One of the more striking features of the pandemic is the inequity of the pain it has inflicted. It has disproportionately affected black and Latino communities. More than 16-million Americans are unemployed, nearly triple February’s levels, but investors in the S&P’s 500 Index are back in the green for the year. And while some businesses are looking at a multi-year slump in demand, others are experiencing their best sales growth ever.

The second-quarter earnings season brought fresh evidence of relative bright spots for spending, from the obvious demand for cleaning products to more surprising splurges such as swimming pools and Weight Watchers memberships. That’s a shift from the financial crisis of 2008 and 2009. You would be hard pressed to name large companies that didn’t experience some sort of a slowdown from that particular recession, let alone any that were outright beneficiaries.

There are no real winners in a pandemic that has killed more than 150,000 people in the US, but the willingness of at least some Americans to keep spending on certain categories is a positive indicator and has most likely served to keep the economic downturn from being even worse.

Here’s what stood out.

Big-ticket items

The unique nature of the pandemic, with months spent under lockdown conditions, has some consumers making the kind of large discretionary purchases that are typically the first to get cut in a downturn. New-home sales in the US rose to an almost 13-year high in June, while purchases of existing homes posted the largest ever month-over-month gain as families juggling the work-from-home and virtual-learning experiment seek bigger properties in less urban areas. Much of this home-buying now starts virtually.

That translated to a 12% gain in monthly users on Zillow Group’s sites during the second quarter. Better-than-expected sales growth in its internet and mortgages divisions should push the company’s third-quarter operating profit above the threshold it was targeting internally before the pandemic, CFO Allen Parker said on an earnings call last week.

High on the list of priorities for some home shoppers is going to be a parking spot. A wariness of public transportation and ride-sharing has underscored the appeal of individual cars and helped the sector bounce back much more quickly than anticipated.

General Motors (GM) and Ford both reported better-than-expected second-quarter results amid a strong gain in sales once dealerships and plants were allowed to reopen in May and June. Both could return to profitability next quarter, a sharp contrast to the financial crisis when GM and Chrysler were forced into bankruptcy and Ford only barely avoided the same fate.

Outdoor living  

The US Centres for Disease Control and Prevention says outdoor activities are less risky than indoor ones, and many people are growing tired of being cooped up at home. No wonder RV-maker Thor Industries cited an “influx” of first-time buyers. Camping World Holdings said this month that demand remained strong through the summer months and that it might be on track for its most profitable year ever. Yeti Holdings posted an 18% increase in second-quarter sales for the division that includes its luxury coolers, waterproof backpacks and fancy camping chairs.

If you can’t drive your RV to the beach or a campsite on a lake, the next best option is to create your own personal waterfront oasis. Pool Corporation, a distributor of parts and supplies, reported record sales in the second quarter and increased its earnings guidance for 2020. The company filled most of that demand from existing inventory, but the revenue boom will eventually make its way to Pentair, which makes pool pumps, cleaners and automated control systems.

Orders are up for both new pool construction and remodels, CEO John Stauch said on the company’s earnings call last month. With most new pools taking several quarters to complete, that’s not the kind of investment that’s made lightly and not one that’s common in economic slumps. Global sales of pool equipment at Pentair fell 45% in the first quarter of fiscal 2009, for example.

Home improvement

Sadly, a pool remains out of reach for most people. But it’s also seemingly a good time to do something about that cabinet that has never closed properly, replace that appliance that’s making ominous noises, or build that new deck. Stanley Black & Decker rode the DIY wave to 8% organic sales growth in its tools segment in June and July, compared with the year-earlier periods.

Whirlpool said revenue declines in 2020 wouldn’t be as bad as previously thought, as an initial spike in demand for extra refrigerators and freezers to store all that food people were stockpiling gave way to other upgrades in the kitchen, such as ovens.

Heating, ventilation, and air conditioning (HVAC) systems have been another spending hot-spot because a broken air conditioner makes spending 24/7 inside a home even more of a challenge. Proper ventilation is also a critical tool for combatting the coronavirus.

Orders for residential HVAC systems were up 100% in June compared with those in the month a year earlier and trending up more than 50% in July at Carrier Global, with similar spikes at rivals Trane Technologies and Johnson Controls International.

People are also paying closer attention to their yards. Scotts Miracle-Gro’s revenue surged 28% in the quarter ended June 27, thanks to robust demand for gardening and lawncare products. The sales surge prompted the company to raise its full-year earnings outlook.


Other Americans have apparently made a project of themselves. Rosetta Stone reported a 92% increase in bookings from a year earlier in its consumer language segment as people decided to use time stuck at home to learn Spanish or brush up on their Italian. That uptake, coupled with increased sales of its literacy products for K-12 students, led the company to boost full-year sales guidance.

Rosetta Stone is reportedly looking to capitalise on the demand boom with a potential sale. Meanwhile, WW International, the company behind Weight Watchers, notched 5-million subscribers in the second quarter — a count that was about even with the first quarter, the period that is typically peak season thanks to New Year’s resolutions.

The pandemic is prompting a “radical reappraisal” of life and work in which “health and wellness is definitely moving from what I would think of prior as a luxury to a necessity,” CEO Mindy Grossman said at a recent conference. WW’s quarterly revenue fell from a year earlier, as many of its brick-and-mortar studios were temporarily closed because of the pandemic. But digital subscriptions — a more profitable model the company is trying to pivot towards anyway — rose 23%.   

Constant cleaning

The pandemic has put hygiene and sanitisation into sharp focus. This has shown up in obvious ways, such as a 22% surge in sales for Clorox in the second quarter and a 19% increase in sales of 3M’s personal-protective gear, including N95 masks.

Cintas is known for its corporate uniforms, but it also helps supply companies with items such as hand sanitiser and masks. Sales for the unit that houses this business grew 22% in the most recent quarter on an organic basis, with demand for safety products more than making up for a decline in the restocking of office first-aid cabinets.

It’s not just disinfectants, though. With people spending so many more hours at home, the dishes are piling up more frequently and the floors are becoming grimy faster. That helped power sales of Procter & Gamble’s Dawn dish soap and Swiffer brands in the quarter, which contributed to a 14% increase in organic sales in the company’s fabric and homecare division. Colgate-Palmolive, too, said it was struggling to keep up with sustained demand for dish soap.

Reynolds Consumer Products recorded a double-digit increase in sales in its Hefty waste and storage bags unit as people generate more trash at home. Americans are also reluctant to share homes that may already feel a bit crowded with bugs and other pests. Rollins, a pest-control company that operates under the Orkin brand, among others, said it had outpaced its previous 10 best sales days during the second quarter and the month of July, largely through inbound call volume.

In the kitchen 

Americans have been eating more meals and snacks at home amid widespread teleworking and safety concerns about visiting restaurants. The chaos of the outside world also has many people reaching for comfort food.

Demand for previously forsaken goods such as cereal and frozen foods is lifting sales at companies such as Kellogg, which raised its guidance for the full year. Newell Brands, the company behind Crock-Pots and Calphalon non-stick pans, said sales at US retailers of its appliances and cookware products were up “double digits” from a year ago.

The stay-at-home lifestyle and a reluctance to venture into grocery stores has also benefited meal-kit maker HelloFresh, which increased its ranks of global active customers to 4.2-million in the most recent quarter, up from 2.4-million a year earlier.

Its smaller, US-based rival, Blue Apron Holdings, also had an increase in demand. Crucially, both companies experienced a jump in orders per customer, a sign that the services are becoming more of a habit for their users.


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