Shares of Disney
(NYSE:DIS) are climbing in premarket trading after its subscriber numbers topped Wall Street expectations. On its earnings call, the company also highlighted a comeback in the consumer as COVID restrictions ease. Parks were
profitable for the first time since the onset of the COVID-19 pandemic. Chief Financial Officer Christine McCarthy noted that per capita spending was up "significantly" vs. 2019 numbers, at both Disney World and Disneyland. And reservations remain strong at both domestic resorts, she said, but a recent credit card survey from BofA Securities indicates that spending is already slowing.
"With the full month of July data, we calculate the seasonally adjusted change from June to July. Total card spending was down 1.3% on a month-over-month seasonally adjusted basis (mom sa)," BofA Economist Michelle Meyer writes in a note. "Slicing the data further, retail sales ex-autos were down a more notable 2.4% mom sa."
There are two main reasons for the decline, Meyer says: A decline in online retail sales due to the timing of Prime Day promotions, which are usually in mid-July. The increase in services spending moderated and was unable to offset the weakening in goods spending.
Higher cases and higher prices: While U.S. shoppers have savings to deploy following the pandemic and little place to find yield, caution in going out and spending the cash remains.
"The biggest deceleration continues to be in spending on airfare which we think reflects concerns over the Delta variant. At the same time, durable goods spending (electronics + furniture + home improvement) weakened, with 2-year growth of 24%," Meyer says. "What's left? A combination of other services which tend to be less cyclical and nondurable goods spending which continues to run at a trend pace."
"The urban cities, like New York, Chicago and San Francisco, aren't feeling the same recovery as the Sunbelt states and less populated areas," Naveen Jaggi, president of retail advisory firm JLL told
Forbes. "Combine this with many corporate offices slowing their return to the office. We are going to have a very uneven return to work and we are going to have an even longer return to the shopping habits of yesterday."
Rising prices in services could add to the reluctance. Tyson Foods
(NYSE:TSN) recently warned that it is racing to
pass on the rise on its higher costs to customers, which indicates higher restaurant checks ahead.
The July PPI came in hotter than expected, underscoring input cost concerns.
(
7 comments)
EmoticonEmoticon