It's a huge week for US corporate earnings including all the big tech names but the economy hangs more on overall consumer demand. That's why today's results from barbecue-maker Weber come as a bit of a shock.
We've known there would be a transition to services spending from goods spending for a long period but how quickly and completely spending on household goods is evaporating is worse than imagined.
The company delivered disastrous results today that include the CEO leaving immediately, withdrawing guidance and halting the dividend. Shares are down 20% premarket.
"The Company now expects Adjusted EBITDA to be marginally profitable, which is materially lower than the internal budget related to the previously announced fiscal year 2022 Adjusted EBITDA guidance. The Company also expects to have a net loss in the period ending June 30, 2022. Profitability was negatively impacted by significant currency devaluations within the quarter, promotional activity to enhance retail sell through, lower margin country, and product mix, as well as substantial freight cost increases," the earnings release said.
The company said it is pursing initiatives that could include layoffs, reducing expenses and lowering inventories.
All the factors affecting Weber -- which has a strong brand -- are hitting many firms, particularly in household furnishings. Demand was pulled-forward during the pandemic and companies were hit with high costs. Now demand has disappeared.
One of my favorite corporate economic barometers is Whirlpool and that company reports today after hours. I think we just got a preview of what's to come.
What's worrisome is that the market didn't see this one coming. Weber shares largely traded sideways in the last two months and were even the beneficiary of a WSB-style short squeeze in June.
