Is the American consumer being ripped off? Earnings will provide new clues

Consumers are torn and are choosing essential spending over discretionary spending, Helen of Troy (HELE) executives said Tuesday, indicating that other consumer-facing companies could see their own struggles this earnings season.

“The macro environment and the health of consumers and retailers have deteriorated,” Chief Executive Officer (CEO) Noel Geoffroy said on a conference call with Wall Street analysts Tuesday. “Consumers are even more financially stretched and are even more prioritizing essential goods over discretionary goods.”

The news comes ahead of other high-profile earnings reports due this week, including announcements from PepsiCo (PEP), ConAgra (CAG) and Delta Air Lines (DAL), which should provide further insight into how consumer spending is holding up. U.S. retail sales growth in May was slightly below economists’ expectations.

Helen of Troy shares fall after financial results announcement

Shares of Helen of Troy, known for brands such as OXO, Revlon, Vicks and Osprey, have recently fallen nearly 28%. The company on Tuesday missed Wall Street estimates for fiscal first-quarter profit and revenue and lowered its outlook, a report that offered early indications of the health of the American consumer as earnings season approaches.

According to a conference call transcript shared by AlphaSense, company executives cited an “unexpected” slowdown in the outdoor products category, which has impacted sales of kits and accessories; pressure on the cosmetics category, particularly beauty tools under $100; and a decline in interest in some household items, including dry food storage.

Shares of cosmetics maker Estee Lauder (EL) recently fell 2%. The company, which is due to report its next set of quarterly results on Aug. 19, lowered its profit forecast in May, citing macroeconomic pressures.