Corporate Insights

The Kraft Heinz Company 4Q23: Net Sales -7%, Organic Sales -0.7%, Adjusted EBITDA -5.3%

The Kraft Heinz Company 4Q23: Net Sales -7%, Organic Sales -0.7%, Adjusted EBITDA -5.3%

Kraft reported that 4Q23 was more challenging than originally anticipated as higher interest rates continue to weigh on the consumer at the same time SNAP benefits significantly declined from 4Q22 peak levels. Notably, the resumption of student loan repayments in October 2023 is not expected to have a meaningful impact on future sales and management expects to drive top-line growth, return to positive volumes, and expand gross & operating margins during 2024.

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The Coca-Cola Co. 4Q23: Organic Rev +12%, Global Unit Case +2%, Price/Mix +9%

The Coca-Cola Co. 4Q23: Organic Rev +12%, Global Unit Case +2%, Price/Mix +9%

Coke reported that North American consumer spending in aggregate is holding up well although its unit case volume declined -1% as growth in juice, value-added dairy, plant-based beverages & legacy Coca-Cola was more than offset by a decline in water, sports, coffee, and tea. While inflationary pressures are moderating or stabilizing across most of Coke’s markets, the cumulative impact of inflation is pressuring certain consumer segments who are seeking value. Resultantly, Coke increased its affordability offerings throughout 2023 sufficient to win volume & value share.

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US Foods Holding Corp 4Q23: Net Sales +4.9%, Case Volume +5.6%, Adj EBITDA +10.9%

US Foods Holding Corp 4Q23: Net Sales +4.9%, Case Volume +5.6%, Adj EBITDA +10.9%

US Foods Holding’s full year 2024 guidance: net sales +5% to +8%; case volume growth +4% to +6%; and slight inflation of +0.5% to +1.5%. Management expects independent restaurant case growth to continue exceeding overall case growth & management believes that independent restaurant operators are strong, enjoying a nice recovery as they add new restaurants to the original base that came back online post-covid.

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Walmart 4QFY24: U.S. Comps +4% & U.S. Adjusted Operating Income +13%

Walmart 4QFY24: U.S. Comps +4% & U.S. Adjusted Operating Income +13%

Walmart’s management was encouraged by the strength of its unit & transaction growth during the quarter. The retailer gained a share in almost every category, with a substantial contribution from households earning $100k+. In its general merchandise category, two-thirds of its share gains were driven by new high-income customers & digital sales (the company passed $100B in global eCommerce sales for the first time during the year). In any case, Walmart’s value & convenience resonates with consumers of all income levels, driving traffic & share.

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Grocery Outlet Holding Corp 4Q23: Sales +6.3%, Adjusted EBITDA +18%

Grocery Outlet Holding Corp 4Q23: Sales +6.3%, Adjusted EBITDA +18%

While food inflation has been moderating, consumers still face higher food prices & other financial burdens according to Grocery Outlet Holding Corp. Further, consumer pressure is aggravated by high interest rates & consumer credit. While this value-oriented chain is well positioned in today’s economy, it reports a lower basket indicative of smaller, more frequent trips & moderating inflation (retail prices).

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Amazon 4Q23 Sales +14%, Operating Income +482% Y/Y

Amazon 4Q23 Sales +14%, Operating Income +482% Y/Y

As if Amazon’s quarter wasn’t sufficiently outstanding, the company is planning on expanding into medical services where it believes it can easily outperform an outdated healthcare system which requires consumers to schedule appointments far out in advance, drive 20 minutes to an appointment before waiting 15 minutes in an exam room to receive a prescription, & then driving even further to a pharmacy to pick up their prescription.

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Walmart 3QFY24: Comps +4.9% Y/Y

Walmart 3QFY24: Comps +4.9% Y/Y

Walmart is working hard to lower grocery prices to help ease holiday consumer pressure driven by: elevated food prices that are not deflating fast enough (particularly as it relates to very high meat prices); tightening bank credit; a return to pre-covid debt levels; & the resumption of student loan repayments which affects 27MM Americans. In any case, Walmart is encouraged by traffic trends which were strong & consistent throughout 3QFY24.

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PFG 1QFY24: Current State of the Foodservice Distribution Industry

PFG 1QFY24: Current State of the Foodservice Distribution Industry

Performance Food Group believes it is very well positioned in the large & growing food away-from-home market with exposure across nearly all channels & product offerings. Management reported that the consumer remains resilient despite multiple years of above-average inflation, with PFG able to evolve & grow in a stable market.

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