Amazon Shopper Loyalty Holds Strong Amidst Inflation Concerns, While Kenvue Faces Retail Headwinds

A recent Jefferies survey highlights the enduring loyalty of U.S. Amazon shoppers, who continue to spend despite rising prices. Concurrently, consumer health company Kenvue is navigating slowing retail trends, leading to a revised stock price target.

Amazon Shopper Behavior

A survey of approximately 700 U.S. Amazon shoppers by Jefferies indicates that consumer spending on the e-commerce giant remains robust. Despite 80% of respondents expressing concern over higher prices due to tariffs, 62% reported spending the same or more in the past three months. Only a small fraction, 3%, indicated they have stopped shopping on Amazon altogether.

However, signs of caution are present, with 31% spending less and 34% shopping less frequently. In a scenario of worsening inflation, 45% of consumers stated they would reduce their Amazon spending rather than switch to alternative retailers.

Key Takeaways:

• Amazon Prime membership is a significant loyalty driver, with 73% of participants being members, far exceeding competitors like Walmart+ (26%) and Target Circle (22%).

• A majority (57%) intend to maintain their Prime memberships, though 19% are considering cancellation.

• The upcoming four-day Prime Day event (July 8-11) is anticipated to boost sign-ups, especially among younger shoppers, due to its extended format and focus on deals.

• Amazon continues to lead in online retail metrics, ranking first in shipping (72% vs. Walmart's 13%) and selection (74% vs. Walmart's 13%), and is a close second in low prices (37% vs. Walmart's 46%).

Jefferies maintains a "Buy" rating on Amazon, noting the stock's attractive valuation.

Kenvue Navigates Retail Slowdown

Jefferies has lowered its price target for Kenvue Inc. to $23.00 from $25.00, while reiterating a "Buy" rating. This adjustment comes as retail trends show a noticeable slowdown, with a 1.5% decline reported, representing a 100 basis point quarter-over-quarter deterioration.

Litigation concerns have also become a central issue for Kenvue. Despite these challenges, the stock has seen a significant decline of over 32% in the past six months. Nevertheless, Kenvue maintains strong gross profit margins of 58.15% and offers a substantial dividend yield of 5.43%.

Jefferies anticipates Kenvue's 2025 guidance to remain on track, with projected low-single-digit percentage declines in revenue and earnings per share. Positive factors include expected foreign exchange tailwinds and the lapping of headwinds in China.

Investors are keenly awaiting updates on a permanent CEO appointment and the company's strategic review process, which are expected soon. The reduced price target reflects a lower multiple due to "lower visibility into turnaround timing, given legal liability risk."

Kenvue is also facing a UK class action lawsuit related to Johnson & Johnson's talcum products. Separately, President Trump issued a warning regarding Tylenol use during pregnancy and childhood, though the European Medicines Agency has stated there is no evidence linking paracetamol use during pregnancy to autism.

Sources

• Jefferies survey of U.S. Amazon shoppers reveals key behavioral trends By Investing.com, Investing.com.

• Jefferies lowers Kenvue stock price target to $23 on slowing retail trends By Investing.com, Investing.com.