Consumer and Retail Sector
Retail and consumer markets showed varied performance today, with Home Depot beating Wall Street expectations on strong DIY demand while Klarna shares plunged 20% due to weak German retail sales. Meanwhile, Peacock raised subscription prices following its first profitable quarter, and American Airlines announced cabin upgrades to boost profitability. In the UK, grocery inflation eased to 2.1% as debit payments dominated consumer spending.
American Airlines is reversing its decade-long strategy by bringing 4K seat-back screens back to its domestic narrow-body fleet. The carrier announced a broad cabin revamp that includes installing the new displays, Bluetooth audio pairing, and USB-C charging across all cabins. New aircraft deliveries from Boeing and Airbus will feature the technology starting in 2028, with full fleet retrofits expected by the early 2030s. The reversal follows years of relying on passengers to use personal devices, a policy that lagged behind competitors like Delta Air Lines, United Airlines, and JetBlue. Alongside the entertainment upgrades, American is expanding its premium seating by adding more first-class seats on Airbus A321neos and Boeing 737 Max 10s, as well as increasing extra legroom options. The cabin investments aim to close a profit gap with major rivals, following a second-quarter profit of $71 million compared to United's $805 million and Delta's $1.6 billion.
Klarna shares tumbled 20 percent after the buy-now, pay-later provider lowered its full-year revenue and volume forecasts due to slowing retail sales in Germany. The Swedish fintech now expects 2026 gross merchandise volume between $149 billion and $151 billion, down from its previous $155 billion projection, while revenue is projected at $4.08 billion to $4.16 billion compared to an earlier $4.34 billion target. Management assumed no recovery in its largest market for the remainder of the year. The guidance cut overshadowed an unexpected second-quarter profit of $0.01 per share, beating consensus estimates for a loss. Revenue for the quarter rose 27 percent year over year to $1.04 billion, driven by stronger performance in the United States and improving loan delinquency rates. Concurrently, CFO Niclas Neglén announced his departure after six years with the company.
Home Depot generated $47.86 billion in revenue during its second fiscal quarter, topping Wall Street expectations of $47.24 billion as smaller DIY projects offset a frozen housing market. Adjusted earnings per share came in at $4.92, ahead of the $4.73 consensus forecast. Globally, comparable store sales climbed 1.7%, marking the highest such increase since the third quarter of 2022. While everyday shoppers spent more per average receipt—rising to $92.50 from $90.01 a year earlier—overall customer transactions slipped 1%. Financing hurdles continued to suppress big-ticket renovations, where larger projects fell 2.1% due to elevated borrowing costs. Management reaffirmed its full-year guidance for fiscal 2026, projecting total sales growth between 2.5% and 4.5% alongside flat to 2% comparable sales growth. The outlook factors in tariff refunds designed to cushion higher fuel and input expenses. Meanwhile, the retailer rolled out a nationwide express delivery service promising orders within three hours for a flat fee.