Shop Talk

Retailers, consumers and prices

Check Out Line: Inflation crimps consumer companies

June 17, 2008

cocoaBy Ben Klayman

Check out how high gas and commodity costs are crimping Hershey and Best Buy.

Chocolate maker Hershey cut its long-term earnings growth target and said it would boost advertising as it moves to reverse falling profits.

However, the largest U.S. chocolate company, which is meeting with analysts, said the pressures it faces — soaring prices for cocoa , energy and other commodities — remain the same.

“We expect 2009 to be another trying year for us with respect to input costs,” Chief Executive David West said.

The price of oil has surged to $133 a barrel and that has pushed up costs across all industries.

The government said rising energy prices sent producer prices – a gauge of costs at the farm and factory gate — up a bigger-than-expected 1.4 percent in May. Housing starts fell in May to their lowest level in more than 17 years as that industry grapples with the subprime mortgage meltdown.

Meanwhile, consumer electronics retailer Best Buy reported a lower, but better-than-expected quarterly profit thanks to market share gains in TVs, computers and video games.

Like all retailers, Best Buy has faced slowing consumer spending due to rising gasoline and food prices prices, as well as the U.S. housing slump.

Also in the basket:

Reuters Consumer and Retail Summit coverage

(Photo: REUTERS/Susana Gonzalez)

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