Kimberly-Clark (NYSE: KMB) shares were off 3% Monday after the company cut the lower end of its full-year outlook as rising commodities costs hurt the maker of Huggies and Kleenex.
The stock is a holding in Consumer Staples Select Sector SPDR Fund (NYSEArca: XLP), which was down fractionally in afternoon trading.
“Kimberly-Clark reported first-quarter earnings per share below expectations, with management reducing the low-end of its outlook for the year by a dime, as commodity cost inflation continues to eat into margins, despite a healthy top line,” commented Jefferies analysts on the quarterly results.
“However, we are cautious that management’s plan to raise prices to offset the inflation could cause an adverse change in volumes, particularly in more competitive North American markets,” they wrote in a report.
“It was a familiar story for Kimberly-Clark in the first quarter, as rampant input cost inflation and a soft consumer spending environment continued to hinder the household and personal care firm,” added Erin Lash at investment researcher Morningstar.
Kimberly-Clark is one of many large companies seeing their profit margins eroded by higher input costs. [Hedge Against Rising Inflation with TIPS ETFs.]
Some analysts point out the latest bout of inflation is hitting lower-income consumers hard. [TIPS ETFs to Consider as Inflation Rises.]
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.