Yahoo Finance

Well, earnings season is in full swing with dozens of major companies, household names reporting results this week. Investors keeping a close eye on whether tariffs and related uncertainty weigh on companies outlook for the rest of the year, especially for consumer stocks. Yahoo Finance's Executive Editor, Brian Sozzi has more insights here and this was the sense that we got early on in the earnings season that uncertainty would be kind of the mode or the theme.

Yeah, if there's any uh positivity off the jump, let me just uh I'll start here uh is that these stocks aren't falling off a cliff pre-markets. Pepsico, PNG, I'll look at Coca-Cola how it's trading after those PepsiCo guidance cuts. Not really falling off a cliff, so that's good, but that doesn't mean the numbers are good at all. Pepsico uh for a company that I've covered probably 15 years, they take guidance super seriously, some would argue perhaps, perhaps too seriously, to see them out, come out here this morning and cut guidance essentially seeing no earnings growth this year. Three months ago, they were looking for low single-digit sales growth and it's really a two-pronged thing here, not only with Pepsico, many of these consumer companies, the tariff, the cost hit from tariffs, but also demand has started to weaken. Demand starting to fall off in March. It looks like a lot of those trends have gotten worse into into April. But then I talked to PNG CEO John Moller, you can read a little bit more on that conversation now on our homepage, but I asked Moller, are you seeing consumers trade down? He told me no, but he is seeing consumer pressure. Here here's what he told us.

And what you see is a is a reduction in the number of loads that are done per week currently. Going from about, if you go all the way back pre-COVID, to about five loads per week to now about three and a half. So that's what's driving the the the the the slower market growth. Still growing, but at a slower rate.

And why I asked John, this guys is because out of all the company's business segments, they did okay, but the fabric care business, of course that is Tide detergent, that did that division didn't grow. So to John's point, consumers are under pressure. Good for PNG, they're not trading down just yet, but again, they are perhaps putting a little water in that Tide detergent at the end of the week to make it last a bit longer, doing a little bit less laundry. To me, all that is a red flag. I know the stocks aren't down, but to hear PNG uh probably the world's most iconic consumer package good company, telling investors that uh you know, people doing less laundry a week. I that's a red flag. You got to clean your clothes. I mean, I'm not wearing dirty clothes to work. That's all.

But that's also what's so important, you never are, Sozzi, of course, but what's so important about that there just to really put a bow on this for the audience is that that's a consumer staple. You're pointing to it. That's a need for consumers. That's not necessarily a want, which may be the extra guac on your Chipotle bowl is considered a want. What is the broader story that you're getting in terms of what all of this tells us about where the consumer is at right now?

Consumers straight up, just under pressure, guys. They are pulling back. I think they're now starting to realize that the the price increases from tariffs are starting to hit. Maybe that, I think for some companies were waiting to the back half of the year to push that through. They're now pulling them forward. I look at the conversation that I had with Brooks DePalma, Howmet CEO last night after earnings. I encourage everyone to watch this interview. Brooks first question off the jump asked about the state of the economy. Here, Tupperware CEO described the pressure on that consumer, which has historically done very well during periods of economic stress. To see him talk about stress consumers, report their first declined same-store sales since the pandemic, again another red flag. I know the market may be taking in stride this morning, but to me, as someone that's crunching the numbers, not good for these companies and also for a lot of their competitors that have yet to report yet.

You know, keeping kind of with the CEO theme here too. Many of the retail CEOs have been trying to get the ear of the president and in recent days, they they have. They've been able to kind of make their pilgrimage to Capitol Hill, try to make sure that they've got time at 1600 Pennsylvania Avenue in order to let the president know what exactly they're forecasting, or how hard the self-induced nature of some of the tariff announcements have hit and impacted some of their forecasts and make it more uncertain going into the next or beyond the next 90 days here, which spells out a more larger kind of economic scenario that could spell turbulence ahead.

Yeah, and after that meeting earlier in the week, reports were that retail executives, I believe it was Walmart and Target warned of potential empty shelves. I asked Moller about that too. From his perspective, he's not seeing from a PNG perspective, not likely to see empty shelves from their products, but doesn't mean you won't see it from other companies. A lot of these big consumer package good companies, because of the hit to tariffs and where they get ingredients from and packaging, they're going to have to cut back on certain stock keeping units or certain products, just to more efficiently keep their operations running. That might mean you go down to Walmart and your favorite product's just not there. That's the reality and that's not a reality a month from now. That's probably coming right at consumers probably in a few weeks.

A headline crossing right now too, container bookings to the US from China are down by one third. So that's concern from retailers about stuff not being on the shelves. Very critical. That's coming from a German shipping company this morning.