Visa Inc. said Tuesday it was seeing healthy spending trends, supported by pent-up demand for activities outside the home and resurgent activity among affluent cardholders.
Chief executive Al Kelly told investors at a JP Morgan conference on Tuesday that his company had still not been hit by broader spending activity due to geopolitical events, such as the Russian invasion of Ukraine, or macroeconomic circumstances, meaning high food and fuel inflation and the Federal Reserve. post-COVID-19 tightening.
“We just don’t see those negative impacts in our numbers,” he said, according to a FactSet transcript.
““Right now, the consumer seems pretty healthy, despite inflation, supply chain issues, the war in Ukraine, rising interest rates, etc., where one would think that we would see some impact. We don’t see it.”
Kelly argued that there is no historical precedent for the current environment, given “so much pent-up demand” for activities outside the home among people who were tired of being locked down for more than two years amid the pandemic.
At the “lower ends of the spending strata”, Visa V,
is still seeing consistent trends compared to before the pandemic, according to Kelly. At the same time, the company is experiencing a nice increase in spending by the wealthiest.
“What’s really come down during the pandemic is the higher spending levels and we’re really seeing over the last nine or 10 months that the affluent shopper is coming back into the market a lot,” Kelly said.
He gave the example of restaurant spending, noting that while tickets around $25 have been largely flat in recent quarters, tickets from $100 to $300 or $300 and above are showing the strongest growth.
“It’s clear evidence that the affluent customer comes back, goes to restaurants with white tablecloths and buys a nice bottle of wine with the meal, etc.”, he continued.
Kelly was also optimistic about travel trends, saying consumers seemed eager to leave their homes, especially as restrictions eased.
“We don’t anticipate any impact on travel except for Russia and Ukraine,” he said. “We do not expect any impact on negative travel trends outside of these countries.”
Kelly’s upbeat comments on the state of consumer spending come after several retailers made investors nervous in recent days while discussing the impacts of inflation on their businesses.
Walmart Inc.WMT,
shared last week that shoppers were increasingly opting for private label products due to inflation, while Ross Stores Inc.’s ROST,
the chief executive said “escalating inflationary pressures had a greater impact on lower-income households.”
Shares of Visa are down 3% in Tuesday trading. The stock has lost 7% in the past three months as the Dow Jones Industrial Average DJIA,
fell 5%.
