Tariffs linger over earnings, even as companies get used to them

By Juveria Tabassum

Jan 26 (Reuters) - Many U.S. companies person sought to reassure investors that tariffs are "manageable," but aboriginal earnings-season comments suggest nett margins are astatine hazard with consumers balking astatine higher prices.

Bellwethers including Procter & Gamble, Fastenal and 3M person flagged the challenges.

Andy Jassy, ​CEO of retail elephantine Amazon.com, told CNBC connected the sidelines of the World Economic Forum successful Davos, Switzerland the institution was seeing prices ‌tick up connected its e-commerce level arsenic sellers person tally down inventories they brought successful to front-run tariffs.

Numerous companies with planetary footprints study results successful the coming week, including General Motors, Caterpillar, ‌Colgate-Palmolive, and packaged goods institution Kimberly-Clark.

While broader user spending has held up, buyers person been judicious, often looking for worth items, peculiarly lower- and middle-income earners.

"While immoderate are little price-sensitive than others, astir consumers are inactive huffy astir the level of existent prices and won't instrumentality kindly to further hikes," said Brian Jacobsen, main economical strategist astatine Annex Wealth Management.

'SURGICAL' PRICE INCREASES

More than 100 S&P 500 companies volition study adjacent week, according to LSEG data.

Tariff-related terms increases are expected to materialize this ⁠year for gardening and workplace instrumentality seller Tractor Supply, ‌according to a enactment by brokerage Telsey Advisory Group.

Tractor Supply reports results connected Thursday, and executives person said consumers implicit the past twelvemonth person been buying with worth successful caput and that it would beryllium "surgical" with terms increases.

Levi Strauss reports holiday-quarter results ‍on Wednesday. The institution said successful October that tariffs would chopped its margins by 0.7%, up from a erstwhile 0.5% estimate. While Levi Strauss has raised immoderate prices portion trying to diversify its proviso chain, the institution besides warned of a softer user environment.

Harvard University professors Alberto Cavallo, Paola Llamas and Franco Vazquez person been tracking the terms ​of astir 360,000 goods, from carpets to coffee, astatine large online and brick-and-mortar retailers successful the United States.

They estimation that arsenic of year-end, home goods ‌cost astir 4.3 percent points much than would person been expected based connected the pre-tariff regime, portion imported goods are astir 5.8 percent points much expensive.

Some companies, similar spice shaper McCormick & Co, are raising prices, aft tariff costs roseate much than expected successful the 4th quarter.

"Approximately 50% of the incremental tariffs connected McCormick items stay successful place, and we proceed to look related inflationary pressures," said CEO Brendan Foley. McCormick's gross nett margins were down astir 130 ground points from the year-earlier period.