With the entire world getting ready to hunker down and quarantine themselves due to the coronavirus outbreak, grocery sales have been surging so far this month. Food retailers saw explosive new sales growth of 8% during the first week of March, according to analysts at Morgan Stanley. This is an unprecedented surge for a retail segment that generally moves in small ticks.
The same analysts predict that this number has accelerated in recent weeks.
Morgan Stanley analysts including Simeon Gutman and Josh Kamboj say that comps could even move "well into" the double digits for the first quarter of 2020. They predict that a recent 6% boost to Kroger's sales estimates could be too conservative.
Analysts at Jefferies agree, stating that trends would continue to be pronounced, especially in canned products and other shelf-stable items. They predict that frozen food and other core categories will also show improvement.
At the same time, Amazon is prioritizing the stockpiling of household staples and medical supplies while trying to deal with a surge in demand due to shoppers not wanted to leave the house. The company is looking to hire 100,000 new workers to help pick, pack and deliver orders.
Amazon is the only name that has declined in March, while brick and mortar names like Kroger, Walmart and Costco have all outperformed the S&P index by a longshot.
Increase in valuations this year:— Jon Erlichman (@JonErlichman) March 17, 2020
Walmart +$13.5 billion
Costco +$5.7 billion
Clorox +$5.5 billion
General Mills +$3.7 billion
Kroger +$3.2 billion
Kimberly-Clark +$2.0 billion
JM Smucker +$1.5 billion
Campbell Soup +$1.3 billion
Meanwhile, U.S. food processors like Tyson have rushed to expand production of key items like chicken, pork and beef while other processors in countries like Brazil slow, or suspend production. U.S. processors are also diverting food that would normally be used for restaurants and for export back to grocery chains to meet the needs of the U.S. shopper as dine-out demand collapses.
The demand surge is also becoming evident in prices, with live cattle futures surging almost 5% early this week.