Cramer points out current economic issues some companies are ignoring

CNBC’s Jim Cramer on Monday said a variety of companies, to their detriment, won’t admit they’re hurting due to certain ongoing economic trends.

“If companies would just own up to their changing circumstances, things would be so much easier for everybody. But who wants to admit that they made mistakes?” he asked. “If they’d just own up, I think they’d earn a lot of credibility for themselves, leading to higher stock prices down the line. Instead, their stocks languish, as investors try to assess what’s really going on, and they presume the worst, not the best.”

For example, Cramer said, some food and beverage companies are loath to acknowledge that the popularity of GLP-1 weight loss drugs could be hurting business. He said these treatments are powerful and seem to have changed consumer behavior, with patients eating less junk food and drinking less alcohol.

Cramer pointed to Jack Daniels maker Brown-Forman, which missed estimates during its most recent quarter and is down about 23% year to date. Cramer also mentioned peer spirit company Diageo, which saw sales decline in its most recent quarter and is down more than 14% year to date.

Cramer added that other consumer-oriented companies don’t recognize that they need to lower prices to attract customers in an inflated landscape. According to Cramer, few companies have lowered prices since they raised them during the Covid-19 pandemic. He noted that outfits that have rolled back prices, such as Costco and Walmart, are doing better than some retail peers.

Enterprise software companies are tight-lipped about problems in their businesses, he said, even though they are one of the most poorly performing sectors on the market. Cramer added that it’s not clear what exactly is ailing the companies, but suggested they haven’t figured out the return on investment in a new landscape where artificial intelligence could make many employees redundant.

“Maybe they think if they ignore the problems, they’ll go away. Let me ask you: ‘Has that ever worked for you?'” he said. “Denial is a powerful defense mechanism, but it is a terrible way to run a business.”

Brown-Forman and Diageo did not immediately respond to CNBC’s request for comment.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Costco.