Chief Financial Officer Rachel Ruggeri explained on the post-earnings conference call with analysts, according to a FactSet transcript, that the rise in average ticket was driven by "strategic pricing actions," which means higher prices, and "strong food attach," which means more people are buying food to go with their coffee.
Meanwhile, raised prices was more impactful to United Parcel Service Inc.'s (UPS) results.
The package delivery giant said daily package volume in its U.S. Domestic Package segment fell 4.0%, driven by an 8.2% drop in residential volume. However, revenue for the segment rose 7.3%, due to an 11.9% increase in revenue per piece.
Internationally, average daily volume dropped 4.8%, but revenue edged up 0.7% as average revenue per piece jumped 14.8%.
And Coca-Cola Co. (KO) reported 19% jump in second-quarter revenue in North America from a year ago, even as unit case volume edged up just 2%. That's because pricing and sales mix rose by 10%.
The bifurcated consumer effect
The latest earnings season has offered plenty of examples of how consumers are getting squeezed from inflation, rising rates, and other macroeconomic pressures.
Take Walmart Inc. (WMT), where executives said last month that shoppers may need to be enticed with markdowns before buying clothing because they're spending so much on food and gas.
Or look at AT&T Inc. (T), which disclosed that some wireless customers are taking slightly longer to pay their bills.
And then there's Sprouts Farmers Market Inc. (SFM) The company's Chief Executive Jack Sinclair pointed out in July that consumers are "moderating the number of cherries that they'll buy," among other new food patterns.
It's becoming increasingly clear this earnings cycle that the storm of economic pressures is affecting spending patterns. But it's also becoming evident that the various economic weights aren't impacting all consumers--or companies--equally.
"We believe the financial health of subprime and affluent consumers is highly bifurcated," RBC Capital Markets analyst Daniel Perlin wrote last month.
Chief Executive Stephen Squeri of American Express Co. (AXP) said on an earnings call that he and his team "continue to see no significant signs of stress in our consumer base."
Amex caters to "premium" customers across its consumer, small-business, and corporate bases, and that's a big reason Chief Financial Officer Jeff Campbell sees the company posting strong results despite macroeconomic concerns in other parts of the market.
Additionally, he told MarketWatch that the company's credit performance has benefitted from "liquidity that has been pumped into the economy over the past few years."
Starbucks Corp. also pointed to its "premium" skew in discussing the impact--or lack thereof--of inflationary pressures on sales.
"It's critically important that you all understand we are not currently seeing any measurable reduction in customer spending or any evidence of customer's trading down," Chief Executive Howard Schultz said on the company's earnings call. One driver of that, in his view, is the "premium nature of our beverage and food offerings."
The enthusiasm from Amex and Starbucks stood in contrast to less upbeat tones on other earnings calls over the past few weeks.
At Aaron's Company Inc. (AAN), a lease-to-own retailer focused on categories like furniture and appliances, "customer demand and payment activity progressively worsened through the quarter," Chief Executive Douglas Lindsay shared. He noted "significant financial pressure on the lower income customer that we serve."
Newell Brands Inc. (NWL) had been bracing for macro impacts, but Chief Executive Ravichandra Saligram said the pullback in demand amid pressure on lower-income spenders has been "more acute than initially anticipated," namely in home fragrances. The company owns Yankee Candle and Chesapeake Bay Candle.
And McDonald's Co. (MCD) has noticed that "customers, and specifically lower-income customers," are "[trading] down to value offerings and fewer combo meals," Chief Financial Officer Kevin Ozan shared.
If there's any consolation for McDonald's, it's that the company is simultaneously benefiting from a different leg of the "trade-down" cycle. Chief Executive Christopher Kempczinski noted that some consumers are moving down to McDonald's as inflationary pressures keep them out of fast-casual joints.
Don't miss: Inflation is impacting consumers very differently: 'A little bit of a tale of two cities'
(END) Dow Jones Newswires
08-08-22 0754ETCopyright (c) 2022 Dow Jones & Company, Inc.