The Details CFOs Prepare to Manage Rising Revenues, Changing Consumer Demands | So Good News

Looking ahead, many economists said they expect the same trend in terms of inflation. Below are excerpts from recent quarterly calls that have been edited and condensed for clarity.

Ian Borden, CFO, McDonald’s Corp.

There are certainly a number of drivers for this year that have caused the landscape to change. The first is the impact of the strong US dollar. So if you think about us [general and administrative expenses] 60% of our sales come from outside the US Obviously, we are translating those sales into less US dollars and 70% of our G&A is in US dollars. So that’s the first touch.

The second result is obviously the inflationary pressures that we’re seeing on the pricing, which is obviously coming back to consume our G&A expenses. I think what I can say, coming into this role, is that it’s an area that I focus on. I think we continue to believe that in terms of driving the business portion of our G&A revenue, we should be able to drive better and gain momentum as we continue to drive through our top line as we go forward. (Oct. 27)

Susan Li, vice president of finance and incoming CFO, Meta Platforms Inc.

We are looking forward to 2023 [capital expenditures] to be between $34 billion to $39 billion, at our expense [artificial intelligence] promote overall growth. We focus on evaluation [return on investment] of our AI investment, and this will inform our future use. But so far, we have seen [a] continue to make a significant impact on our offerings by advancing our AI work.

…We think we’re just getting started on this journey, but our amount of CapEx will depend on the benefits we get through these investments in AI. And if we make a big deal and make a profit, we will continue to invest here. And if we don’t, we will use the money wisely. (Oct. 26)

Matt Puckett, CFO, VF Corp.

We believe that there are many things that have affected us this year – that is, I will say, short-term – that affect the border. And this is just the edge of the border… Additional storage costs due to the increase in the number of products with limited time.

But the biggest thing is the ideas we’re making right now in terms of what the market will need in terms of advertising, both. [in] our logistics, and to support our suppliers. (Oct. 26)

Gina Goetter, CFO, Harley-Davidson Inc.

We’re just about done with the budget. So we don’t comment too negatively on what’s expected next year. But keep a few things in mind: First, our basic rule is that we will take adequate prices that exclude inflation; and then the second part is the FX storm coming our way. So it’s going to be material for us next year, and we’re just reeling and seeing how many prices are going to end up in FX next year. (Oct. 26)

John Vandemore, CFO, Skechers USA Inc.

I think it’s important to remember that part of the [our] Productivity comes at a cost, right? You can’t go through the surge in goods and the boom we’ve had in the last year without affecting your balance sheet, because it just goes through that way. I would say, if we think about it from a dividend perspective, where it’s growing at a slower pace than what we’ve seen on the dollar side, we expect things to start to slow down.

Now some of that depends on how the supply chain works. Because, again, this is not a situation where the reserves are supported for lack of demand. This is not the situation we are in. So it has to do with time management and timing, all things that we have struggled to predict well in the last few years. (Oct. 25)

Neil Mitchell, CFO, Raytheon Technologies Corp.

We will bring back the revised prices as we do at the beginning of the year. We expect this to be higher than what we have seen in the past, reflecting the price increases we are making across the business. So we are attacking both value and value as we see the business moving forward.

…[M]every job we’ve seen involving the integration of footwork and automation and the digitalization of our factories is pretty much the same as the inflation we’re seeing today. (Oct. 25)

Andre Schulten, CFO, Procter & Gamble Co.

In terms of consumer opinion, in many cases, we see the share of consumers in Fabric Care, for example, rising, as I said, to one level. We’re also seeing growth in our mid-sized companies.…We’re also seeing consumers moving into different price points. So the consumer group is looking for profit by trading in higher sizes to get lower cost per use or lower cost per unit. And we’re seeing some consumers who are very money-conscious, and very focused on spending. (Oct. 19)

Sandeep Reddy, CFO, Domino’s Pizza Inc.

When we talk about the problem of inflation, it is not only a domestic problem, but also a global one. So the same forces that we were talking about to be forced would be difficult in the world… And I think the risk is when you have an increase in prices, consumers can switch to cooking at home and preparing meals altogether. And that’s the only risk. We are in an era of unprecedented inflation.

So how consumer behavior changes right now remains to be seen, but our test models show that there is room for change if inflation remains at these high levels. (Oct. 13)

Write to Kristin Broughton is [email protected]