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About the Industry
The Zacks Consumer Products – Staples industry consists of companies involved in marketing, producing and distributing a wide range of consumer products. These include personal care items, cleaning equipment, stationery, bed and bath products and household goods like kitchen appliances, cutlery and food storage. Some industry participants also provide batteries and lighting products, whereas some offer pet food and treats, pet supplies, pet medications and pet services. Companies in the Consumer Products – Staples universe offer products to supermarkets, drug/grocery stores, department stores, warehouse clubs, mass merchandisers and other retail outlets. Some companies sell products to manufacturers of perfumes and cosmetics, hair and other personal care products. Products are also sold through other distributors and the fast-growing e-commerce channel.
Trends Shaping the Future of the Consumer Products - Staples Industry
Encountering Higher Costs in a Challenging Landscape: The consumer goods industry faces pressure from rising costs across raw materials, labor and transportation. These elevated input costs weigh on profit margins, particularly when companies are unable to fully pass them on to consumers through price hikes. Adding to the strain are higher SG&A expenses and increased investments in digital transformation and marketing initiatives aimed at driving growth. Many firms are vulnerable to shipping disruptions, which can result in delays and higher freight expenses, squeezing overall profit margins. To navigate this challenging environment and protect margins, firms are rolling out restructuring plans and cost-cutting measures designed to enhance operational efficiency and maintain profitability.
Consumer Spending Volatility: The Consumer Products – Staples industry is navigating heightened consumer spending volatility amid an uncertain macroeconomic backdrop. Shifting consumer behavior, especially among lower-income households, is being driven by rising living expenses and declining personal savings. These financial pressures are dampening purchasing power and directly impacting sales across the industry. Given its significant reliance on middle- and lower-income consumers, the sector remains vulnerable to economic headwinds that could lead to reduced sales volumes and slower growth.
Currency Fluctuations: Numerous players in the industry are susceptible to unpredictable currency movements due to their exposure to international markets. The risk arises from the potential impact of a stronger U.S. dollar, which may compel companies to consider increasing prices or squeezing profit margins in locations beyond the United States.
Maximizing Revenues Through Strategic Optimization: Players in the consumer products space have been refining their operations to optimize revenue generation, which includes a strong focus on enhancing e-commerce and digital initiatives. They are also innovating to cater to evolving consumer demands, such as prioritizing healthier food options, incorporating eco-friendly packaging and leveraging technology to enhance convenience. These efforts not only fuel growth but also help maintain competitiveness in an ever-changing market. Many industry players are reshaping their portfolios by pursuing strategic acquisitions and divestitures, enabling a sharper focus on high-growth areas.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Consumer Products – Staples industry is housed within the broader Zacks Consumer Staples sector. It currently carries a Zacks Industry Rank #175, which places it in the bottom 29% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually becoming less confident about this group’s earnings growth potential. Since the beginning of April 2025, the industry’s consensus estimate for current financial year earnings has decreased 2.4%.
Let’s look at the industry’s performance and current valuation.
Industry vs. Broader Market
The Zacks Consumer Products – Staples industry has lagged the S&P 500 Index and the broader Zacks Consumer Staples sector over the past year.
The industry has lost 1.9% over this period against the S&P 500 Index’s growth of 9.2%. Meanwhile, the broader sector has advanced 3.7%.
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Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing consumer staple stocks, the industry is currently trading at 20.46X compared with the S&P 500’s 21.89X and the sector’s 17.66X.
Over the past five years, the industry has traded as high as 23.56X, as low as 18.96X and at the median of 21.20X, as the chart below shows.
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4 Consumer Product Stocks to Keep a Close Eye On
Colgate: The Zacks Rank #3 (Hold) company is a global leader in the oral care hygiene market and continues to benefit from effective pricing strategies and ongoing productivity efforts such as its Funding the Growth initiative. The company continues to invest in core and premium product innovation, while increasing advertising spend to enhance brand visibility and household penetration. Colgate is also expanding its digital, data, and analytics capabilities, reinforcing its competitive advantage and supporting long-term profitability in a dynamic consumer landscape. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Colgate’s current fiscal-year earnings per share (EPS) has remained unchanged in the past 30 days at $3.65, indicating growth of 1.4% from the year-ago period’s level. Shares of the company have lost 5.9% in the past year.
Clorox: The consumer products company continues to be well-positioned for long-term growth, supported by a robust innovation pipeline, ongoing digital transformation, and effective pricing and cost-saving initiatives. The company is making strong progress with its IGNITE strategy, which emphasizes innovation and targeted expansion across core business segments to accelerate performance. Clorox is also advancing in international markets through its Go Lean strategy, aimed at driving profitable growth while focusing on high-return investments to fuel global expansion. These strategic initiatives help keep the Zacks Rank #3 company on track to meet its long-term financial goals.
The Zacks Consensus Estimate for Clorox’s current fiscal-year EPS has moved down a penny to $7.09 in the past 30 days. The projection indicates growth of 14.9% from the year-ago period’s figure. CLX’s shares have declined 10.8% in the past year.
BJ's Wholesale Club: A leading operator of membership warehouse clubs, BJ carries a Zacks Rank #3 at present. The company continues to demonstrate strong performance, fueled by its strategic focus on membership growth and digital innovations. BJ remains committed to enhancing omnichannel capabilities and providing value to customers. These endeavors have contributed to growth in membership signups and renewals, resulting in higher membership fee income. Offering members convenient options such as same-day delivery, curbside pick-up, and buy online and pick up in-club, the company ensures an engaging and seamless digital shopping experience. BJ's Wholesale has been steadily increasing its footprint, targeting high-growth regions and underserved markets.
The Zacks Consensus Estimate for BJ's Wholesale Club’s current fiscal-year EPS has moved up 1.7% to $4.30 in the past 30 days. The projection indicates growth of 6.2% from the year-ago period’s level. BJ’s shares have gained 23.5% in the past year.
Grocery Outlet: The Zacks Rank #3 company is strengthening its market position through a well-rounded strategy that includes a diverse product assortment, targeted marketing efforts, in-store enhancements and expanding e-commerce capabilities. The company’s same-day delivery services highlight its focus on customer convenience and digital growth. Additionally, Grocery Outlet is accelerating the rollout of its private-label offerings to boost value and differentiation. With a disciplined approach to expansion, the company is prioritizing Return on Invested Capital by optimizing its store growth strategy. Grocery Outlet is focused on returning to its long-term growth trajectory in fiscal 2025.
The Zacks Consensus Estimate for Grocery Outlet’s current fiscal-year EPS has remained unchanged at 74 cents in the past 30 days. The projection indicates a decline of 3.9% from the year-ago period’s figure. GO’s shares have declined 34.8% in the past year.
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This article originally published on Zacks Investment Research (zacks.com).
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