Monday’s closing bell. There are no top drawer U.S. economic data due Monday.

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  • Expectations for Nvidia’s earnings are massive. Will they even matter?

    Expectations for Nvidia’s earnings are massive. Will they even matter?

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    When Nvidia Corp. last reported quarterly results, the chip maker forecast record revenue that was far above anything it had put up before. In response, investors sent the stock into orbit. On Wednesday, the latest round of earnings for the company will be a test of Nvidia’s status as the darling of the AI investment boom, and a test of whether it can deliver on its own lofty expectations.

    The results will also be an update of tech demand overall, after businesses tightened their IT budgets following worries about an economic slowdown. But even with Nvidia’s
    NVDA,
    -0.10%

    stock up more than 200% so far this year and expectations rising just as much, some analysts still say there’s room for shares to go higher, despite supply-side logjams.

    Barclays said that Nvidia, whose chips analysts say will help power AI technology in the days to come, has “monopolized the economics of the AI boom, with no clear competitor close behind.” They added that “cloud capex budgets are being funneled towards AI.”

    Signs that Nvidia might be falling behind on meeting chip demand have started to emerge. But as businesses rush to mark their territory, or potential territory, in the world of AI, Wedbush analysts have asked whether Nvidia’s results and forecast would even matter, as today’s production constraints turn into tomorrow’s sales.

    “We don’t think NVDA results/guidance need to hit the high end of expectations,” Wedbush analyst Matt Bryson said in a research note on Friday.

    “With demand for AI training having lifted substantially in the past quarter and with no other silicon supplier now capable of providing part volumes within an order of magnitude of NVDA’s output, we believe any unfilled demand will just be pushed into forward quarters fueling future sales and (earnings per share),” he continued.

    Synovus analyst Daniel Morgan was also bullish on Nvidia’s business targeted toward data centers, as those facilities try to integrate generative AI and large language models. And within Nvidia’s gaming segment, he said the company’s new Ada Lovelace graphics-processing unit ecosystem “appears to be seeing a high level of success in retail.”

    Still, the longer a stock runs higher, the harder it can fall. And Nvidia’s $1 trillion valuation, Morgan said, “is not for the faint-hearted.”

    This week in earnings

    Along with Nvidia, China search giant Baidu Inc.
    BIDU,
    -3.63%

    reports, as the nation’s economic rebound sputters. And if more businesses are still cautious about cloud spending, or shifting spending to AI, the mood could filter through to results from Splunk Inc.
    SPLK,
    +0.35%

    and Snowflake Inc.
    SNOW,
    +0.47%
    .
    Peloton Interactive Inc.
    PTON,
    +1.59%
    ,
    Workday Inc.
    WDAY,
    +0.16%

    and Marvell Technology Inc.
    MRVL,
    +0.05%

    also report.

    The call to put on your calendar

    Zoom and offices: If even Zoom is calling some of its workers back to the office, what could that possibly mean for its results on Monday and the business of videoconferencing? Zoom Video Communications Inc.
    ZM,
    +1.42%

    hasn’t been spared from the wave of tech-industry layoffs, and the company is trying to branch out from its pandemic-mainstay video-call platform, and harnessing its technology to handle phone calls and customer contact centers. Benchmark Research analyst Matthew Harrigan, in a note last week, said he still liked Zoom’s prospects, even though he wasn’t expecting “much instant gratification.” “We do expect AI to crystallize as a significant positive for Zoom even as it navigates through customer pushback on using customer data to train AI models off privacy concerns,” he said.

    The numbers to watch

    Sales, forecasts and inventories from retailers: Last week, Target Corp.
    TGT,
    +0.85%

    reported what one analyst called “the definition of mixed results,” while another said the results amounted to “Recessionary trends without the recession.” Sales of essentials like groceries, as they have over the past year, helped Walmart Inc.’s
    WMT,
    +1.44%

    results, but management said that consumers were still feeling the pain from inflation, which for some shoppers over the past year has left little room for much beyond the basics.

    In the week ahead, we’ll get results whole bunch of retailers that don’t sell basics — like department stores Macy’s Inc.
    M,
    +0.53%

    and Kohl’s Corp.
    KSS,
    +3.53%

    ; clothing chains Nordstrom Inc.
    JWN,
    +0.47%
    ,
    Gap Inc.
    GPS,
    +2.17%
    ,
    Urban Outfitters Inc.
    URBN,
    +2.00%

    ; shoe retailer Foot Locker Inc.
    FL,
    +0.60%

    and beauty-products chain Ulta Beauty Inc.
    ULTA,
    +1.40%
    .
    Those retailers will report as prices for some things start to come down, or at least not rise as fast, and as some economists overcome their recession fears. But remarks from executives could offer some sense of the impact from higher borrowing costs and the return of student loan payments, and how much they’ll be able to bank on the back-to-school season and wealthier — and more carefree — consumers.

    Dollar-store Dollar Tree Inc.
    DLTR,
    +0.44%

    will also report results, as low-income consumers suffer more under inflation and deal with the end of pandemic-era supplemental food assistance. Off-price retailer Burlington Stores Inc.
    BURL,
    +1.43%

    reports as well, after Ross Stores Inc.
    ROST,
    +5.01%

    Chief Executive Barbara Rentler said that while its low- and moderate-income shoppers were still hurting, shoppers overall “responded well to our improved value offerings throughout our stores.

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  • Nvidia, Lowe’s, Dollar Tree, and More to Watch

    Nvidia, Lowe’s, Dollar Tree, and More to Watch

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    The majority of second-quarter earnings season is over, with a handful of major technology and retail names left to report this week. Economists will be focused on any news from an annual gathering of monetary policy thinkers and practitioners in Jackson Hole, Wyoming.

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  • No One Has to Pretend Water Is Exciting

    No One Has to Pretend Water Is Exciting

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    Over the past few decades, what Americans want out of their beverages has swung wildly between two extremes. In the 1990s, sweet drinks were all the rage. Soda sales were on what seemed like a limitless upward trajectory. Quaker bought the then-ascendant Snapple brand for $1.7 billion in cash, a sum that made me actually snort when I read it in the harsh light of 2023. Gimmicky drinks such as Surge, Orbitz, and SoBe “elixirs” crowded grocery-store shelves. As a middle schooler in the late ’90s, my consumption patterns were practically a case study in the era’s marketing magic. I’m not sure a single drop of plain water ever touched my lips outside of soccer practice.

    Toward the end of that decade, the first evidence of the coming reversal was already visible. Skepticism (most of it warranted, though some of it not) toward sugar and artificial sweeteners steadily grew. The soda giants, reading the room, began marketing their own bottled-water brands to compete with the more fashionable likes of Evian and Perrier. Dasani and Aquafina came right on time: As soda sales faltered, bottled-water sales took off. In 2016, the Beverage Marketing Corporation estimated that, for the first time, Americans consumed more bottled water—almost 40 gallons per capita on average—than carbonated beverages. Tap water, too, has found a new home in an ever-increasing number of reusable water bottles. New Stanley cup, anyone?

    Americans, in short, got sold on hydration. As my colleague Katherine J. Wu recently wrote, how much water any particular person needs to drink to maintain a healthy baseline is still the subject of significant disagreement among experts. But in the absence of clear guidance—and with plenty of encouragement from the health-and-wellness industry—many people seem to have simply decided that more is more, and they shoot for as much as a gallon a day.

    That isn’t to say that everyone likes drinking all this water. As the nation has disciplined itself to refill its glasses, Americans have been forced to confront the inconvenient reality that drinking plain water day in and day out can be kind of a chore. To choke it all down, they’ve returned to powders and concentrated syrups designed to make water more palatable, more healthful, or both. Sweet drinks are back again, albeit in a different form. Enter the water enhancer.

    Today, products meant to gussy up your water are everywhere at grocery and convenience stores. They come in little brightly colored squeeze bottles or single-serving packets. The sales pitch is pretty simple: Throw one in your purse or laptop bag, and instead of buying a packaged beverage, you squirt a couple of drops of syrup or mix a tablespoon or two of powder into regular water. Voilà. Now water is better. This is not exactly a new type of product: Powdered mixes from Crystal Light and Gatorade were around in the 1980s. But unlike the water enhancers of yore, today’s mixes are mostly portioned for single servings instead of big batches.

    According to Phil Lempert, a grocery-industry expert and the founder of the website Supermarket Guru, water enhancers split into roughly two categories: low-calorie flavorings, such as Kraft Heinz’s highly concentrated MiO drops, and hydrating sports (or hangover) drinks, such as powdered electrolyte packets from Liquid I.V. Both MiO and Liquid I.V. debuted in the early 2010s. Within a few years, competitors including LMNT, Cure, and Buoy entered the market, along with the new entrants from old brands, Crystal Light and Gatorade among them. Most of these brands boast about their products’ low sugar content; even some of the enhancers flavored to taste like Skittles, Starburst, or other candy rely on artificial or alternative sweeteners and have few calories. Other ingredients have been incorporated into new products: Companies such as Cure now make caffeinated concentrates. Liquid I.V. has a powder that includes melatonin for sleep. Lots of other products now contain additional vitamins, minerals, or electrolytes. Many water enhancers have become, in essence, drinkable supplements.

    Water enhancers’ rise can easily be charted in sales numbers. Darren Seifer, the food-and-beverage-industry analyst at the consumer-data firm Circana, told me that although the products are still a small part of the overall beverage market, they’ve seen consistent growth. In 2022, sales volume of sports-drinks mixes—the category in which the firm places most water enhancers—was up 15 percent over the previous year. According to Seifer, the growth has been much larger for some brands. A spokesperson for Liquid I.V., which was bought by Unilever in 2020, told me that the brand’s sales have nearly doubled in each of the past four years.

    Like so many cultural phenomena, water enhancers also have become the subject of a viral trend. WaterTok, a subset of TikTok where users mix and match different powders and syrups into recipes inside giant insulated water bottles, flooded the internet earlier this year with tips on how to make tap water taste like, among other things, birthday cake. (Like most TikTok trends, it’s a little extreme, and it doesn’t seem to be especially indicative of how regular people end up using the products. TikTok Franken-water sounds sort of terrifying, and some health experts have expressed concern over its potential misuse as a weight-loss aid.)

    The whole concept of water enhancement can be pretty easy to mock: Why, exactly, can some people not find it within themselves to drink regular water? Why do they need it to taste like Skittles? Why do some people think a random wellness company might actually be able to improve on water, of all things? Once you’ve got the water in your glass, just stop there! Drink that! And yes, drinking Jolly Rancher aspartame water does strike me as more ludicrous than just having a Diet Coke. But if you let go of your immediate revulsion at the occasional licensed candy branding and consider water enhancers as a concept on its merits, you’ll find that even the worst of the bunch isn’t functionally much different than a sugar-free sports drink or low-calorie lemonade. In most cases, they’re arguably better if your goal is to stay hydrated, have a little treat, and have some say in how much sugar or sweetener you consume in the process.

    There’s little reason to believe that the people who use water enhancers are doing so at the expense of the plain water that they’d be drinking otherwise. Americans’ consumption of plain water remains, by all indications, robust. It’s mostly sales of soda and juice that are generally sluggish, which at least hints that, for a lot of the people who like those types of drinks, the trade-off that’s actually being made is between water enhancers and some kind of heavily sweetened beverage. In a lot of cases, that trade-off seems positive, on balance, especially because the enhancers allow people to control how much sweetness actually goes into a drink. This does not guarantee that people consume lower concentrations of flavorings, but it at least allows them to do so if they want.

    To fully understand why people are suddenly so enthusiastic about water enhancers, you also have to look outside of the beverage market and to the kinds of vessels that are so often used to consume them: reusable water bottles and high-capacity insulated cups. According to Circana’s data, the Hydro Flasks and Yetis and Stanleys of the world are still selling like hotcakes, and they present a significant shift in the physical reality of how a lot of Americans get their daily fluids—and, potentially, how much of those fluids they intend to be drinking. If you’ve already got 30 or 40 ounces of water on your desk at work, buying a Gatorade or coconut water or other premixed beverage to lug around with it makes less sense than it otherwise would, and having a couple of packets of sweetened electrolyte powder in your laptop bag is comparatively easy.

    At the core of all of this is a fundamental anxiety. Americans want to do what they can for their health, but for so many people, the most meaningful changes—easier, more affordable access to nutritious foods; taking time for exercise; less stress—are difficult to achieve or outside of their control. Swapping out sugary drinks for plausibly healthier options might not be life-altering, but at least it feels like something. “It’s a low-hanging fruit, in terms of healthy behaviors,” Caleb Bryant, a food-and-beverage analyst at the consumer-data firm Mintel, told me. The same anxiety exists for people who buy bottled water regularly, which Circana’s Seifer points out is still a huge group whose numbers have not yet shown any decline. If you’re selling water enhancers, you don’t need to convert bottled-water drinkers away from a product they already like, as you would with a bottled drink—you just have to convince them that they might occasionally like adding something to it.

    The enhancers have their limits. The freedom they confer can easily mislead consumers about how much better self-mixed drinks actually are: The experts I spoke with all agreed that at least some people seem to assume that no matter how much or what kind of water enhancer they use, their beverage will end up inherently healthier than something prepackaged, just because they get to see the water first before they add anything to it. In that way, the brands behind water enhancers are still very much profiting off of the confusing hydration hype that’s been separating people from their money in dubiously healthful ways for years.

    On balance, though, water enhancers do seem to offer something desirable to people who want their water to be a little bit more palatable and the companies who want to sell to them. They are, on some level, a rare win-win: Water enhancers’ smaller, lighter proportions have significant upsides for the companies marketing them, according to Supermarket Guru’s Lempert. The beverage business as a whole is already a more profitable, less cost-intensive category in which to operate than many other sectors of the grocery industry, he told me, which likely helps account for all the upstarts flocking to the water-enhancer category—they’re inexpensive to produce and don’t spoil quickly. When you take away the necessity of buying plastic bottles and packing, shipping, and stocking heavy liquids, the beverage math gets even better. Consumers find some advantages in those differences too: They create less plastic waste (as long as you’re not always buying bottled water to use with them), take up less room in the pantry, and are sometimes less expensive per serving than a bottled alternative.

    Ultimately, the biggest driver behind water enhancers’ popularity is probably just the nature of water itself. It’s great, but drinking a ton of it every day can become drudgery. These additive products play to a tendency to tinker with water in pursuit of health, stimulation, or pleasure that humans have had for thousands of years. Teas, coffee, beer, wine, and sweetened, fruity drinks such as aguas frescas were all developed because, on some level, water—humble and utilitarian as it is—just wasn’t satisfying all of the needs and desires that our forebears had. Now that lots of people believe they need to be downing liters of water every day for their health, they’ve rediscovered an age-old problem. Yes, water is great. But maybe it could be better, or at least more fun?

    You do need to drink water; any downsides of erring on the side of overhydration don’t really kick in until the volume gets extreme. But forgoing a little fun or flavor in pursuit of perfect physical health is something that humans have never been particularly good at doing. One medieval religious text even cited drinking nothing but plain water as a just punishment for swearing against God. With that in mind, it might have been foolish to expect that in the 21st century, with so many alternatives available, copious amounts of plain water would be the widespread drink of choice for long.

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    Amanda Mull

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  • Want companies to lower their prices? Stop buying stuff from them.

    Want companies to lower their prices? Stop buying stuff from them.

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    The thing that will make companies lower prices is if consumers stop complaining about paying more for the things they need and want, and actually start refusing to buy them.

    As the U.S. corporate earnings-reporting season progresses, with earnings from major retailers Walmart Inc.
    WMT,
    +0.59%
    ,
    Target Corp.
    TGT,
    +0.10%

    and Home Depot Inc.
    HD,
    +0.52%

    on tap next week, investors can get a ground-floor view of how consumer demand may have been hurt, or not, by higher prices, and what the companies plan to do, or not do, about it.

    This dynamic of how consumers adjust their spending habits when prices change is referred to by economists as the price elasticity of demand.

    For companies to cut prices, ‘you have to have the consumer go on strike, and they’re not there yet.’


    — Jamie Cox, Harris Financial Group

    Those who trust companies will choose to ratchet down prices on their own, or at least not raise them because the rise in input costs has been slowing, haven’t been listening to what the many companies have told analysts on their post-earnings-report conference calls.

    Read: U.S. inflation eases again, PCE shows. Prices rise at slowest pace in almost two years.

    Kraft Heinz Co.
    KHC,
    +0.47%

    acknowledged after its second-quarter report that its relatively higher prices have hurt demand, but not by enough for the food and condiments company to consider cutting prices.

    Colgate-Palmolive Co.
    CL,
    +0.81%

    said it will continue to raise prices, even as inflation slows and selling volume declines, as the consumer-products company continues to be laser focused on boosting margins and profits.

    And while PepsiCo Inc.
    PEP,
    +0.16%

    was worried that elasticities would increase, given how its lower-income customers were being particularly pressured by inflation, the beverage and snack giant reported strong results as it witnessed “better elasticities” in most of the markets in which it operated.

    “Obviously, there is still carryover pricing, and I don’t think we’ll do anything different than our normal cycles on pricing in the balance of the year,” PepsiCo Chief Financial Officer Hugh Johnston told analysts, according to an AlphaSense transcript.

    Basically, as MarketWatch has reported, so-called greedflation is alive and well.

    Jamie Cox, managing partner for Harris Financial Group, said as long as the job market stays strong, as it is now, corporate greed will continue to pay off.

    “If something is more expensive, and you have a job, you’ll complain about it, but you won’t substitute it for something cheaper,” Cox said. For companies to cut prices, “you have to have the consumer go on strike, and they’re not there yet,” Cox added.

    ‘At some point, people are going to say, “All right — enough.” ’


    — Paul Nolte, Murphy & Sylvest Wealth Management

    The reason elasticity is so important in the current environment is that, as long as consumers continue to pay the higher prices companies are charging, inflation will remain stubbornly high, making it, in turn, more likely that the Federal Reserve will continue to raise interest rates or, at the very least, not lower them.

    But the longer interest rates stay high enough to crimp economic growth, the more likely the stock market will reverse lower as recession fears rise.

    “At some point, people are going to say, ‘All right — enough,’ ” said Paul Nolte, senior wealth manager and market strategist at Murphy & Sylvest Wealth Management. “But we just haven’t seen that yet.”

    What is elasticity?

    Economists use the term “price elasticity of demand” to refer to the way in which consumers adjust their spending habits when prices change.

    “Elasticity tries to measure how much more producers will want to produce if prices rise, and how much more consumers will want to buy if prices fall,” explained Bill Adams, chief economist at Comerica.

    Elasticity often depends on the type of product a company sells.

    For example, consumer-discretionary-goods companies that sell products and services that people want will often experience greater price elasticity than consumer-staples companies that sell things that people need, such as groceries and prescription drugs.

    But even for needs, consumers often still have a choice, as less expensive generic, or private-label, alternatives may be available.

    Andre Schulten, chief financial officer of consumer-staples maker Procter & Gamble Co.
    PG,
    +0.58%
    ,
    which recently beat earnings expectations as it continued to raise prices, telling analysts that, while there was “some trading into private label,” the overall market share of private-label products was unchanged for the year.

    As Harris Financial’s Cox said, consumers may be complaining about higher prices, but they aren’t yet desperate enough to stop buying.

    The Federal Reserve’s latest Beige Book economic survey stated that business contacts in some districts had observed a “reluctance” to raise prices as consumers appeared to have grown more sensitive to prices, but other districts reported “solid demand” allowed companies to maintain prices and profitability.

    That’s likely why companies and analysts have become less concerned about price elasticity. Based on a FactSet analysis, mentions of the word “elasticity” in press releases and conference calls of S&P 500 companies
    SPX
    increased as inflation and interest rates started surging in early 2022 through the end of the year.

    With inflation trends softening this year, the Fed took a brief pause in raising rates in June, helping fuel further stock-market gains, before raising rates again in July.

    Mentions of the word elasticity in earnings press releases and conference-call transcripts of S&P 500 companies.


    FactSet

    As the chart shows, “elasticity” popped up in more than 55% of earnings releases and conference calls in mid-2022, but with the second-quarter 2023 earnings-reporting season more than half over, mentions had dropped to about 20%.

    Perhaps that will pick up, as retailers, especially those catering to lower-income customers — recall the PepsiCo comment — assess the demand impact of continued price increases.

    Meanwhile, the branded-foods company Conagra Brands Inc.
    CAG,
    +0.71%
    ,
    whose wide-ranging food brands including Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim, were starting to see the emergence of a different dynamic.

    Chief Executive Sean Connolly said consumers were shifting behavior in some categories as prices remained high. Rather than trade down to lower-priced alternatives, he noticed some consumers buying fewer items overall, “more of a hunkering down than a trading down.”

    That’s exactly the kind of consumer behavior that is needed, if companies are to stop feeding into the greedflation phenomenon and to start pulling back on prices.

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  • Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

    Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

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    What’s going on with frozen fruit and vegetables?

    Food prices rose 0.2% on the month in July after remaining unchanged in June, and they rose 4.9% on the year, while the cost of food at home rose 3.6% on the year, government data released Thursday showed. Prices of fresh fruits and vegetables rose just 1.2% year over year.

    However, there were some big — even alarming — outliers: Frozen fruit and vegetable prices increased by 11.8% in July over last year, frozen vegetable prices rose 17.1% and frozen noncarbonated juice and drink prices rose 16.3%.

    Those price rises are at odds with overall inflation figures. U.S. consumer prices rose to 3.2% in July from 3% in the prior month, the Bureau of Labor Statistics said this week. It was the first increase in 13 months.  

    Why have the prices of frozen fruits and vegetables shot up over the past 12 months, while the cost of fresh fruits and vegetables has increased so little? 

    Climate change and extreme weather conditions — from heavy rainfall to drought, particularly in California — have led to big problems for farmers. This has been compounded by issues related to the war in Ukraine and an ongoing increase in the cost of labor, experts said.

    As a result, a large proportion of the fruits and vegetables grown were destined to be sold as fresh produce — which led to a shortage of ingredients for frozen goods, said Brad Rubin, sector manager at Wells Fargo Agri-Food Institute. “Because of the late crop, lots of produce is being pushed to the fresh market to keep up with demand,” he said.

    California weather

    California has experienced some drastic weather conditions over the last 12 months. Some 78 trillion gallons of water fell in California during winter 2022 and early spring 2023, according to data from the National Weather Service, delaying planting. And all that snow and rain was followed by a months-long drought in the region.

    What happens in California is felt by consumers across the country. 

    “California produces nearly half of U.S.-grown fruits, nuts and vegetables,” according to estimates from the Sciences College of Agriculture, Food & Environmental Sciences at California Polytechnic State University in San Luis Obispo. “California is the only state in the U.S. to export the following commodities: almonds, artichokes, dates, dried plums, figs, garlic, kiwifruit, olives, pistachios, raisins and walnuts,” it says.

    The subsequent price rises hit ingredients like strawberries and raspberries especially hard, Rubin added. Inventories of frozen berries are “near five-year lows” after winter storms in Watsonville flooded agricultural fields, damaging and delaying the strawberry crop. Most of the strawberries in the U.S. are grown in California. 

    Labor costs

    Frozen fruits and vegetables have a longer supply chain than fresh produce, which can make them more vulnerable to disruptions in inventory, experts say. Rising energy prices are also pushing up the cost of cold storage. 

    In addition to those issues, U.S. farmers are dealing with increased labor costs and fewer migrant workers, partly due to changes in government policies and the closure of borders during the COVID-19 pandemic, according to a February 2023 report from the Federal Reserve Bank of San Francisco. 

    “Immigration has traditionally provided an important contribution to the U.S. labor force,” the report said. “The flow of immigrants into the United States began to slow in 2017 due to various government policies, then declined further due to border closures in 2020-21 associated with the COVID-19 pandemic. This decline in immigration has had a notable effect on the share of immigrants in the U.S. labor force.”

    Russia’s invasion of Ukraine also continues to affect agricultural production in the U.S., said Curt Covington, senior director of institutional business at AgAmerica Lending, a financial-services company providing agricultural loans. Because the war disrupted supplies of commodities like wheat and corn — also pushing up prices for those goods — farmers have been prioritizing planting those crops over vegetables. 

    “These escalating frozen-vegetable prices present a challenge for farmers as they grapple with increased production costs and labor pressures,” and that presents a long-term challenge for farmers, “potentially impacting their profitability,” Covington said. 

    All of these factors — from international supply chains to extreme weather conditions — will have an effect on the cost of frozen goods in U.S. supermarkets. Ultimately, experts said, consumers will end up paying the price.

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  • Canadian pot company Tilray is buying 8 beer and beverage brands from AB InBev

    Canadian pot company Tilray is buying 8 beer and beverage brands from AB InBev

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    Canadian cannabis producer Tilray Brands Inc.
    TLRY,
    -3.48%

    on Monday said it had agreed to buy eight beer and drink brands from Anheuser-Busch InBev
    BUD,
    -0.09%

    — including Shock Top, Redhook Brewery and Widmer Brothers Brewing. The other five brands are Breckenridge Brewery, Blue Point Brewing Co., 10 Barrel Brewing Co., Square Mile Cider Co. and HiBall Energy. The deal, which includes related staff and breweries, is expected is expected to close this year. Tilray said it expects to pay in cash to complete the deal. The purchase price wasn’t disclosed in a release. The deal follows other efforts by Tilray to expand into alcohol, amid heavy competition in Canada’s legal cannabis industry and stalled federal reform in the U.S. Shares rose 2.7% after hours on Monday.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

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    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” 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.

    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.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs 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,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    -1.10%
    ,
    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.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If 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,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    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.

    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.

    Coca-Cola Co.
    KO,
    -1.51%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.62%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    -1.82%

    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’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -1.05%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” 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.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -0.82%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[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,” Chief Executive Miguel Patricio said.

    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.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So 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. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

    [ad_1]

    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” 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.

    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.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs 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,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    +0.18%
    ,
    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.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If 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,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    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.

    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.

    Coca-Cola Co.
    KO,
    -0.49%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.75%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    +0.09%

    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’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -0.95%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” 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.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -1.75%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[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,” Chief Executive Miguel Patricio said.

    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.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So 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. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • ‘Crooked Coffee’: The alleged election office breach in the Trump indictment was part of a years-long pattern, some locals say | CNN Politics

    ‘Crooked Coffee’: The alleged election office breach in the Trump indictment was part of a years-long pattern, some locals say | CNN Politics

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    Douglas, Georgia
    CNN
     — 

    The breach of the Coffee County elections office can seem almost out of place in the 97-page Georgia indictment of former President Donald Trump and associates.

    The sprawling racketeering allegations spread from centers of power with pressure on the vice president to ignore the Constitution, reported calls to secretaries of state to change vote counts, and the creation of slates of fake electors for Congress. They also include the invitation of a tech team to a non-public area of a small-town administration building.

    But to some people in Coffee County, deep in southern Georgia and far from interstates, the alleged crimes were merely the latest chapter in a local history of failing to secure the rights and votes of residents. And they worry it’s a history that will repeat.

    Among the 19 mugshots that flowed from the charges brought 200 miles north in Atlanta were faces that were familiar in Douglas, the seat of Coffee County.

    Prosecutors allege that former county Republican Party chair Cathy Latham and former elections supervisor Misty Hampton helped to facilitate employees from a firm hired by Trump attorneys to access and copy sensitive voter data and election software. Surveillance video captured Latham waving the visitors inside, and Hampton in the office as they allegedly accessed the data. Both have pleaded not guilty.

    Mike Clark, owner of some small businesses in Douglas, said he was struck by the way the surveillance footage showed the election officials entering the building in broad daylight. “You walk inside the voter registration office with no mask on, and they just give you the votes. They just give them to you! Why? Why would that be?” Clark said. “That shows you right there it ain’t just started. It’s always been just like that.”

    Coffee County businessowner Mike Clark said the ground was laid for the alleged election breach long ago.

    Douglas City Commissioner Kentaiwon Durham agreed. “That’s what power and privilege do. It makes you feel as if you can do anything you want to do,” he said. “They thought they were above the law and above the Constitution.” Durham, who like Clark is Black, thought it would be “a whole different ballgame” if it were his face in the surveillance footage.

    Douglas is a majority Black city, and the surrounding Coffee County is about 68% White and 29% Black. Like many places in the South, Black citizens have had to fight for democratic rights in court – repeatedly suing for representative districts for the election of local officials since the 1970s. In the late summer, it’s unbearably hot – so hot that if you sit outside too long people ask if you’re crazy. If you have a latent southern accent, the town will draw it out.

    When CNN asked local people how to put the alleged election office breach in the broader context of voting rights in the county, nearly everyone suggested we speak to “Miss Livvy.” Olivia Coley-Pearson is a Douglas city commissioner, the first Black woman elected to the position. She’s a tall woman who wore a Barbie-pink blazer when we met, and like many others CNN spoke with in Coffee County, she saw the involvement of her county in the alleged Trump scheme as part of a long local pattern of voter suppression and intimidation.

    “There’s power – a certain amount of power and control when you’re in certain offices,” Coley-Pearson told CNN. “Some people will do whatever it takes to maintain it. … And if it takes voter intimidation to do it, some people willing to intimidate to maintain that power and control.”

    Olivia Coley-Pearson was arrested, charged and acquitted of a crime for accompanying a voter who legally asked for assistance.

    Coley-Pearson, named a “human rights hero” by the American Bar Association, follows in the footsteps of her mother, who was a political activist in Coffee County in the 1970s, the decade after segregationist Gov. Lester Maddox had picked the county to host many of his speeches. Gladys Coley is commemorated with others in a memorial plaque for fighting for civil rights in Douglas and across the county.

    Coley-Pearson is well-known for helping people who may need a ride to the polls. Not everyone around town appreciates her efforts, however. In a Facebook Live video posted a couple days before the alleged breach, Latham complained about Coley-Pearson’s get-out-the-vote efforts for Georgia’s runoff elections to the US Senate.

    “Olivia Pearson’s up to her normal – handing out hamburgers and hot dogs … to people who voted and stuff,” Latham said, running her fingers through her cropped blonde hair in apparent exasperation. “So, all kinds of things happening in Coffee County just to get people to come vote. Yeah, it’s not a really good situation down here.”

    Former county GOP chair Cathy Latham, pictured in her booking photo, escorted visitors to the election office days after urging people to

    Latham urged her viewers to vote. “We got to out-vote the fraud,” she said. She has not responded to CNN’s request for comment.

    Coley-Pearson had tangled with local officials over voter access several times. Georgia law allows people who are disabled or illiterate to get assistance in voting, and Coley-Pearson helped with that in the 2012 election. At the time, it seemed uneventful.

    But Coffee County officials complained to the Georgia secretary of state’s office that she helped people who didn’t qualify for assistance. It led to a years-long investigation, and though the state didn’t prosecute her, she was charged locally with two felonies. After one trial ended in a hung jury, she was found not guilty in the second in 2018.

    The city of Douglas is majority Black and the surrounding Coffee County is majority White.

    Then, during early voting in October 2020, Coley-Pearson asked a question about the buttons on a voting machine, sparking a confrontation with then-election supervisor Misty Hampton. Coley-Pearson says Hampton was “hollering” that she must not touch the machine. Hampton, who is White, has said in a deposition that she spoke in a “normal voice” and told Coley-Pearson she was being “disruptive.” The voter Coley-Pearson assisted said in a deposition she felt afraid of Hampton.

    Coley-Pearson left the polling place to pick up another voter, Rolanda Williams. In the meantime, Hampton called the police. “She’s out here touching my darn machines,” Hampton told the police, as recorded in a police video. At one point, after saying Coley-Pearson had improperly touched the ballot, Hampton said, “I don’t care what I got to file, what I got to do, she is not to come back to my office. If I have to say I feel threatened I don’t care. Because I do!” Hampton has not responded to CNN’s request for comment.

    When Coley-Pearson returned to the polling place with Williams and stepped out of the car, she was met by police officers. They said she was banned from the property for yelling, she remembers. “I guess they didn’t like me asking why, and I got arrested. I was put in handcuffs,” Coley-Pearson said, beginning to cry at the memory.

    “She was telling the cop that the handcuffs were too tight. And to me, he was trying to get them tighter,” Williams, the voter Coley-Pearson was driving, told CNN. When Williams went inside the polling place, she said Hampton began asking her questions. “She was asking me where I work – which, I felt was none of her business. … She actually pulled up a Facebook page of mine. And I felt like I was into some type of trouble or something.”

    “I was scared and fearful,” Williams said. “I didn’t want to go back up there to vote. And I won’t go back and vote, because of everything that’s going on. I didn’t understand why they call this ‘Crooked Coffee.’ But now I understand.”

    Coley-Pearson is now suing the city and election officials over her treatment. The city says it did not violate her constitutional rights.

    Disappointment and fear

    Many locals said the town was divided, though not neatly along racial lines. Jim Hudson, a White man with white hair and a neatly tucked-in button-down shirt, has been pushing local officials to appoint an independent counsel to investigate what happened around the apparent breach and advise how to make sure it never happens again.

    A retired lawyer, Hudson said he was “shocked … and very disappointed, and hurt” when he started researching what happened. His investigation had gone deep, reading transcripts of depositions in a related court case and analyzing the surveillance video from the election office. “I still feel that way, because of the failure of the commissioners as well as the board of elections to take action.”

    Hudson was distressed by the sense he hadn’t known the county as well as he’d thought. “It’s my home,” he said. “I’ve been here many years. I’m going to die here. And I want a place that we can all be proud of.”

    Hampton resigned in February 2021 as election supervisor over falsifying timesheets.

    New election supervisor Christy Nipper said residents had come to her office asking if their votes would be counted.

    Christy Nipper, the new election supervisor, said, referring to the breach, “There’s not a lot of people anywhere in the county that I’m aware of that have spoken a lot about it.” She said she felt a responsibility to do so. “Obviously, I feel like the public needs reassurance, and it’s going to be hard to move past this if we don’t give them that. I feel like they deserve it,” Nipper said. She said she tried to do so when citizens came into her office asking if their votes would be counted. The breach had not changed the vote totals, she said, and she would not let anyone into the secure election data area.

    CNN often encounters people who have smart things to say but are scared to speak publicly, fearing a social media pile-on from strangers. But in Douglas, people feared backlash from people they know in town. Mickeayla Clark, head of the Coffee County Democrats, said some were afraid they’d risk their livelihoods if they spoke out.

    A woman at a bar asked CNN to follow her outside for a smoke. She said she was afraid she wouldn’t be welcome back if she talked, but she did anyway. She said she was for Trump all the way – she voted for him in 2020 and would do it again – but, speaking of the alleged breach, she said, “That election sh*t wasn’t right. They shouldn’t have done that.”

    Tommy Crozier and Zip Grantham, right, argued the end of official segregation showed racial discrimination was also gone from Coffee County.

    The bar crowd tipped CNN off to a group of older White men known for holding court over breakfast every morning at the restaurant Hog-N-Bones. After debating with CNN the meaning of the Sermon on the Mount, Zip Grantham and Tommy Crozier agreed to an interview. They said they didn’t think there was racial discrimination in the county anymore – Black people, they said, could serve in the military and learn at the same schools. The men said they’d vote for Trump in the 2024 election if he was the Republican nominee, but maybe not in the primary.

    “Do I like Trump? I wouldn’t want him sitting at the table with me this morning talking,” Grantham said. “But yeah, I think he had good values.”

    Still, he said of the former president, “maybe he should be held responsible.”

    And with the spotlight on Coffee County, city commissioner Durham said he welcomed a reckoning.

    Of Latham, Hampton and the others indicted, he quoted his grandma: “You make the bed up, you gotta lay in it.”

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  • Starbucks sees a big rebound in China, but results fail to impress investors

    Starbucks sees a big rebound in China, but results fail to impress investors

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    Shares of Starbucks Corp. fell after hours Tuesday after the coffee chain reported third-quarter same-store sales that missed expectations, despite a big rebound in China.

    The coffee chain reported fiscal third-quarter net income of $1.14 billion, or 99 cents a share, compared with $912.9 million, or 79 cents a share, in the same quarter last year. Adjusted for restructuring and impairment costs, Starbucks earned $1 a share.

    Revenue rose 12.5% to $9.17 billion, compared with $8.15 billion in the prior-year quarter. Same-store sales rose 10% worldwide, with a 7% gain in North America. Those same-store sales jumped 24% internationally, with a 46% gain in China.

    Analysts polled by FactSet expected Starbucks
    SBUX,
    -0.31%

    to report adjusted earnings per share of 95 cents, on revenue of $9.29 billion and same-store sales growth of 11%.

    Operating margins rose to 17.3%, from 15.9% a year ago, with higher prices and productivity offset by greater spending on employee wages and benefits.

    Shares slipped 1.2% after hours on Tuesday. Shares of Starbucks are roughly where they were at the beginning of the year.

    Starbucks executives over the past year have said that amid stubborn inflation, customers see coffee as an affordable luxury worth treating themselves to. But Wall Street has struggled to find a reason to push the stock higher amid questions about trends in North America and slowing same-store sales in the years ahead, as well as China’s uneven economic recovery as it shakes off pandemic restrictions.

    UBS analysts said that demand in the U.S. was likely still “solid.” But they said that the focus would be on demand in China. Quo Vadis analyst John Zolidis, meanwhile, said that along with China, investors had been focused on the chain’s efforts to set up more drive-through locations in the U.S., and any benefits from higher-priced cold drinks and customizable orders.

    The coffee chain also continues to fight with its unionized employees. Bargaining has stalled. Last month, unionized workers accused Starbucks of banning Pride-themed decorations. Starbucks aggressively denied those allegations.

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  • Senate OKs security clearances for people who used marijuana, but House hasn’t signed off

    Senate OKs security clearances for people who used marijuana, but House hasn’t signed off

    [ad_1]

    The U.S. Senate version of the National Defense Authorization Act (NDAA) that has been approved by a vote of 86 to 11 includes a provision that would prohibit intelligence agencies such as the Central Intelligence Agency (CIA) and the National Security Agency (NSA) from denying security clearance to applicants solely due to their past use of cannabis, according to a statement on the NDAA measure from Sen. Michael Bennet, a Democrat from Colorado. The amendment proposed by  Sen. Ron Wyden, Democrat from Oregon, was co-sponsored by Bennet and Sen. Martin Heinrich, Democrat from New Mexico. The U.S. House of Representatives has passed its own version of the NDAA with amendments from conservative Republicans, so a clash is expected in the fall as the two chambers work to produce a final version of the bill. It’s not yet clear if the security clearance amendment will make it into the final version of the NDAA that will be sent to President Joe Biden for a signature. The cannabis provision was initially reported by Marijuana Moment.

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  • Anheuser Busch InBev to cut jobs after Bud Light boycott

    Anheuser Busch InBev to cut jobs after Bud Light boycott

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    Anheuser-Busch InBev is planning to cut jobs in the U.S. after a sharp deterioration in sales following a boycott that’s still impacting Bud Light.

    The industry publication Brewbound said the company was going to cut 2% of its U.S. workforce, where it employs 19,000. The company told the publication that front-line workers, including warehouse staff and field reps, will not be impacted. The company did not specifically identify slumping Bud Light sales as the cause of the layoffs.

    Bud Light sales have tumbled after the company’s ill-fated social media promotion with Dylan Mulvaney.

    Citing Nielsen U.S. beer data, analysts at Bank of America said volumes at the brewer tumbled by 15.3% year-over-year in the four weeks ending July 15, compared to the 2.7% decline for the broader U.S. beer category.

    Bud Light sales over that same time period skidded 29.8%, and Budweiser volumes skidded 14%. In contrast, Coors Light sales rose 17% in the last four weeks, Miller Lite volumes rose by 12.5% and Yuengling sales surged 38%.

    Anheuser-Busch InBev’s U.S.-listed shares
    BUD,
    +0.22%

    have dropped 2% this year. In its home market of Belgium, shares
    ABI,
    +0.97%

    rose 0.6% on Thursday.

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  • Unilever PLC 1H EPS EUR1.40

    Unilever PLC 1H EPS EUR1.40

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    By Joe Hoppe

    Unilever said Tuesday that its second-quarter sales growth beat expectations, as price increases outweighed a slight decline in volumes, and it raised full-year guidance.

    The Anglo-Dutch retailer–which owns consumer brands like Ben & Jerry’s ice cream, Dove soap and Domestos cleaning products–posted underlying sales growth of 7.9% for the second quarter of the year, with a decrease of 0.3% in volumes and an increase of 8.2% in prices. Analysts’ consensus for underlying sales growth was 6.4%, according to a forecast from the company.

    “As underlying price growth has sequentially moderated from 13.3% in the fourth quarter of 2022, volumes were virtually flat with a step-up in performance in Beauty & Wellbeing and Personal Care offsetting volume declines elsewhere,” it said.

    For the first half as a whole, sales growth came in at 9.1%, beating the company’s compiled consensus of 8.3%.

    The company said first-half pretax profit was 5.27 billion euros ($5.83 billion) compared with EUR4.36 billion a year earlier.

    Turnover came in at EUR30.43 billion, including EUR15.74 billion in the second quarter. Analysts expected half-year and second-quarter turnover of EUR30.34 billion and EUR15.59 billion, respectively.

    The company raised its guidance for full-year underlying sales growth for 2023 to be above 5%. It had previously guided at the upper end of 3%-5%.

    The board declared a quarterly dividend of 42.68 European cents a share, flat on the first half of 2022.

    Write to Joe Hoppe at joseph.hoppe@wsj.com

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  • Bud Light sales are still falling, but investors get it at this point. Here’s what Morgan Stanley says they might be missing.

    Bud Light sales are still falling, but investors get it at this point. Here’s what Morgan Stanley says they might be missing.

    [ad_1]

    Bud Light sales are still falling, as the impact of a boycott against the beer continues to stick. But Morgan Stanley analysts on Thursday said that impact was already reflected into shares of its parent company, Anheuser-Busch InBev, and that AB-InBev’s global footprint and the falling costs of beer ingredients would help sales and margins up ahead even if struggles in the U.S. spill over into next year.

    Morgan Stanley assumed coverage of AB-InBev
    BUD,
    +0.51%

    with an overweight rating, a step up from its prior equal-weight rating. The firm bumped its price target on the stock higher, to $68.50 from $64. Shares of AB-InBev were up 0.4% on Thursday.

    The analysts also said that AB-InBev’s second-quarter results, set for Aug. 2, could be a clarifying moment for investors.

    “While investors are currently sitting on the sidelines, waiting for the company to fully quantify the impact of the Bud Light situation, we see upcoming H1 results as likely timing for such clarification,” the analysts said in a research note.

    “We think ABI shares now price in the U.S. Bud Light challenges, which have stabilised, but not the gross margin recovery and de-leveraging upside into next year,” they added later.

    The conservative-led boycott against Bud Light began in April, after the brand briefly partnered with Dylan Mulvaney, a trans influencer. That anti-trans anger has translated into weeks of sharp declines, generally above 20%, for Bud Light sales. Mulvaney said Bud Light never reached out to her, despite what she said was “more bullying and transphobia than I could have ever imagined” as a result of the partnership and calls for a boycott.

    The fall-off has spread to some of other AB-InBev’s other beer brands, and benefited its rivals. Modelo Especial has recently dethroned Bud Light as the best-selling beer in the U.S.. Constellation Brands Inc.
    STZ,
    +0.47%

    sells Modelo beer in the U.S., after a deal a decade ago to acquire Grupo Modelo’s U.S. beer business from AB-InBev.

    Still, the Morgan Stanley analysts emphasized Anheuser-Busch’s worldwide reach, and said that even a 13.5% drop in U.S. yearly sales — broadly, where things stand in the U.S. now — would only mean a 4% drop for the company’s sales overall. And they said double-digit growth expected elsewhere, in regions like South America and the Asia-Pacific, would drive organic sales growth of 6% for the company overall in its fiscal 2023. They also said a “wind-back” on commodity costs and sales incentives to U.S. beer sellers would help margins up ahead.

    Still, they didn’t expect much of a break for sales trends in the U.S. They said they expected the 13.5% drop in U.S. sales to ease to a 12% drop in AB-InBev’s fiscal 2024.

    Overall, however, the analysts were upbeat on beer sales and profits for next year. Falling ingredient costs would help brewers overall. A pandemic-era jump in U.S. demand for spirits — or hard liquor like gin, Scotch and vodka — had now “normalized,” they said.

    Shares of Anhueser-Busch InBev are down 1.4% so far this year. By comparison, the S&P 500 Index
    SPX,
    -0.68%

    is up 18.9% over that period.

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  • ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    [ad_1]

    Dear Quentin,

    I went for dinner with six friends last weekend, and we each ordered entrees and desserts, and some side orders. One of our group only eats gluten-free food, so he ordered two starters. We split the bill, and it worked out at $36 each. But our gluten-free friend cried foul, and asked for a separate check to pay $22 for his gluten-free dish. I was outraged — and almost felt physically sick. I kicked my husband under the table, and said under my breath, “Can you believe that?’

    Can you believe it? Do you think he should have just paid the $35 instead of asking for a separate check? Adding insult to injury, he left the waiter a $10 tip. Why not just pay $35 like everyone else? I told my husband I was never going for dinner with him again. Don’t you think he should have just paid $35 like everyone else? It was a big crowd. If everyone did that, you’d need a forensic accountant to figure out how many breadsticks someone ate. 

    We otherwise had a nice evening, and it was a bring-your-own-bottle restaurant. I work as a teacher and my husband works in tech. We own a home together and have three kids. Our gluten-free friend is a freelance consultant, and is divorced with two kids. He had a very privileged upbringing. I worked hard for everything I have. I’m not saying any of us are rich, but when we go out to eat, we like to share and share alike, and split the bill down the middle. 

    When did eating out become so full of these cringeworthy moments?

    Equal Bill Splitter

    Dear Equal,

    I’m sorry to say that the most cringeworthy moment here happened when you kicked your husband under the table. I’m not a big fan of under-table communication in a group, and while we could debate the pros and cons of asking for a separate check for a $13 difference, I don’t think there’s much of a gray area when it comes to calling someone out at the dinner table, especially when your eye-rolling and disapproval could be picked up by the other guests.

    As far as your friend is concerned, $13 is a lot of money to pay when you did not eat all the food that was ordered by the table. Maybe it doesn’t seem like it to you or anyone reading this column, but your friend is divorced with two kids, and works as a freelancer — so let’s assume his income is not always stable. Could he have just split it down the middle and paid $35 and another 15% or 20% for a tip? Sure. But he has good financial boundaries. I applaud him.

    The real issue here may go back to your respective upbringings, and could explain your dramatic — and I would argue disproportionate reaction — to your friend asking for a separate $22 check. You’ve worked hard, and maybe your friend had an easier start in life, but that doesn’t mean he’s not entitled to pay for what he ate, and watch every dollar. Divorce is like a recession. You can end up struggling to get back on your financial feet for years.

    Perhaps your friend had always intended to pay $22 for his gluten-free dish, and tip the server 50%, or perhaps he has a well-trained side eye and caught your reaction to his paying for his own order, and he decided to pay closer to what everyone else had paid. But ordering separate checks, I suspect, will become more common as prices continue to rise, even at a slower pace, and people feel uncertain about spending money in restaurants. 

    You believe in equality of bill splitting. I suggest you apply that equality to all dinner guests, regardless of upbringing and dietary restrictions, and allow them to make their own choices about what they pay for at dinner. People often have problems — financial or otherwise — that we are not aware of, so try to leave space for that. And if your friend did see your eye-rolling and under-the-table antics? I’d like to think he made space for your behavior too.

    Readers write to me with all sorts of dilemmas. 

    By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    I had a date with a great guy. I didn’t drink, but his wine added $36 to our bill. We split the check evenly. Should I have spoken up?

    ‘I’m living paycheck to paycheck and I feel drained’: My fiancé said he would pay half of the mortgage. Guess what happened next?

    ‘We live in purgatory’: My wife has a multimillion-dollar trust fund, but my mother-in-law controls it. We earn $400,000 and spend beyond our means.

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