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Kimberly-Clark Corp.
KMB,
announced Wednesday that it has alerted customers in the U.S. and Canada about coming price hikes on the majority of its North America consumer goods, including baby and child care products, adult care items and Scott bathroom tissue.
The price hikes will be in the mid-to-high single digits and will be implemented in June.
The increases will be reflected in list prices and are due to commodity cost inflation.
Kimberly-Clark brands include Huggies, Kleenex, Kotex and Cottonelle.
A couple of weeks ago, JPMorgan analysts published a downgrade of Kimberly-Clark to underweight from neutral.
“In regards to pulp, list price forecasts have continued to move higher following pulp price declines for much of 2019 and 2020,” analysts wrote.
Transportation costs are also a factor.
See: Amazon becomes the top clothing retailer in the U.S., outselling Walmart, Target, Gap and others
Kimberly-Clark stock has gained 9% over the past year while the Consumer Staples Select Sector SPDR ETF
XLP,
has rallied 25.7% and the benchmark S&P 500 index
SPX,
is up 54.4%.
CFRA previously warned that a falling U.S. birth rate could impact the company’s diaper business. A December 2020 Brookings Institution report said 34% of women have decided to delay having a baby or have reduced the number of children they plan to have due to COVID-19.
In Europe, a similar trend has emerged.
Kimberly-Clark is bracing for a shift in spending as COVID-19 vaccines continue to roll out and consumers resume activities that had been halted for the pandemic.
Consumer spending intentions have improved across income levels, with the exception of those households earning less than $75,000, according to proprietary data collected by Stifel analysts.
Also: ‘Plexiglass will stay up for a while’: Shoppers remain anxious about COVID but head back to stores
However, Stifel says discretionary categories will get a boost from the latest round of stimulus checks. Apparel, electronics and jewelry will benefit, though shoppers will continue spending on grocery, personal care and household products as well.
Stifel expects Target Corp.
TGT,
to get a boost from this spending activity.
“Our survey also indicates that Target shoppers who use same-day services do so at a higher frequency than average, and compared to Walmart shoppers,” Stifel wrote in a note. Data shows that Target customers are about 40% more likely to be same-day service users.
“We view usage of same-day services by consumers as more recurring in nature and thus sticky over time, plus with above-average basket sizes.”
Stifel rates Target stock as buy with a $230 price target.
