Second quarter earnings reports from fast-food chains and e-commerce indicate financial strain among consumers

Recent earnings reports from fast-food chains and e-commerce indicate financial strain among consumers, affecting the brands.

Fast food joints struggle
McDonald’s reported disappointing earnings for the second quarter, with earnings per share and revenue falling short, marking the worst sales performance since the pandemic began.

Starbucks’ shares dropped 12% following the announcement of the first decline in same-store sales since 2020 after a disappointing Q2. US sales fell 3%, and China saw an 11% drop, contributing to a nearly 2% decline in global revenue to $8.56 billion.

Yum Brands, owner of KFC and Pizza Hut, also saw same-store sales decline. However, Chipotle saw 18% sales growth from April to June, indicating that consumers focus more on value than the lowest price.

E-commerce sales report
Amazon reported a slowdown in online sales growth for Q2. While the company exceeded profit and cloud computing revenue estimates, it forecasts current-quarter sales below Wall Street expectations.

Amazon’s advertising revenue of $12.8 billion missed the anticipated $13 billion, though it grew 20% from the previous year. The company also faces increased capital expenditures in AI development, aiming to catch up with rivals like Microsoft and Google.

Etsy’s Gross Merchandise Sales (GMS) fell by 2.9%, with consolidated GMS down by 1.9%. However, gifting sales rose by 4.1%. The company ended the quarter with $1.1 billion in cash and bought back $150 million worth of shares.

Wayfair reported a 1.7% drop in revenue to $31 billion for Q2, missing the $3.18 billion estimate. Despite this, it narrowed its net loss to $42 million from $46 million last year.

Economic growth and consumer spending
The economy grew by 2.8% last quarter, surpassing expectations and marking two years of growth. Strong consumer spending significantly contributed to this growth. Despite a disappointing July jobs report and stock market concerns, most economists believe a recession is unlikely, suggesting a return to normalcy post-pandemic.