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Key Words: Visa CEO says retail sector remains healthy thanks to big spenders: ‘We’re just not seeing these negative impacts’

Visa Inc. maintained Tuesday that it’s seeing healthy spending trends, buoyed by pent-up demand for activities outside the home and resurgent activity among affluent cardholders.

Chief Executive Al Kelly told investors at a Tuesday J.P. Morgan conference that his company still hasn’t seen hits to broader spending activity due to geopolitical events, such as Russia’s invasion of Ukraine, or macroeconomic circumstances, meaning high food and energy inflation and Federal Reserve tightening post-COVID-19.

“We’re just not seeing these negative impacts in our numbers,” he said, according to a FactSet transcript.

“‘Right now the consumer seems quite healthy, despite inflation, supply chain issues, the war in Ukraine, rising interest rates, etc., where you would think that you would see be seeing some impact. We’re not seeing it.’”

— Visa Chief Executive Al Kelly

Kelly argued that there isn’t a historical precedent for the current environment, given “so much pent-up demand” for activities outside the home among people who grew tired of being cooped up for two-plus years amid the pandemic.

At the “lower ends of the spend strata,” Visa
V,
-2.43%

is still seeing consistent trends relative to before the pandemic, according to Kelly. At the same time, the company is experiencing a nice rally in spending among the more affluent.

“What really dropped off during the pandemic was the higher levels of spend strata and we’re really seeing in the last nine months or 10 months is the affluent customer coming very much back into the market,” Kelly said.

He gave the example of restaurant spending, noting that while tickets around $25 have been largely flat in the past few quarters, tickets of $100 to $300 or $300-plus are showing the most growth.

“That’s clear evidence of the affluent customer coming back, going to white tablecloth restaurants and buying a good bottle of wine with the meal, etc.,” he continued.

Kelly was also upbeat about travel trends, saying that consumers seem eager to leave home, especially as restrictions ease.

“We expect no impacts on travel except for Russia and Ukraine,” he said. “We’re not expecting any spill over into negative travel trends outside of those countries.”

Kelly’s upbeat comments on the state of consumer spending come after several retailers made investors jittery in recent days while discussing the impacts of inflation on their businesses.

Walmart Inc.
WMT,
+1.15%

shared last week that shoppers increasingly have been opting for private-label products due to inflation, while Ross Stores Inc.’s
ROST,
-1.16%

chief executive said that “escalating inflationary pressures had a larger impact on lower-income households.”

Shares of Visa are off 3% in Tuesday trading. The stock has lost 7% over the past three months as the Dow Jones Industrial Average
DJIA,
-0.46%

has fallen 5%.

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