US Consumer Staples: Thoughts ahead of 2Q earnings; convergence of the "K"?

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US Consumer Staples: Thoughts ahead of 2Q earnings; convergence of the "K"?

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US Consumer Staples

Thoughts ahead of 2Q earnings;

convergence of the “K”?

Price Objective Change

Low-income improvement for 2H – Blip or reality? 10 July 2026

Heading into 2Q26 earnings season and looking into 2H, we expect many of the same Equity

debates weighing on Consumer Staples sentiment through 1H to remain. Staples United States

sentiment remains notably subdued as consumption continues to lag, inflation accelerated Consumer Staples

in 2Q and negative estimate revisions have yet to find a bottom. Recent reporters (GIS, Peter T. Galbo, CFA

PEP, STZ – see linked reports) have not dispelled this notion, though positioning into prints Research Analyst

has been a larger determinate of stock price reactions. It’s not all bad though – late June BofAS+1 646 743 0175

consumption data (Prime Day shift) appeared to improve and select spending data points peter.galbo@bofa.com

suggest the potential for some recovery among the lower income cohort (see The Institute Anna Lizzul

Research Analyst

Employment Report), which has disproportionately negatively impacted Staples BofAS

consumption to this point. As for positioning, in the current environment, our macro/sub- +1 646 855 2569

anna.lizzul@bofa.com

sector preferences are unchanged from our Year Ahead report, favoring Emerging Market-

Lisa K. Lewandowski

led narratives over Developed Market ones, and Non-alcoholic Beverage over HPC, Research Analyst

Packaged Food and Beverage alcohol (in that order). Should evidence of a sustained US BofAS +1 646 855 4647

low-income consumer recovery emerge, we see potential for meaningful rotation into US- lisa.lewandowski@bofa.com

exposed Staples names, which have underperformed year-to-date.