Market Update
Big Lots Comparable Sales and Inventories Declined 15%
Scott Peters
29 Aug, 2023
New York City
Big Lots Inc soared 31% to $8.22 after the deep discount retailer reported smaller-than-expected loss.
Big Lots said quarterly revenue declined 15.4% to $1.14 billion from $1.35 billion and net loss soared to $249.8 million from $84.2 million and diluted loss per share jumped to $8.56 from $2.91 a year ago.
Inventory at the end of the quarter declined 15% to $0.98 billion from $1.2 billion because of lower in-transit and on-hand units and lower average unit costs.
On August 25 the company completed the sale of its Apple Valley, California distribution center 22 stores, resulting in gross proceeds of $300 million and after tax and expenses net proceeds were $294 million.
The synthetic lease is an off-balance sheet financing that allows the company to report the lease as an operating lease for financial reporting and deemed as financing for federal tax purposes.
The company used proceeds to pay $100 million for its synthetic lease on the distribution center and the remainder to pay down debt.
The discount retailer forecasted comparable sales to decline in the "low-teen" range and sales to ease 140 basis points compared to the third quarter a year ago.
The company did not provide earnings per share outlook for the third quarter and estimated share count to average 29.3 million in the third quarter.
U.S. Movers: Docusign, Kroger, Plant Labs, RH
Scott Peters
08 Sep, 2023
New York City
Stocks turned lower on Friday and market indexes extended weekly losses amid growing uncertainty related to Fed's interest rate policy.
The S&P 500 index traded up 0.2% to 4,459.15 and the Nasdaq Composite fell 0.3% to 13,787.38.
Kroger Company declined 1.1% to $45 after the largest independent grocery retail chain reported mixed second quarter results.
Revenue in the second quarter declined to $33.8 billion from $34.6 billion and excluding fuel, sales increased 1% from a year ago to $29.5 billion.
Kroger defines identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, Kroger Specialty Pharmacy businesses, jewelry and ship-to-home solutions.
Kroger defines a supermarket as identical when it has been in operation without expansion or relocation for five full quarters.
The company swung to a net loss of $180 million from a profit of $731 million and diluted earnings per share swung to ($0.25) from $1.0 a year ago.
Separately, the company said it settled most claims related to opioid for $1.2 billion.
The company said the settlement and the payment terms will not affect Kroger’s ability to complete its proposed merger with Albertsons and the company still expects to reduce its net total debt to adjusted EBITDA ratio to 2.50 within 18 – 24 months after the close of the merger.
Planet Labs PBC declined 7.7% to $2.84 after the satellite imagery company reported weaker-than-expected quarterly results and forecasted revenue below market expectations.
Revenue in the second quarter ending in August increased 11% to $53.8 million and net loss shrank to $37.9 million from $39.4 million and diluted loss per share declined to 14 cents from 15 cents a year ago.
For the third quarter ending in October, the company estimated revenue to increase 11% between $54 million and $56 million.
The satellite imagery company estimated fiscal full-year revenue between $214 million and $223 million, an increase of 15% at the midpoint.
DocuSign Inc jumped 1% to $52.65 after the company reported better-than-expected revenue in its latest quarter.
Revenue in the second quarter ending in July increased 11% to $687.7 million from $622.2 million and the company swung to a profit of $7.4 million from a loss of $45 million and diluted earnings per share was 4 cents compared to (22 cents) a year ago.
Free cash flow increased to $183.6 million from $105.5 million in the same period last year.
RH dropped 9.1% to $335 after the home goods retailer forecasted weak third quarter outlook citing weakness in the luxury residence market on elevated mortgage rates.
Revenue in the second quarter ending in July decreased to $800 million from $991.6 million and net income declined to $76.4 million from $122 million and diluted earnings per share fell to $3.36 from $4.54 a year ago.
The company forecasted third quarter revenue between $740 and $760 million and adjusted operating margin in the range of 8% to 10%.
The retailer raised to the low end of revenue guidance for the year to a range of $3.04 billion to $3.1 billion and reiterated its outlook for adjusted operating margin in the range of 14.5% to 15.5%.
RH estimate the 53rd week will result in revenues of approximately $60 million.
Fed Uncertainties and Tech Stock Weakness Drag U.S Indexes Lower
Barry Adams
08 Sep, 2023
New York City
Stocks traded down and Treasury yields inched lower as investors remained divided on the Federal Reserve's policy direction.
Market indexes are lacking direction in September after facing volatile six weeks of trading following the worries of a rebound in inflation and a rise in energy prices.
For the week, crude oil prices rose 2% and after Russia and Saudi Arabia extended voluntary production cuts till the year's end to bolster the price near the target level of $90 a barrel.
On the international front, natural gas prices soared 10% in Europe after unions decided to strike at four LNG facilities in Australia, disrupting global supply of natural gas as early as next month.
Japan's second quarter economic growth was revised lower to 4.8% from the previous estimate of 6% on an annual basis, the Cabinet Office said in Tokyo today.
On a quarterly basis, GDP growth estimate was revised lower to 1.2% from the flash estimate of 1.5%.
The Offshore Chinese yuan traded at a record low against the U.S. dollar since the start of trading in 2010.
The Chinese yuan dropped as low as 7.51 but recovered to 7.356 as investors worry of rising capital outflow amid weak economic recovery and deepening property market woes.
U.S. Indexes & Yields
The S&P 500 index traded up 0.2% to 4,459.15 and the Nasdaq Composite fell 0.3% to 13,787.38.
The yield on 2-year Treasury notes increased to 5.03%, 10-year Treasury notes inched higher to 4.29% and 30-year Treasury bonds edged down to 4.36%.
Crude oil increased $0.31 to $87.19 a barrel and natural gas prices increased 3 cents to $2.61 a thermal unit.
The dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
The dollar index hovered near 105 mark and extended gains from the low of 99.85 reached on July 13.
U.S. Stock Movers
Kroger Company declined 1.1% to $45 after the largest independent grocery retail chain reported mixed second quarter results.
Separately, the company said it settled most claims related to opioid for $1.2 billion.
Planet Labs PBC declined 7.7% to $2.84 after the satellite imagery company reported weaker-than-expected quarterly results and forecasted revenue below market expectations.
Docusign Inc jumped 1% to $52.65 after the company reported better-than-expected revenue in its latest quarter.
RH dropped 9.1% to $335 after the home goods retailer forecasted weak third quarter outlook citing weakness in the luxury residence market on elevated mortgage rates.
Europe Movers: Berkeley Group, Capgemini, Casino Guichard, Computacenter, Saipem
Inga Muller
08 Sep, 2023
Frankfurt
European markets have been on the decline for the last five weeks on the worries of economic slowdown and higher interest rates that could dip the economy into a deeper recession.
For the week, the DAX declined 1.6%, the CAC 40 fell 2.0% and the FTSE index dropped 0.3%.
The DAX index decreased 0.4% to 15,659.63, the CAC-40 index declined 0.1% to 7,188.91 and the FTSE 100 index inched down 0.1% to 7,431.18.
Berkeley Group Holdings PLC declined 0.7% to 3,946.0 despite the company reaffirming its earnings outlook for the year.
Restaurant Group Plc gained 4.4% to 46.16 after chairman Ken Hanna announced his plan not to seek reelection at the next annual general meeting in 2024.
Computacenter Plc soared 15.4% to 2,488.0 after the computer services provider reported "extraordinary" growth in its first-half revenue.
Capgemini SE increased 0.6% to €169.15 after the company agreed to acquire the Finance Crime Compliance division of a software as a service firm Exiger.
Casino Guichard Perrachon SA rose 2.1% to €2.13 after the heavily leveraged French supermarket company is scheduled to be removed from the SBF-120 index that tracks major French companies.
Saipem SpA increased 0.7% to €1.48 after the Italian energy services group won two new offshore energy field services contracts in Italy and Ivory Coast worth €850 million.
8th Day of Decline In European Markets On Economic Growth and Rate Path Worries
Bridgette Randall
08 Sep, 2023
Frankfurt
European markets extended losses for the eighth session in a row amid growing worries of global economic slowdown and rate hikes in the Euro Area and in the U.S.
Market indexes in Paris, London and Frankfurt declined and are set to close down between 1% and 2% for the week.
In economic news, German inflation edged slightly lower to 6.1% in August from 6.2% in July, the Federal Statistics Office or Destatis reported Friday.
The inflation remained elevated because of the sustained increase in food and energy prices.
The inflation measure was first estimated at 6.1% on August 30.
French industrial output rebounded 0.8% on a monthly basis in July after declining 0.9% in June, the statistical agency INSEE reported Friday.
On an annual basis, industrial production rose 2.7%.
However, Spain's industrial production declined 1.8% from a year ago, following the upwardly revised 3.2% fall in the previous month, the statistical agency INE reported Friday.
Spain's industrial production declined for the fourth month in a row after output declined in durable consumer goods, intermediate goods and energy production.
Europe Indexes & Yields
European markets have been on the decline for the last five weeks on the worries of economic slowdown and higher interest rates that could dip the economy into a deeper recession.
For the week, the DAX declined 1.6%, the CAC 40 fell 2.0% and the FTSE index dropped 0.3%.
The DAX index decreased 0.4% to 15,659.63, the CAC-40 index declined 0.1% to 7,188.91 and the FTSE 100 index inched down 0.1% to 7,431.18.
The yield on 10-year German bonds increased to 2.61%, French bonds traded lower to 3.14%, the UK gilts edged up to 4.45% and Italian bonds rose to 4.35%.
The euro edged lower to $1.069, the British pound to $1.247 and the U.S. dollar fetched 89.19 Swiss cents.
Brent crude increased $0.66 to $90.58 a barrel and the Dutch TTF natural gas increased €3.95 to €38.70 per MWh.
Europe Stock Movers
Berkeley Group Holdings PLC declined 0.7% to 3,946.0 despite the company reaffirming its earnings outlook for the year.
Restaurant Group Plc gained 4.4% to 46.16 after chairman Ken Hanna announced his plan not to seek reelection at the next annual general meeting in 2024.
Computacenter Plc soared 15.4% to 2,488.0 after the computer services provider reported "extraordinary" growth in its first-half revenue.
Capgemini SE increased 0.6% to €169.15 after the company agreed to acquire the Finance Crime Compliance division of a software as a service firm Exiger.
Casino Guichard Perrachon SA rose 2.1% to €2.13 after the heavily leveraged French supermarket company is scheduled to be removed from the SBF-120 index that tracks major French companies.
Saipem SpA increased 0.7% to €1.48 after the Italian energy services group won two new offshore energy field services contracts in Italy and Ivory Coast worth €850 million.
Global Markets Extended Losses and Investors Adjust to Higher Rates for Longer Scenario
Barry Adams
07 Sep, 2023
New York City
Fears of higher interest rates and the resurgence of inflation kept investors on edge and tech stocks led decliners.
Resurgent inflation worries dominated market sentiment after the latest data pointed to a resilient U.S. economy and the labor market.
Tech heavy Nasdaq Composite index dropped more than 1% on the worries that the Fed may raise rates at the next policy meeting and higher rates are likely to stay longer.
Initial jobless claims declined 13,000 from the previous week to 216,000 at the end of September 2, the U.S. Department of Labor reported in its weekly report on Thursday.
The jobless claims dropped near a 7-month low, and continuing claims fell 40,000 to 1.679 million in the previous week, and fell to a six-month low.
What is good news for the job market is bad news for investors, because investors interpreted the strength in the job market could spur the Federal Reserve to consider raising rates at its next meeting.
A separate report from the U.S. Bureau of Labor Statistics revised higher its estimate of the unit labor costs.
Unit labor costs in the nonfarm business sector rose 2.2% from a year ago in the second quarter, higher than 1.6% in the preliminary estimate.
The increase was still lower than 3.3% gain in the first quarter.
The unit costs increase reflects a 5.7% rise in hourly compensation compared to a 5.5% rise and a 3.5% increase in productivity compared to a 3.7% increase in the preliminary estimate respectively.
Unit labor costs in the manufacturing sector increased 4.9% compared to 3.6% and for business rose 1.9% compared to 1.3% in the previous estimate respectively.
The dollar index, which tracks the price of the U.S. dollar against major currencies, increased for the fifth day in a row and extended weekly gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
The dollar index jumped above 105 mark and extended gains from the low of 99.85 reached on July 13.
U.S. Indexes & Yields
The S&P 500 index traded down 0.3% to 4,451.14 and the Nasdaq Composite fell 0.9% to 13,748.83.
The yield on 2-year Treasury notes increased to 5.03%, 10-year Treasury notes inched higher to 4.29% and 30-year Treasury bonds edged down to 4.36%.
Crude oil increased $0.45 to $86.27 a barrel and natural gas prices decreased 5 cents to $2.53 a thermal unit.
The dollar index, which tracks the price of the U.S. dollar against major currencies, increased for the fifth day in a row and extended weekly gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
The dollar index jumped above 105 mark and extended gains from the low of 99.85 reached on July 13.
U.S. Stock Movers
Dutch Bros Inc declined 6.9% to $26.12 after the company announced its plan to raise $300 million through the public offering of Class A common stock.
WestRock Company increased 5.8% to $26.12 on a report that the company is nearing a merger with the UK-based paper and packaging company Smurfit Kappa.
The expected merger news was reported by The Wall Street Journal.
ChargePoint Holdings Inc plunged 27.5% to $5.08 after the company reported second quarter revenue jumped 39% to $150.5 million from $108.3 million and gross margin plunged to 1% from 17% a year ago.
Net loss in the quarter increased to $125.3 million from $92.7 million and diluted loss per share rose to 35 cents from 28 cents a year ago.
Dave & Buster's Inc dropped 3.9% to $36.0 after the restaurant and entertainment company reported quarterly results that missed some investors expectations.
Second quarter revenue increased 15.7% to $542.1 million and net income declined to $25.9 million from $29.1 million and diluted earnings per share was 60 cents compared to 59 cents a year ago.
European Markets Declined Seventh Day In a Row
European markets turned slightly higher after investors returned for bargain hunting.
Market indexes in London, Paris and Frankfurt attempted to rebound after six days of losses in a row amid worries of looming global economic slowdown and rate hikes.
China's exports and imports shrank and trade surplus declined in August after exports to the European Union, ASEAN region and the U.S. fell in double digits.
Euro Area First Quarter GDP Growth Revised Lower
The Euro Area GDP growth in the second quarter was revised lower to 0.1% from the previous quarter, Eurostat reported Thursday.
The economic growth was downwardly revised from the initial estimate of 0.3%.
On an annual basis, the GDP growth was revised lower to 0.5% from the initial estimate of 0.6% and slower than 1.1% in the first quarter ending in March.
From the previous quarter GDP stalled in Germany, expanded 0.5% in France, rose 0.4% in Spain but contracted 0.4% in Italy.
The currency bloc's economy is likely to dip into a recession with the weak outlook for the German economy.
German industrial production declined 0.8% from the previous month in July following a downwardly revised 1.4% fall in June, the Federal Statistics Office or DeStatis reported Thursday.
Industrial production declined after output for capital goods fell 2.9%, consumer goods eased 1% and industrial goods decreased 0.7%.
On an annual basis, production fell 2.2% after falling 1.5% in June.
Europe Indexes & Yields
European markets have been on the decline for the last five weeks on the worries of economic slowdown and higher interest rates that could dip the economy into a deeper recession.
The DAX index increased 0.05% to 15,718.66, the CAC-40 index increased 0.02% to 7,196.10 and the FTSE 100 index inched up 0.2% to 7,441.21.
The yield on 10-year German bonds increased to 2.63%, French bonds traded higher to 3.16%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.36%.
The euro edged lower to $1.076, the British pound to $1.246 and the U.S. dollar fetched 89.23 Swiss cents.
Brent crude decreased $0.83 to $89.76 a barrel and the Dutch TTF natural gas increased €1.98 to €32.05 per MWh.
Europe Stock Movers
Resource companies traded volatile with a downward bias after China's exports and imports declined in August.
Glencore, Antofagasta and Anglo America declined between 1% and 2%.
Nestle SA increased 0.5% to CHF 104.76 and the company agreed to acquire Brazilian chocolate brand Kopenhagen.
Direct Line Insurance Group Plc soared 16% to 174.15 pence after the home and automobile insurance company posted an operating loss in the first-half but forecasted improved earnings in 2024.
Deutsche Telekom AG declined 0.3% to €19.87 after its subsidiary T-Mobile U.S. announced a stock repurchase plan of up to $19 billion between the fourth quarter 2023 and the end of 2024.
Smurfit Kappa Group Plc decreased 1.6% to 3,168.0 pence after the UK-based packaging company is in potential merger discussion with the U.S. rival WestRock.
The news was first reported by the Wall Street Journal.
SAP SE jumped 0.7% to €129.88 after the German software company said it acquired software management company LeanIX without disclosing terms.
ThyssenKrupp AG decreased 1.8% to €7.08 after the company said chief financial officer Klaus Keysberg will step down from management duties next year.
Japanese Yen Traded Down, China Exports Declined 8.8%
Market indexes in Asia traded down after the U.S. Treasury yields advanced and on going property woes in China.
The yen traded above 147 against the U.S. dollar for the second day in a row after the short term U.S. Treasury yields advanced following the worries of a rebound in inflation.
A private survey showed that prices are still accelerating in the service sector in August and the recent rebound in crude oil prices fed the fears of a rebound in overall inflation.
The widening yield gap between the U.S. Treasury bonds and the Japanese government bonds dragged the market indexes lower, halting the market advance in previous eight sessions in a row.
Market indexes in China declined on the ongoing worries of the property sector woes and contagion fears to banks and steel and cement producers.
China Exports Fall 4th Consecutive Month In August
China's exports declined for the fourth month in a row by 8.8% in August and imports declined 7.3%. General Administration of Customs reported Thursday.
Trade surplus declined to$68.4 billion from $80.6 billion in July after exports declined 8.8% to $284.9 billion and imports decreased 7.3% to $216.5 billion.
Exports fell at a slower pace in August after a 14.5% decline in July and imports declined 7.3% following the decrease of 12.4% in the previous month.
Exports to three largest trading partners declined in the month.
Shipments to ASEAN or Association of Southeast Nations, China's largest trading partner, declined 13.3, to European Union dropped 19.6% and to the United States decreased 9.5%.
Export growth to Russia increased 16% in August after rising 52% in July and 91% in June.
Rare earth metals exports surged 30% to 4,775 metric tons on the rising global demand and weakening yuan against the U.S. dollar.
Despite the month-to-month international trade volatility, exports for the first eight months to August declined 5.6% to $2.2 trillion.
Asia Market Indexes
In Thursday's trading, the Nikkei index decreased 0.8% to 32,991.08, the Shanghai SSE Composite index dropped 1.1% to 3,122.07, the Hang Seng index declined 1.3% to 18,207.17 and the KOSPI index decreased 2,544.40.
India stocks struggled in Mumbai after foreign institutional investors were net sellers of stocks in August. The yield on Indian government bonds edged higher and silver and gold traded volatile with a downward bias.
Market indexes in Mumbai lacked direction and investors reviewed rising global bond yields and resurgent dollar.
The Sensex and the Nifty indexes edged slightly higher in cautious trading but new 52-week highs remained above 200 for the third day in a row.
The Sensex index increased 4.69 points to 65,885.21 and the Nifty index rose 4.61 points to 19,615.20.
Despite the weak international market sentiment, domestic retail investors continue to pour money into large and mid cap stocks.
In August, the Nikkei index fell 0.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.
Movers: ChargePoint, Dave & Buster's, Dutch Bros, WestRock
Scott Peters
07 Sep, 2023
New York City
Stocks turned lower after jobless claims dropped to multi-month lows, indicating persistent strong labor market and also supported the case for higher rates for longer.
The S&P 500 index traded down 0.6% to 4,438.03 and the Nasdaq Composite fell 1.3% to 13,697.33.
Dutch Bros Inc declined 6.9% to $26.12 after the company announced its plan to raise $300 million through the public offering of Class A common stock.
WestRock Company increased 5.8% to $26.12 on a report that the company is nearing a merger with the UK-based paper and packaging company Smurfit Kappa.
The expected merger news was reported by The Wall Street Journal.
ChargePoint Holdings Inc plunged 27.5% to $5.08 after the company reported second quarter revenue jumped 39% to $150.5 million from $108.3 million and gross margin plunged to 1% from 17% a year ago.
Net loss in the quarter increased to $125.3 million from $92.7 million and diluted loss per share rose to 35 cents from 28 cents a year ago.
Dave & Buster's Inc dropped 3.9% to $36.0 after the restaurant and entertainment company reported quarterly results that missed some investors expectations.
Second quarter revenue increased 15.7% to $542.1 million and net income declined to $25.9 million from $29.1 million and diluted earnings per share was 60 cents compared to 59 cents a year ago.
Comparable same store sales from a year ago declined 6.3% but rose 5.8% from the same period in 2019.
The Company purchased 2.1 million shares at a total cost of $74.5 million in the second quarter.
Total share repurchases to date in fiscal 2023 are 5.7 million shares totaling $200 million and representing 11.8% of the outstanding shares as of the end of fiscal 2022.
The company Board also expanded share repurchase authorization by $100 million to a total of $200 million.