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Commentary: Why are some companies confident of being ‘recession-resistant’?

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LONDON: Are bikini waxes sticky during a recession? A chain of salons based in Texas, European Wax Center, is confident they are.

Chief executive David Berg told investors this week that he based this optimism on “how quickly we rebounded coming out of COVID-19”, when customers soon “got back into their regular beauty care regimen”.

Facing rising rates, soaring inflation and lower growth forecasts, many other executives were putting on a brave face during earnings calls this week.

Companies that have spent years wanting to be considered as “tech”, for the racier multiples, now emphasise their dull reliability — staples rather than discretionary, value rather than growth. The message to investors: Do not adjust your portfolios. We are safe.

UPSIDE FROM LOOMING DOWNTURN?

Airbnb’s Brian Chesky sees upside from the looming downturn. He reckons more people struggling with their rent and mortgages will turn to hosting paying guests. At the same time, he says, travellers will be more budget-conscious, trading down to Airbnb from hotels. “I think we’re a pretty resistant business,” he told investors this week.

Garden products company ScottsMiracle-Gro noted that even when most home improvement categories fall in a recession, people keep buying paint and lawn care items. “I wouldn’t say we’re recession-proof,” said chief executive Jim Hagedorn, “but I do believe we’re recession-resistant.”

Door-to-door protein shakes? “Based on the last 100 years of direct selling, it’s been very countercyclical,” said Herbalife chief John DeSimone.


LONDON: Are bikini waxes sticky during a recession? A chain of salons based in Texas, European Wax Center, is confident they are.

Chief executive David Berg told investors this week that he based this optimism on “how quickly we rebounded coming out of COVID-19”, when customers soon “got back into their regular beauty care regimen”.

Facing rising rates, soaring inflation and lower growth forecasts, many other executives were putting on a brave face during earnings calls this week.

Companies that have spent years wanting to be considered as “tech”, for the racier multiples, now emphasise their dull reliability — staples rather than discretionary, value rather than growth. The message to investors: Do not adjust your portfolios. We are safe.

UPSIDE FROM LOOMING DOWNTURN?

Airbnb’s Brian Chesky sees upside from the looming downturn. He reckons more people struggling with their rent and mortgages will turn to hosting paying guests. At the same time, he says, travellers will be more budget-conscious, trading down to Airbnb from hotels. “I think we’re a pretty resistant business,” he told investors this week.

Garden products company ScottsMiracle-Gro noted that even when most home improvement categories fall in a recession, people keep buying paint and lawn care items. “I wouldn’t say we’re recession-proof,” said chief executive Jim Hagedorn, “but I do believe we’re recession-resistant.”

Door-to-door protein shakes? “Based on the last 100 years of direct selling, it’s been very countercyclical,” said Herbalife chief John DeSimone.

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