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Friday May 27, 2022

Finances

Finances
 

Walgreens Reports Earnings

Walgreens Boots Alliance, Inc. (WBA) released its latest earnings report on Thursday, January 6. The drug store chain's stock dropped nearly 3% following the release of its earnings.

The company revealed sales of $33.90 billion for the first quarter. This was an increase of 7.6% from sales of $31.43 billion during the same quarter last year.

"First quarter results exceeded our expectations, with a very encouraging performance across all our business segments," said Walgreen's CEO, Rosalind Brewer. "The strong start to the fiscal year reinforces our confidence in the future, and as a result, we are raising our guidance for the full year and increasing investments in our people. Looking ahead, we are well positioned for sustainable, long-term value creation."

Walgreens posted quarterly net earnings of $3.6 billion, or $4.13 per share. This is up from earnings of $308 million, or $0.36 per share during the same time last year.

The company's retail same-store sales rose 10.6% compared to the same time last year which accounted for the largest increase in more than 20 years. Pandemic-related items such as at-home COVID-19 tests and cold and flu medication boosted retail sales. The company administered 15.6 million COVID-19 vaccines during the first quarter, an increase from 13.5 million shots the previous quarter. Domestic pharmacy sales increased 6.8% in the quarter, with prescriptions filled increasing by 6.2%, with much of that growth coming from COVID-19 vaccines.

Walgreens Boots Alliance, Inc. (WBA) shares closed at $53.84, up 3% for the week.

WD-40 Releases Earnings Report


WD-40 Company (WDFC) announced its latest quarterly earnings on Thursday, January 6. The company reported increased sales for the quarter.

The company's net sales for the first quarter totaled $134.7 million. This was up 8% from sales of $124.6 million during the same quarter last year.

"This is a different game that we're playing and we are using a different playbook," said WD-40 Company CEO, Garry Ridge. "We expect the operating environment to remain volatile and so we are proactively increasing the capacity and resiliency of our supply chain in many of our markets. In addition, in order to navigate the challenging inflationary environment, we are taking the necessary actions to restore our gross margins to historic levels. We're confident that our plans to rebuild margin, when coupled with the advancement of our Must-Win Battles, will enable us to deliver on both our long-term margin and revenue goals."

WD-40 reported net income of $18.6 million or $1.34 per adjusted share for the quarter. This was a 21% decrease from last year's earnings of $23.6 million or $1.72 per adjusted share.

The company's Americas segment increased by 4% in net sales for the quarter. This increase was attributed to higher sales of maintenance products. The EMEA segment, which consists of Europe, the Middle East, Africa and India, increased sales 5% year-over-year. Sales in the Asia-Pacific segment grew 34% from the same quarter last year due to easing of COVID-19 lockdown measures in the region.

WD-40 Company (WDFC) shares ended the week at $240.99, down 1.3% for the week.

Bed Bath and Beyond's Earnings


Bed Bath & Beyond Inc. (BBBY) announced quarterly earnings on Thursday, January 6. The home goods retailer's shares rose 7% after the release of the report.

Revenue for the third quarter reached $1.88 billion. This is down from $2.62 billion reported during the same quarter last year and is less than the $1.95 billion in revenue that analysts expected.

"Overall sales were pressured despite customer demand due to the lack of availability with replenishment inventory and supply chain stresses that had an estimated $100 million, or mid-single digit, impact on the quarter and an even higher impact in December," said Bed Bath and Beyond CEO, Mark Tritton. "As we prepare for 2022, we look forward to operating in a normalized environment with a base of business upon which to grow."

Bed Bath & Beyond reported net losses of $276 million or $2.78 per adjusted share. This is up from last year's third quarter earnings of $75 million or $0.61 per adjusted share.

Bed Bath & Beyond noted that its third quarter results were significantly affected by continued supply chain issues. The lack of inventory caused an estimated $100 million impact on the quarter's results. As a result, same-store sales decreased 10%. In response, Bed Bath & Beyond CEO, Mark Tritton announced a plan to revamp stores, add private label products and shut down underperforming locations.

Bed Bath & Beyond Inc. (BBBY) shares ended the week at $13.80, down 5.2% for the week.

The Dow started the week of 1/3 at 36,322 and closed at 36,232 on 1/7. The S&P 500 started the week at 4,778 and closed at 4,677. The NASDAQ started the week at 15,733 and closed at 14,936.
 

Treasury Yields Rise

U.S. Treasury yields rose throughout the week after the Federal Reserve conducted its December policy meeting and rising inflation levels. Yields continued to rise on Friday as unemployment levels continued to fall.

On Wednesday, the minutes from the Federal Reserve's December policy meeting were released. The minutes revealed that the central bank had commenced with its plans to begin reducing the number of bonds that it currently holds.

"One aspect of the selloff which speaks to the sustainability of the progress toward higher yields is that the move has been in real rates," said BMO's head of U.S. rates, Ian Lyngen. "This is consistent with the FOMC Minutes reinforcing the Committee's hawkishness and reflects investors' renewed faith in the Fed's ability and willingness to combat the amount of inflation presently in the system."

The benchmark 10-year Treasury note yield opened the week of 1/3 at 1.514% and traded as high as 1.751% on Thursday. The 30-year Treasury bond yield opened the week at 1.906% and traded as high as 2.139% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 207,000. This was higher than analysts' estimates of 195,000. The Bureau of Labor Statistics reported the overall unemployment rate dropped to 3.9%, lower than analysts' estimates of 4.1%.

"This report says it's a tight labor market. Employers can't find workers. The unemployment rate went down. Overall headline payroll growth is mediocre but it feels like more of an ongoing labor supply issue." said head of global strategy at NatWest Markets, John Briggs.

The 10-year Treasury note yield closed at 1.77% on 1/7, while the 30-year Treasury bond yield was 2.12%.
 

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 6. Mortgage rates continued to increase this week and exceeded 2021 levels as rising inflation continues to impact markets.

This week, the 30-year fixed rate mortgage averaged 3.22%, up from last week's average of 3.11%. Last year at this time, the 30-year fixed rate mortgage averaged 2.65%.

The 15-year fixed rate mortgage averaged 2.43% this week, up from 2.33% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.16%.

"Mortgage rates increased during the first week of 2022 to the highest level since May 2020 and are more than half a percent higher than January 2021," said Freddie Mac's Chief Economist, Sam Khater. "With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise. The impact of higher rates on purchase demand remains modest so far given the current first-time homebuyer growth."

Based on published national averages, the savings rate was 0.06% as of 12/20. The one-year CD averaged 0.13%.

Published January 7, 2022
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