In This Article:
We recently published an article titled Jim Cramer's Thoughts On These 8 Stocks and the Packaged Goods Playbook. In this article, we are going to take a look at where Chewy, Inc. (NYSE:CHWY) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently took a deep dive into the challenges facing the consumer packaged goods sector, offering his perspective on the factors driving the decline of these stocks.
“The recent decline in the consumer packaged goods stocks, I find it breathtaking… Why is this happening? The truth is, there are a host of reasons, and every time you think that things have gotten better, they seem to have gotten worse, much worse than you've imagined.”
READ ALSO Jim Cramer’s Thoughts on These 9 Stocks and Jim Cramer Discussed 10 Stocks Leading the Dow Higher in 2025
Cramer noted that many companies within the sector seem to believe that younger consumers will settle for smaller portions of food and that this might mitigate some of the challenges. While Cramer acknowledged that this shift in consumer behavior is part of the equation, he argued that many companies are overlooking the significant impact of GLP-1 weight loss drugs. These medications, which curb cravings for junk food, pose a serious threat, as Cramer sees them as something that could be widely adopted in the United States. He then added:
“Oh, and let's not forget about the problem of tariffs. You're getting some sudden price increases for many goods. Someone has to pay for the tariffs. These companies hope it will be you because if it's not you, it's them.”
Another significant challenge for companies in the packaged goods space is the difficulty of raising prices. Cramer explained that while many companies try to increase prices, they often face fierce competition from major retailers and online marketplaces, which offer private-label products that consumers increasingly recognize as being just as good as the branded alternatives.
While private labels are not seeing explosive growth at the moment, Cramer pointed out that they are exerting pressure on all prices, including those of established brands. Furthermore, Cramer observed that the price hikes implemented during the COVID-19 pandemic have led to consumer fatigue, with many shoppers now seeking better value.
“I don't know what turns around the consumer packaged goods stocks, mergers would make sense. This new antitrust department probably blessed the concentration. Maybe the companies that slash prices the deepest ultimately win. No matter, this moment is untenable. The stocks can't find their footing, just too many forces against them. These used to be safety stocks for heaven's sake, but they're safe no more.”