Off-Cycle Insights: Seeing the Effect of Higher Gas Prices

Research evidence excerpt

Off-Cycle Insights: Seeing the Effect of Higher Gas Prices

FICC Research

Credit Research

2 July 2026

HG Consumer

Off-Cycle Insights: Seeing the

Effect of Higher Gas Prices

As we wrap up off-cycle consumer/retail earnings, we provide Priya Ohri-Gupta, CFA

key points on the consumer as we head into 2Q26 earnings. +1 212 412 3759

priya.ohrigupta@barclays.com

The tone appears to have softened around consumer demand BCI, US

as gas spiked, and companies are increasingly pulling levers Teresa Tian

in their control to support ratings/balance sheet. +1 212 526 8973 teresa.tian@barclays.com

BCI, US

Taking Control of Their Own Destiny

Amid ongoing consumer and category pressure, the tone from consumer companies

increasingly suggest decisive actions to control what’s in their power including leaning into mix

(GIS, MKC), continued focus on value and having the right price points (GIS, DRI), as well as M&A

(KR, MKC). That said, higher gas prices took a toll on consumer behavior into April and May with

STZ, MKC and GIS all citing evidence of softening trends over that period. We view this to be

transitory, given that gas prices have been retracing in recent days. Still, the underlying tone

remains focused on balance sheet and ratings preservation, underscored by MKC outlining a LT

leverage target of 2-3x after its merger with Unilever Foods, GIS’s recent hybrid + debt

repayment to support getting net leverage back to 3x (combined with a decreased focus on M&A

and share repurchase), while KR’s deal puts it now in line with its ongoing leverage target of

2.3-2.5x.

In this report, we examine recent themes including consumer trends, the cost/inflation

backdrop, portfolio actions, and channel trends evident in recent earnings from General Mills,