What CFOs Are Planning If the Economy Goes South

Delinquencies on some consumer loans are starting to rise as pandemic stimulus money ends. Meanwhile, supply-chain snarls and higher commodity prices—brought on by external events like Russia’s war on Ukraine and virus-related lockdowns in China—continue to dog businesses.

Whether these factors coalesce into a broader slowdown remains to be seen. CFO Journal asked chief financial officers in interviews what preparations they were making, and reviewed CFO comments at recent investor events. Their remarks follow, some of which have been edited or condensed for clarity.

Ernst Teunissen, CFO of Tripadvisor Inc., a Needham, Mass.-based online travel company

Maybe there is a recession on the horizon, but there’s so much pent-up demand in travel that we think it may be one of the last categories that consumers are really going to economize. (June 2)

Jonathan Ramsden,

CFO of Big Lots Inc., a Columbus, Ohio-based discount retailer

Being a value-oriented retailer, our experience in the past is we’ve fared relatively well during recessions because of people going towards value and trading down. That said, it depends on how long or severe the recession might be. (June 1)

Tom Casey, CFO of LendingClub Corp., a San Francisco-based online lender

We’ve been disciplined in not expanding our credit to folks that’ll be more impacted by that—hourly workers maybe losing some hours or potentially losing their jobs as the economy slows. It takes time to play through, and we’ve already got a lot of that put into our models.

Obviously, higher interest rates put pressure on our investor base, and we’ll continue to work on passing some of that onto the borrower. So the cost of credit will go up, and we’ll be disciplined on how fast we do that. (June 1)

Gary Swidler, CFO of Match Group Inc., a Dallas-based online dating site

I think the business was very recession-proof in 2008. It actually saw a bit of a boom in 2008 in the middle of the great financial crisis because people had a little more time on their hands. [A subscription is] not spend they’re going to cut if they can go and meet people and still be happy. And so I’m not expecting that we’re going to see a significant impact from a downturn on our business. (June 1)

Fernando Tennenbaum, CFO of Anheuser-Busch InBev SA, a Leuven, Belgium-based brewing company

There are no changes on the outlook this year. We expect 4% to 8% [earnings before interest, tax, depreciation and amortization] growth and no changes on that front. So far, the consumer is in a good place. So far, volumes are still in a good place.

Historically, beer has always been resilient, so I have no reason to believe that it would be somewhat different going forward. We continue to be optimistic about the future. (May 31)

Julie Whalen, CFO of Williams-Sonoma Inc., a San Francisco-based home products company

First of all, we just went through this at the beginning of the pandemic. We’ve all been through it in ’08 and ’09. And thankfully, we have a lot of the same management team that’s here, so we know how to do it.

Hopefully, we’re not in that situation. Certainly, we’re not seeing anything close to that situation today. But we know how to pull back on expenses. We know how to cut inventory, capital, advertising, put a cease to all discretionary spend. (May 25)

Brice Hill,

CFO of Applied Materials Inc., a Santa Clara, Calif.-based chip equipment maker

If the environment were changing, what would happen? Usually the first thing that happens is our customers would not put in new orders. That’s not happening.

The second thing that would happen is they would call us up and try to push out existing orders that they have. That’s not happening.

And the third thing that would happen is their customers—think of the biggest companies in the world that are building silicon products—they would ask for less, because they’re starting to pile up inventory. That’s not happening either.

Those are the signals that we have today. (May 24)

Josh Charlesworth, CFO of

Krispy Kreme Inc.,

a Charlotte, N.C.-based doughnut chain

What’s fortunate in the case of Krispy Kreme, is you start with a high gross margin. So for us, the most important thing is we’re leveraging the labor costs, the operating expenses of the doughnut shops by selling in more and more convenient places. And so you get this low-frequency product with a fundamental high gross-margin product combined with a strategy that leverages the existing assets and drives, therefore, a good margin flowthrough.

That’s something that is working and works, whatever the context. (May 13)

Eric Tiziani, CFO of Olaplex Holdings Inc., a Santa Barbara, Calif.-based maker of beauty products

We enjoy participating in a category that has proven to be resilient through prior economic cycles. In Q1 of 2022, as reported by [market research group] NPD, U.S. retail sales for the prestige hair-care category grew 32%, the highest growth of any beauty category in the U.S. And so, we believe this is a very resilient category through different economic cycles, [it] has significant tailwinds behind it, not just for 2022, but for many years to come.

We’re the leader, and therefore we believe that demand is going to be strong. (May 11)

James Mock, CFO of PerkinElmer Inc., a Waltham, Mass.-based scientific instruments maker

It is a challenging market environment. But, we have much more recurring revenue to make us more resilient during a potential economic crisis. There’s always more to do and we will continue to do more.

But I think a lot of the work has gone into preparing us to deal with pandemics or cyclical headwinds and we’ll be more resilient during that kind of market environment. (May 11)

Jim Peters, CFO of Whirlpool Corp., a Benton Harbor, Mich.-based home appliances company

As the housing market inventory tightened up and people have wound up staying in their existing homes, remodeling is becoming more appealing again. And so we look at all those factors in the U.S. and for us right now, that’s why we’re still pretty bullish on demand.

Our bigger issue is trying to get our supply chain stabilized so we can meet that demand. (April 27)