In terms of consumer staples retail sales, health and personal care stores have the slowest growth while warehouse clubs and superstores grew rapidly from 1992 through 2008. In all cases the consumer staples retail sales aren't as volatile and significantly impacted by recessions as the rest of the retail trade and food services segments. Consumers will always purchase essential retail goods. Although the sales consistency of consumer staples companies are relatively boring investors will feel more secure owning them during recessions.
I saw three interesting articles today regarding the consumer staples industry that may impact XLP's performance.
- U.S. west coast seaports are finally open as labor issues between dockworkers and their employers are resolved. This negatively affects both retail and inventory data from November to February and will probably boost March's data.
- Proctor & Gamble (PG), the largest holding in the Consumer Staples Select Sector SPDR ETF (XLP) announced they are divesting 100 brands. This will definitely impact PG's sales in the near term but the magnitude of impact on XLP will depend on whether other companies in the ETF will absorb the brands.
- The FTC is blocking Sysco's (SYY) acquisition of US Foods. Had the deal gone through we would expect Sysco's weight in XLP to increase.
This is it for this week's review of the consumer staples industry. For more information on the model please visit my website's Consumer Staples Industry Investment Model's page.