China: The World's Biggest Conundrum
Posted at 1:51 p.m. EDT on Friday, June 19, 2015
What's the deal with China? What is really going on there?
This morning we learned the jarring news from Hershey (HSY) that chocolate sales are down because, and I quote, "Macroeconomic challenges and trends are affecting consumer shopping behavior resulting in continued softness within the China modern trade." Jeez, people are cutting back on chocolate?
Making matters worse, Hershey had just shelled out $394 million for an 80% interest in Shanghai Golden Monkey Food last September. In today's release, Hershey said it was "moderating" its full-year net sales expectations for the Shanghai Golden Monkey acquisition because of the Chinese slowdown.
This news is on top of a note this morning from the Wells Fargo research department that Macau gambling is coming in at a four-year low, with June numbers being as much as 20% down from the average for the first five months of the year - and those numbers were incredibly weak to begin with. That spells trouble again for MGM (MGM), Wynn (WYNN) Las Vegas Sands (LVS).
We know from Diageo (DEO) that its best liquor brands haven't been selling well in China. I covered that last night on "Mad Money."
We also know that sales for expensive clothes and accessories such as watches are way down, quite a change from the old days.