Shop Talk
Retailers, consumers and prices
Check Out Line: Taxes up, cigarette shipments down
Check out the falling shipments of cigarettes with expectations of further declines in 2009.
Reynolds American posted a higher-than-expected quarterly profit as its Camel and Pall Mall cigarettes increased market share. But the company said it shipped 21.6 billion cigarettes in the fourth quarter — down 6.3 percent from a year earlier.
Reynolds, like other cigarette manufacturers, could face a difficult 2009. Not only has the recession crimped consumers’ ability to spend, but smokers will feel even more price pressure now that a 61-cent increase in the federal tax on a pack of cigarettes has been passed.
Reynolds CEO Susan Ivey told analysts that the increase in the federal tax will hurt industry volume and she also said some state tax increases will likely be passed, even though Reynolds will fight them.
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Check Out Line: The consumer products earnings parade
Check out consumer product powerhouses including Procter & Gamble, Kraft and Colgate, inundating Wall Street with quarterly reports on Wednesday.
The reports largely showed that the companies are finding successful ways to navigate the consumer spending slowdown and the commodity price surge that has raised their cost of doing business.
P & G, world’s largest consumer products maker, with brands ranging from Pampers diapers to Olay skin-care products, posted higher quarterly profit. It said cost controls helped offset soaring prices for oil and other commodities.
Kraft, whose brands that include Oreo cookies and Oscar Mayer lunch meat, reported a drop in quarterly profit as the largest North American food maker company was hit by soaring costs for oil and ingredients such as wheat, and spending on new products and marketing. But the results were better than analysts were expecting as price increases and new products lifted sales.
Colgate-Palmolive posted a higher-than-expected quarterly profit, boosted by strong sales outside the United States and higher prices that helped offset soaring commodity costs.
And Kellogg, the world’s largest breakfast cereal maker, posted higher-than expected profits as price increases helped offset soaring commodity costs. The maker of Frosted Flakes and Keebler cookies also raised its dividend and stood by its full-year earnings forecast, though it said it expects commodity costs to rise more than originally planned.
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Resident Shop Talk Expert
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smoking may included to daily expenses to those who are really a chain smoker…but in this time of recession… smokers need to base first in their ability to spend..