Blame Walmart for Consumer Firms' Worst Month in Nine Years

(Bloomberg) -- The U.S. may be enjoying soaring consumer confidence and signs of strengthening wage growth, but food, beverage and household companies just logged their worst month since 2008.

The main culprit: Walmart Inc., which fell the most in eight years after posting disappointing fourth-quarter e-commerce growth.

The world's largest retailer is just the fifth-heaviest constituent of the S&P 500 Consumer Staples Index, but its 16 percent plunge sent ripple effects across the industry group. Procter & Gamble Co., which makes up 11 percent of the gauge, relies on Walmart for 16 percent of its revenue. For PepsiCo, it's 13 percent of sales, and 5 percent for Coca-Cola.

A slide in Walmart underscores the importance of retail giant's push to expand online operations as it fights with Amazon.com Inc. for the customers that are increasingly turning to electronic devices for their purchases. The biggest monthly drop in consumer stocks since the financial crisis shows that a pickup in economic growth, consumer confidence at a generation high and wage growth exceeding expectations don't necessarily translate into higher prices for food and beverage stocks.

“The environment for consumer-staples companies is tricky,” said Kenneth Shea, senior analyst at Bloomberg Intelligence. “It's a tough battle. Consumers are opting to click for the purchases as opposed to walking around, and companies have to adjust.”

--With assistance from Janet Freund

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Joanna Ossinger, Randall Jensen

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