Less than a week remains until major packaging manufacturers begin reporting quarterly earnings results, with Black Friday, frequently the busiest shopping day of the year, only about a month out from there.
Containerboard producers’ earnings insights from Q3 and early order patterns in Q4 will be indicative of how the holiday season is shaping up, said Michael Roxland, senior paper and packaging analyst at Truist Securities. Holiday season demand may also coincide with an end to the destocking trend, “so the back half of the year looks pretty good from a shipment vantage point,” he said. A difficult Q4 2022 also sets the industry up for stronger end-of-year results this year.
Ahead of those earnings reports and full-swing holiday shopping, multiple signs point to consumer demand that’s holding up in the face of economic pressures.
Amazon held 48 hours of “Prime Big Deal Days” last week — with more than 13% of U.S. shipments estimated to be delivered without any additional packaging through the Ships in Product Packaging program, the company reported. The e-commerce giant has not publicly disclosed how much consumers spent, but it said the sales were its largest-ever October holiday kick-off sales event. Target and Walmart were among the competitors that also offered pre-Black Friday or Cyber Monday events this month.
According to data released this week by the U.S. Department of Commerce and analyzed by Retail Dive, e-commerce sales were up 6.2% in September.
“September retail sales show that consumers have retained the ability and willingness to spend despite accumulating economic headwinds from higher interest rates and slowing growth,” National Retail Federation CEO Matthew Shay said in a statement Tuesday. “As we gear up for the holiday season, we expect moderate growth to continue.” NRF Chief Economist Jack Kleinhenz added, “The consumer is still healthy, and today’s report shows households are forging ahead with plenty of buying power despite persistent inflation, rising interest rates and geopolitical conflicts.”
A BofA Global Research report this week projected a 12% increase in packaging earnings in 2024, following 10% average declines to packaging stocks and earnings expected for full-year across 2023. “We think we are near the end of volume declines and expect volumes to turn positive between 4Q23 and 2Q24 depending on the company after a packaging recession that began in mid-2022,” BofA analysts wrote.
Deloitte projected in September that holiday sales between November and January will grow between 3.5% and 4.6%, albeit slower than last year’s 7.6% increase. E-commerce sales could grow between 10.3% and 12.8% year over year, to between $278 billion and $284 billion.
Meanwhile, earlier this month Adobe Analytics predicted that online holiday sales between Nov. 1 and Dec. 31 will rise 4.8% from last year to $221.8 billion, in part boosted by consumers using buy now, pay later spending. “Despite an unpredictable economic environment, where consumers face several challenges including rising interest rates, we expect strong e-commerce growth this season on account of record discounts and flexible payment methods,” Patrick Brown, vice president of growth marketing at Adobe, said in a statement.