What's going on?
Turns out eating your way through lockdown was more productive than you thought: chocolatier Hershey and Ben & Jerry’s maker Unilever both reported higher-than-expected quarterly profits on Thursday.
What does this mean?
US consumer confidence is miles ahead of Europe’s, and that much was clear from Unilever’s update: the European packaged food giant’s sales growth – which barely fell at all compared to major analysts’ pessimistic expectations – was partly thanks to its booming North American business. Even when panic-fueled stockpiling was out the way, Unilever continued to benefit from high demand for its foods, ice creams, and teas – though that was somewhat offset by weak demand from the partly shuttered restaurant sector.
America’s Hershey – which reported a higher-than-expected profit on Thursday – has been going through the same thing, and said it’s predicting US sales growth will increase in the second half of the year when, among other things, it hikes the prices of some of its products.
Why should I care?
The bigger picture: Hershey’s kisses.
Unilever warned it’s not out of the woods yet: over half its revenue comes from “emerging markets” like India and Brazil, both of which are very much in the middle of coronavirus – meaning demand for certain products could freeze up. But Hershey isn’t as dependent on those markets – and since the value of the US dollar has been falling against other major currencies, any money the company earns outside the US will be worth more when it’s brought home, potentially sweetening its profits.
For markets: The boring-er, the better.
Unilever and Hershey’s stocks rose 9% and 4% respectively on Thursday, while personal care company Kimberly-Clark – also out with a positive update – saw its shares climb 3%. Good news for earnings doesn’t always end with rising stocks, but the predictability of these so-called consumer staple companies during a downturn clearly seems to be helping them hold their own.