Market Update
PVH Corp, Parent of Calvin Klein, Lowered Annual Outlook
Scott Peters
02 Jun, 2022
New York City
PVH Corp, the parent of Calvin Klein and Tommy Hilfiger, said sales in the first quarter ending in April 2022 rose 2% to $2.123 billion and net income increased 33% to $133.1 million from a year ago.
Diluted earnings per share were ahead of expectations and rose to $1.94 from $1.38 a year ago.
Segment Sales
Tommy Hilfiger revenue increased 2% and advanced 7% on a constant currency basis, including a 2% decrease or 5% increase on a constant currency basis in International revenue and a 15% increase in North America revenue.
Calvin Klein revenue increased 13% and jumped 17% on a constant currency basis, including a 7% increase or 13% increase on a constant currency basis in International revenue and a 26% increase in North America.
Heritage Brands revenue dropped 31% from a year ago and includes a 42% decrease resulting from the Heritage Brands transaction and the exit from the Heritage Brands retail business.
In-transit inventories rose 10% from a year ago largely because of supply chain disruptions but total inventories fell 4% accounting for Heritage transaction and foreign exchange adjustments.
Stock Repurchase Plan
The Company repurchased 1.2 million shares of its common stock for $100 million during the first quarter of 2022 and has used $1.9 billion of its $3.0 billion stock repurchase program.
The company plans to increase its stock repurchases in 2022 to $400 million from $225 million, following the recently approved $1.0 billion increase to the stock repurchase authorization
Guidance and Outlook
The branded apparel maker lowered its full-year 2022 revenue growth estimate to between 1% and 2% from the earlier estimated range between 2% and 3%.
The company lowered its annual earnings per share outlook to $9.20 a share including the revised foreign exchange adjustment of 85 cents compared to previous estimate of 70 cents.
The apparel maker reported $13.25 a share in 2021.
Effective tax rate is expected to be higher than in 2021 and range between 28.5% and 29.5%.
Revenues in the second quarter is expected to range between 3% and 4% and earnings per share to range between $2.20 and $2.51.
Company and Stock
PVH Corp gained 1.8% to $72.63 after the parent of Calvin Klein and Tommy Hilfiger reported quarterly results.
PVH has lost 32.7% in the year so far.
Movers: Chewy, Ciena, GameStop, Microsoft, MongoDB, PVH, Victoria's Secret
Barry Adams
02 Jun, 2022
New York City
Chewy Inc jumped 18.1% to $27.81 after the online pet care and food products retailer reported rising sales as consumers ordered healthcare and consumable items and avoided non-discretionary purchases.
Chewy said sales in the first quarter of 2022 rose 13.7% to $2.43 billion and net income fell 52.3% to $18.5 million.
During the quarter, auto shipments rose to 72.2% of total sales, a new record high for the online retailer.
Ciena Corp declined 1.3% to $50.68 after the networking gear maker said revenues in fiscal 2022 second quarter ending in April jumped 13.8% to $949.2 million and net income plunged 62.1% to $38.9 million or 25 cents from 66 cents a year ago.
The company said demand for its products are strong but supply chain constraints are increasing uncertainties.
GameStop Corp soared 4% to $124.32 after the retailer reported first quarter 2022 revenues increased 7.8% to $1.38 billion and net loss increased to $157.9 million from $66.8 million a year ago.
The company reiterated its commitment to launch NFT wallet in the second quarter and expand its digital assets beyond physical retail stores.
Land's End , Inc soared 18.6% to $13.22 after the apparel retailer said sales in the first quarter of 2022 ending in April declined 5.5% to $303.7 million and swung to a net loss of $2.4 million or 7 cents a share compared to net income of $2.6 million or 8 cents a share.
Inventories jumped 10% to $436.9 million from a year ago.
The retailer guided second quarter sales between $335 million and $350 million and net loss between $3 million and $6 million or 9 cents and 18 cents a share.
For fiscal 2022 the retailer estimated revenues between $1.62 billion and $1.68 billion and earnings per share between $20.0 million and $29.0 million or 60 and 88 cents a share.
Meta Platforms Inc rose 2.02% to $194.21 and Chief Operating Officer Sheryl Sandberg resigned and was replaced by the current chief growth officer Javier Olivan.
Sandberg resigned after holding the position for a decade and guiding the company through a rapid growth phase.
Sandberg will continue as a board member.
Microsoft Corp fell 3% to $264.57 after the company said revenues and earnings are likely to lower than the previous guidance on the foreign exchange adjustments.
The software company lowered its annual sales outlook to a new range between $51.94 billion and $52.74 billion from the previous range between $52.40 and $53.20.
Diluted earnings per share in the fiscal fourth quarter ending in June is now expected to range between $2.24 and $2.34 from the previous estimate between $2.28 and $2.35.
MongoDB Inc soared 16.9% to $282.31 after the company reported sales in the first quarter 2023 increased 57% to $285.4 million and net loss increased to $77.3 million or $1.14 a share compared to a loss of $64.0 million or $1.04 a share.
The database developer guided second quarter revenues between $279.0 million and $282.0 million and fiscal 2023 revenues between $1,1172.0 million and 1,192.0 million.
Stock surged after the quarterly results were ahead of expectations of sales and net loss.
PVH Corp gained 1.8% to $72.63 after the parent of Calvin Klein and Tommy Hilfiger said sales in the first quarter ending in April 2022 rose 2% to $2.123 billion and net income increased 33% to $133.1 million from a year ago.
Diluted earnings per share were ahead of expectations and rose to $1.94 from $1.38 a year ago.
The branded apparel maker lowered its full-year 2022 revenue growth estimate to between 1% and 2% from the earlier estimated range between 2% and 3%.
The company lowered its annual earnings per share outlook to $9.20 a share including the revised foreign exchange adjustment of 85 cents compared to previous estimate of 70 cents.
Victoria's Secret rose 1.6% to $45.60 after the intimate apparel retailer reported fist quarter 2022 sales declined 4.5% to $1.48 billion and net income declined to $80.8 million from $174.03 million a year ago.
The sales decline was driven by a 19.3% decline in direct or online sales to $420.6 million from $520.9 million a year ago.
U.S. Stocks Trend Lower On Microsoft Warning and OPEC Output Decision
Barry Adams
02 Jun, 2022
New York City
U.S. stocks opened lower after the recession and rate worries drove the market sentiment and limited action from the OPEC+.
The S&P 500 index declined 0.25% to 4,091.89 and the Nasdaq Composite index fell 1.1% to 11,952.07.
The yield on 10-year Treasury notes increased to 2.94%.
Microsoft fell 3% to $264.57 after the company said revenues and earnings are likely to lower than the previous guidance on the foreign exchange adjustments.
Diluted earnings per share in the fiscal fourth quarter ending in June is now expected to range between $2.24 and $2.34 from the previous estimate between $2.28 and $2.35.
Investors also parsed the latest earnings from Chewy, GameStop, Victoria's Secret, and HP Enterprise.
GameStop Corp soared 4% to $124.32 after the retailer reported first quarter 2022 revenues increased 7.8% to $1.38 billion and net loss increased to $157.9 million from $66.8 million a year ago.
The company reiterated its commitment to launch NFT wallet in the second quarter and expand its digital assets beyond physical retail stores.
Victoria's Secret rose 1.6% to $45.60 after the intimate apparel retailer reported fist quarter 2022 sales declined 4.5% to $1.48 billion and net income declined to $80.8 million from $174.03 million a year ago.
The sales decline was driven by a 19.3% decline in direct or online sales to $420.6 million from $520.9 million a year ago.
Oil was in focus and fell 2% ahead of the OPEC+ meeting today on the speculation that the alliance of oil producing nations and Russia will increase supply to Europe replacing the banned oil imports from Russia.
OPEC members agreed to bring forward the additional supply of 648,000 barrels of oil per day from the previous plan of 432,000 bpd over three months to September.
OPEC members have little spare capacity to boost the output.
European markets advanced after crude oil futures declined on the hopes that the Middle East nations will lift oil productions and increase supply to Europe after the region's leaders placed a ban on Russian oil.
The DAX index increased 0.6% to 14,427.07 and the CAC-40 index jumped 1.1% to 6,485.85
Markets in the U.K. are closed Thursday and Friday to mark the platinum jubilee of Queen Elizabeth II.
During the 70 years as the head of Commonwealth nations, Elizabeth II rarely promoted the interests of nations other than the U.K., supported the apartheid regime in South Africa, and has consistently rejected the returning of the stolen 105.6 carat Kohinoor diamond placed in the crown of Mother Queen.
Markets in Asia closed mixed with a downward bias after oil traded lower and investors remained focused on the rising inflation and slowing economies.
The Nikkei 225 index in Tokyo declined 27,413.88, the Hang Seng Index in Hong Kong fell 1.0% to 21,082.13, and the Sensex index in Mumbai jumped 0.8% to 55,818.11.
The index in Hong Kong fell after new coronavirus infections were detected in the city.
Chewy First Quarter Sales Rise 14%, Net Income Falls 52%
Anand Sheth
01 Jun, 2022
New York City
Chewy, the online pet care store, reported rising sales as consumers ordered healthcare and consumable items and avoided non-discretionary purchases.
Chewy, Inc said sales in the first quarter 2022 rose 13.7% to $2.43 billion and net income fell 52.3% to $18.5 million.
Net income included stock-based compensation and related tax expense of $27.2 million compared to $24.8 million a year ago.
Diluted earnings per share declined to 4 cents from 9 cents a year ago.
Despite the supply chain disruptions and higher freight costs gross margin fell only slightly lower by 10 basis points to 27.5% but 210 basis points higher sequentially compared to the fourth quarter 2021.
During the quarter, auto shipments rose to 72.2% of total sales, a new record high for the online retailer.
New and existing customers bought more items from the retailer and net sales per active customer rose 15% to $446, an increase of $86 or 24% in two years since the onset of the pandemic.
Active customer base also increased 4.2% to 20.6 million as many customers looked for alternative to other large online stores that ran out of products.
Net cash provided by operating activities was $82.4 million compared to $98.4 million in the first quarter of 2021.
Free cash flow declined to s $6.4 million compared to $59.5 million a year ago.
Inventories at the end of the quarter rose nearly 8% to $598.2 million from a year ago as the company focused on ordering more items in bulk.
Net income margin declined 100 basis points to 0.8% from a year ago.
Guidance and Outlook
The company reiterated its second quarter sales to increase between 13% to 14% to $2.43 billion and $2.46 billion.
Fiscal 2022 sales are estimated to increase between $10.2 billion and $10.4 billion, an increase between 15% and 17%.
The company also estimated adjusted EBIDA margin between breakeven and 1% increase in the fiscal 2022.
Company and Stock
Chewy, Inc is headquartered in Dania Beach, Florida and the company is active in pet care industry that generated about $117 billion in 2021.
Chewy closed down 5.3% to $23.49 in regular trading hours and jumped 18.8% to $27.90 in the after-hours trading.
Chewy stock has fallen 59.1% in the year so far.
Sentiment Sours On Economic Worries, Rising Mortgage Rates, and Elevated Energy Prices
Barry Adams
01 Jun, 2022
New York City
Market indexes in New York retained a downward bias on the worries that the U.S. economy may face stronger headwinds ahead.
The S&P 500 index declined 0.7% to 4,101.79 and the Nasdaq Composite fell 0.7% to 11,994.45.
The yield on 10-year Treasury notes increased to 2.935%.
The futures of crude oil jumped 69 cents to $115.37 a barrel and natural gas jumped 7% to $8.53 a mBTU unit.
In volatile trading, market indexes opened higher and quickly dropped below the flatline after the the Bureau of Labor Statistics released the JOLTS or Job Openings and Labor Turnover Survey.
The indexes continued to decline for the next three hours and touched the intra-day low before 1:00 p.m. ET but managed to rebound and erased most of the losses before 3 p.m. ET.
In the final hour of trading, stocks lacked direction and closed down.
The job openings declined 445,000 from an upwardly revised record 11.855 million in March.
The gap between the number of people searching for jobs and available jobs shrank to 5.46 million in April from 5.6 million in March.
Job openings as a share of the labor force declined to 7%.
Recent comments from JPMorgan Chairman Jamie Dimon also weighed on the market.
The economy is "headed for a hurricane" and "you better brace yourself" and no one knows if the hurricane is
April Job Openings Ease from Record March 11.9 Million
Brian Turner
01 Jun, 2022
New York City
Job openings eased in April but still remained above 11 million indicating tight labor market conditions.
The openings declined 445,000 in April from an upwardly revised record 11.855 million in March.
New hires in the month were little unchanged at 6.6 million and separations including quits and layoffs were also nearly unchanged at 6.0 million, the Bureau of Labor Statistics reported in the Job Openings and Labor Turnover Survey.
The JOLT survey, based on 20,700 companies of the nearly 9.4 million establishments, showed job openings declined but were still strong at 11.4 million.
The largest increases were in transportation, warehousing, and utilities with 97,000 job openings followed by nondurable goods manufacturing with 67,000; and durable goods manufacturing with 53,000.
The largest decreases in job openings were in health care and social assistance with 266,000, retail trade with 162,000, and accommodation and food services with 113,000.
Total job openings rate declined to 7.0% in April from 7.3% in March.
Large number of hires and separations occur in the U.S. economy indicating its dynamism.
Hires totaled 78.0 million and separations totaled 71.6 million, yielding a net employment gain of 6.4 million, in 12 months to April.
These totals include workers who may have been hired and separated more than once during the year.
Movers: Chewy, Delta Air, Levi Strauss, HP, Salesforce, Sportsman's Warehouse
Barry Adams
01 Jun, 2022
New York City
Chewy Inc declined 6.05% to $23.30 ahead of the online pet food retailer's first quarter earnings after the market-close today.
The analysts are expecting the company to report first quarter 2022 revenues of at least $2.41 billion and net loss of 10 cents a share, according to a survey conducted by Refinitive.
Sales in fiscal 2021 ending in January jumped 24% to $8.89 billion and net loss of $63.6 billion.
Delta Air Lines dropped 5.4% to $39.45 after the company said in a regulatory filing that it expects to reach revenues this quarter matching the 2019 levels on strong travel demands and higher fares surpassing the higher fuel costs.
The airline revised higher operating margin between 13% and 14% from the previous estimate between 12% and 14%.
The company also estimated $1.5 billion of free cash flow and adjusted net debt below $20 billion.
American Airlines dropped 3.5% and United Airlines declined 4.5% after the Memorial Day weekend saw as many as 7,000 flight cancellations and stranded thousands of passengers in bad weather.
Levi Strauss jumped 0.7% to $18.29 after the company unveiled its five-year plan to accelerate sales and triple its e-commerce sales in the period and set the target of 2027 revenues between $9 billion and $10 billion reflecting 6% to 8% of organic annual growth.
The Board of Directors also authorized repurchase of $700 million of its stock.
HP Inc rose 2.8% to $39.92 after the computer and peripheral maker said second quarter sales increased 3.9% to $16.5 billion and net income declined 19% to $1.0 billion.
During the quarter, free cash flow declined 74% to $400 million.
The company estimated for the fiscal third quarter 2022 diluted earnings per share between 91 cents and 96 cents and for the full-year between $3.79 and $3.93.
Salesforce Inc jumped 9.3% to $175.41 after the company reported April quarter revenues rose 24% to $7.41 billion and net income dropped 94% to $98 million.
The company lifted its fiscal 2023 adjusted earnings outlook between $4.74 and $4.76 a share from the previous estimate between $4.62 and $4.64.
Sportsman's Warehouse Holdings dropped 7.8% to $8.73 after the retailer said sales in the first quarter ending in April declined 3.5% to $309.5 million.
Same store sales fell 11.5% on lower demand and customers retrenched on rising inflation and food prices and ending of the stimulus payments.
Net income declined to $2 million of 5 cents a share compared to $10.5 million or 23 cents a year ago.
In the second quarter, the retailer anticipates same store sales to fall between 10% and 16% and total sales between $330 million and $350 million and adjusted earnings between 22 cents and 30 cents a share.
Stocks Drop After JOBS Report and Dimon Hurricane Comments
Barry Adams
01 Jun, 2022
New York City
U.S. stocks struggled after the latest employment survey showed a sharp decline in available jobs.
The S&P 500 index declined 0.6% to 4,105.29 and the Nasdaq Composite fell 0.2% to 12,055.70.
The yield on 10-year Treasury notes increased to 2.93%.
The futures of crude oil jumped 2% to $116.15 a barrel and natural gas jumped 5% to $8.53 a mBTU unit.
In volatile trading, market indexes opened higher and quickly dropped below the flatline after the the Bureau of Labor Statistics released the JOLTS or Job Openings and Labor Turnover Survey.
The job openings declined 445,000 from an upwardly revised 11.855 million in March.
The gap between the number of people searching for jobs and available jobs shrank to 5.46 million in April from 5.6 million in March.
Job openings as a share of the labor force declined to 7%.
Recent comments from JPMorgan Chairman Jamie Dimon also weighed on the market.
The economy is "headed for a hurricane" and "you better brace yourself" and no one knows if the hurricane is
U.S. Indexes Extend May Losses
Barry Adams
31 May, 2022
New York City
U.S. stocks closed down after lackluster trading and inflation and oil prices weighed on the market sentiment.
The S&P 500 index declined 0.6% to 4132.12 and the Nasdaq Composite index edged down 0.54% to 12,081.39.
In May, the S&P 500 index fell 0.5% and the Nasdaq Composite index dropped 3.6% after a month of wild trading.
Home prices continued to advance in March despite the rising mortgage rates.
The controversial S&P CoreLogic Case Shiller U.S. National Home Price NSA index showed 3-month average prices to March increased 20.6% after rising at 20% in February.
The price index in 20 metropolitan cities surged 21.2% from 20.3% in February and in 10-city composite increased 19.5% from 18.7% in the previous month.
Tampa, Phoenix, and Miami reported the largest annual gains among the 20 cities in March.
Tampa led the list with 34.8% annual price increase, followed by Phoenix with a 32.4% increase, and Miami with a 32.0% increase.
Inflation worries resurfaced after crude oil extended gains and reached a new 8-yeare high.
Energy prices advanced after China eased restrictions in Beijing and Shanghai and activities are expected to pick up across large cities.
Moreover, European Union leaders except Hungary, agreed to ban most oil products from Russia by the year's end.
Futures of crude oil jumped as much as 4% in early trading but closed up 34 cents to $115.44 a barrel and natural gas declined 51 cents or 5.1% to $8.22 a unit.
The yield on 10-year Treasury notes increased a fraction to 2.855%.
Euro zone consumer price index jumped to more than expected 8.1% and France and Austria also reported record high inflation not seen in the last several decades.
The latest data from the Eurostat, the statistics office in the currency union, showed consumer prices harmonized in May rose 8.1% after rising at 7.4% in April, seventh monthly record increase in a row.
May Inflation in France jumped to 5.8% from 5.4% in April and in Germany surged to 8.7% from 7.8% in April.
Harmonized inflation in Italy rose 7.3% in May from 6.3% in April.
The main driver of inflation in the region is the 39.2% surge in crude oil prices in May after rising 37.5% in April.
The DAX index declined 1.3% to 14,388.35, the CAC 40 index dropped 1.4% to 6,468.30, and the FTSE 100 index rose 0.1% to 7,607.66.
Chinese stocks trading in New York jumped after residents are allowed to visit malls, public places, and parks from June 1.
Workers are also scheduled to return to office after the easing of the Covid restrictions from next month.
Alibaba Group Holding Ltd jumped 3.4% to $96.62, JD.com jumped 52% to $56.51, Baidu Inc jumped 3.1% to $143.38, and Nio Inc jumped 5% to $17.41.
Healthcare stocks led the decliners. UnitedHealth declined 2% to $496.93, Walgreens Boots Alliance jumped 0.6% to $43.99, Cigna Group declined 0.7% to $270.19, and HCA Healthcare fell 2.01% to $211.06.
Cracker Barrel declined 3% to $101.99 and extended loss in the year so far to 22.5% ahead of the release of its earnings on June 6.
Movers: Alibaba, American Eagle, Cracker Barrel, Kirkland's, Nio, PVH
Barry Adams
31 May, 2022
New York City
Chinese stocks trading in New York jumped after residents are allowed to visit malls, public places, and parks from June 1.
Workers are also scheduled to return to office after the easing of the Covid restrictions from next month.
Alibaba Group Holding Ltd jumped 3.4% to $96.62, JD.com jumped 52% to $56.51, Baidu Inc jumped 3.1% to $143.38, and Nio Inc jumped 5% to $17.41.
Healthcare stocks led the decliners.
UnitedHealth declined 2% to $496.93, Walgreens Boots Alliance jumped 0.6% to $43.99, Cigna Group declined 0.7% to $270.19, and HCA Healthcare fell 2.01% to $211.06.
Cracker Barrel declined 3% to $101.99 and extended loss in the year so far to 22.5% ahead of the release of its earnings on June 6th.
American Eagle Outfitters declined 7.5% to $12.11 after Morgan Stanley downgraded the stock "underweight" and added the rating could sink further citing margin pressures and inventory challenges.
PVH Corp gained 0.1% to $70.87 ahead of its first quarter 2022 earnings release on June 2.
The Calvin Klein and Tommy Hilfiger apparel maker reported $1.92 a share in the first quarter 2021 beating the consensus estimate of 93 cents.
Kirkland's declined 14.7% to $5.79 after the retailer of home decor, furnishing and gifts reported first quarter 2022 net sales declined 18% to $103 million on 15.8% fall in comparable sales from a year ago.
In the quarter, the retailer swung to a loss of $7.9 million or 63 cents a share from profit of $1.7 million or 11 cents a share.
The retailer shifting consumer priorities on rising inflation and energy prices and supply chain disruptions and elevated freight rates also impacted quarterly results.
Kirkland's stock has declined 63% in the year-so-far.
Tampa, Phoenix, and Miami Lead Home Price Increase in March
Brian Turner
31 May, 2022
New York City
Home prices continued to advance in March despite the rising mortgage rates.
The controversial S&P CoreLogic Case Shiller U.S. National Home Price NSA index showed 3-month average prices to March increased 20.6% after rising at 20% in February.
The price index in 20 metropolitan cities surged 21.2% from 20.3% in February and in 10-city composite increased 19.5% from 18.7% in the previous month.
Tampa, Phoenix, and Miami reported the largest annual gains among the 20 cities in March.
Tampa led the list with 34.8% annual price increase, followed by Phoenix with a 32.4% increase, and Miami with a 32.0% increase.
Seventeen of the 20 cities reported higher price increases in the year ending March 2022 versus the year ending February 2022.
"Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer," says Craig J. Lazzara, Managing Director at S&P DJI.
On a monthly basis and before adjusted for seasonal factors, home prices rose 2.6% across the nation, jumped 2.8% and 3.1% across 10 and 20 city composites.
After leading the national price increase for nearly three years, Phoenix was replaced by Tampa for the first time.
Home price index in Tampa soared 248% in March followed by 32.4% in Phoenix and 32% in Miami.
Average mortgage rate across the country was reported at 3.29% in January and jumped to 4.67% in March according to the data reported by Mortgage News Daily.
Mortgage rates have continued to rise since then and peaked 5.57% in May.
New and existing home sales have been falling for more than three months and home supplies available for sales are increasing as more homeowners are listing properties before the hot market cools.
U.S. Stocks Turn Lower After Oil Jumps 3%
Barry Adams
31 May, 2022
New York City
U.S. stocks turned lower after crude oil prices extended gains and eurozone inflation touched multi-decade higher.
The S&P 500 index declined 1.1% to 4,114.08 and the Nasdaq Composite index fell 1.2% to 11,984.17.
Crude oil futures in New York gained 3.5% to $119.10 a barrel after the European Union imposed a partial ban on the import of Russian crude oil and energy products.
Euro zone consumer price index jumped to more than expected 8.1% and France and Austria also reported record high inflation not seen in the last several decades.
The latest data from the Eurostat, the statistics office in the currency union, showed consumer prices harmonized in May rose 8.1% after rising at 7.4% in April, seventh monthly record increase in a row.
May Inflation in France jumped to 5.8% from 5.4% in April and in Germany surged to 8.7% from 7.8% in April.
Harmonized inflation in Italy rose 7.3% in May from 6.3% in April.
The main driver of inflation in the region is the 39.2% surge in crude oil prices in May after rising 37.5% in April.
In today's trading crude oil prices increased 1.5% to $119.81 in London, U.K. trading after the European Union leaders proposed to partially ban Russian oil imports.
The popular indexes in New York reversed course after a week of rise that lifted the S&P 500 index 6.5% and the Nasdaq Composite index 6.8%.
The indexes were also under the pressure after the oil prices reached a new 8-year high and investors recalibrated economic slow down prospects.
Crude oil prices also gained after China eased restrictions on return to office work and social gathering in Beijing and Shanghai.
Investors are also looking ahead to earnings from more than 150 companies this week including results from Salesforce.com, Victoria's Secret, HP, Chewy, Lululemon Athletica, and Veeva Systems.
Perception of Cooling Inflation Powered 2% Stock Rally
Barry Adams
27 May, 2022
New York City
U.S. stocks extended advance after the latest inflation measure indicated a downward trend and the falling yield boosted sentiment in the stock market.
The S&P 500 index jumped 2.4% to 4,158.30 and the Nasdaq Composite index advanced 3.3% to 12,131.13.
After eight weeks of selling investors were ready to embrace any news that offered a glimmer of hope.
Household consumption increased for the fourth month in a row in April but disposable income after adjusting for inflation was nearly flat indicating consumers are dipping in savings and wages are not rising at the rate of inflation.
The data released by the Commerce Department also indicated that the Personal Consumption Expenditures or PCE price index, the Fed's preferred measure of inflation, slowed to 6.3% in April after rising at 6.6% in March.
On a monthly basis, the PCE rose 0.2% in April after rising at 0.9% in March.
However, the core PCE which excludes volatile food and energy prices decelerated to 4.9% in April after rising at 5.2% in March.
The PCE is different from the Consumer Price Index and takes into account a change in consumer behavior when prices rise and consumers substitute for cheaper alternatives.
A slight decline in the inflation measure and better than expected results from tech and retail companies was enough to bolster market sentiment.
Ulta Beauty jumped 11% to $419.75 and erased losses in the year after the cosmetic retailer reported better than expected earnings and lifted earnings and revenues outlook for the year.
However, Big Lots, Burlington Stores, Gap Inc, and Hibbett Inc struggled in the quarter as consumers retrenched.
Retailers are battling shifting demand trends where consumers are ready to substitute lower priced groceries in search of discounts but at the same time are ready to splurge for high end items or experiences.
Bloomingdale's owned by Macy's reported quarterly same store sales increased 28% but Burlington Northern and Big Lots sales plunged more than 10%.
Tech-heavy Nasdaq soared nearly 3% after the software developer Autodesk Inc, computer and systems maker Dell Technologies, chip maker Marvell Technology, and cyber security provider Crowdstrike Holdings reported better than expected quarterly results.
But it was the decline in yield in the bond market that supported a rally in tech and high-growth stocks where profits are in the distant future if any.
The yield on 10-year Treasury notes declined to 2.74% after rising as much as 3.25% last week.
The stocks rally was sustained and gathered steam in the late afternoon as investors raced to add exposure to battered tech stocks ahead of a 3-day weekend.
For the year, the Nasdaq Composite index is still down 24% and the S&P 500 lower 13%.
Futures of crude oil jumped 1% to $115.09 a barrel but natural gas declined 2% to $8.74 a unit.
Unleaded gasoline price at pumps across the nation is still near record high of $4.59 a gallon, a 40% increase from $3.04 a year ago according to the data released by AAA.
The automobile association expects 39.2 million people to travel more than 50 miles this weekend, an increase of 8.3% from a year ago but down 7.2% from 2019.
The gasoline prices are not likely to ease at least till July as futures of gasoline trade near record high prices.
Burlington Stores Battles Demand Shift, Inventory Challenges, Inflation
Scott Peters
27 May, 2022
New York City
Burlington Stores Inc earnings plunged after rising product and freight costs added to inventory woes as demand patterns shifted in the quarter.
The retailer said total sales in the quarter ending on April 30 declined 12% to $1.9 billion on a comparable store sales fall of 18%.
Net income in the quarter was $16 million or $0.24 per share compared to $171 million or $2.51 per share a year ago.
Gross margin in the quarter declined to 41% from 43.3% a year ago after freight costs rose 150 basis points and merchandise margin decreased 80 basis points.
Product sourcing costs which include the cost of processing goods through supply chain and buying costs increased to $157 million from $141 million a year ago.
Net income in the quarter plunged to $16 million, or $0.24 per share from $171 million or $2.51 per share a year ago.
Comparable quarter sales patterns changed as more people returned to work and demanded different goods than were available at stores.
The demand shift was evident in the monthly sales trend. Comparable sales on a 3-year basis declined 6% in February, fell 2% in March and increased 5% in April when computed on a geometric basis.
However, the consumer demand is still weak for the company's merchandise as discount shoppers struggle with higher fuel costs and tight budgets.
Guidance and Outlook
The retailer guided second quarter comparable store sales to decline between 13% and 15% and for the full-year fall between 6% and 9%.
The retailer is still planning to open new 120 stores and relocate or close 30 stores and add net 90 new stores in fiscal 2022.
Company and Stock
Burlington Stores Inc fell 0.7% to $168.55 after the retailer reported quarterly results.
Burlington Stores in the year-so-far has declined 42.1%.
Ulta Beauty Benefits from Return to Work, Events and Glam Trends
Scott Peters
27 May, 2022
New York City
Ulta Beauty benefitted as women return to work and increase participation in events and group activities as most Covid-restrictions end.
The cosmetic retailer and beauty salon operator said net sales in the first quarter 2022 ended April 30 increased 21.0% to $2.3 billion.
Comparable sales at stores open at least 14 months and e-commerce sales increased 18.0%, driven by a 10.0% increase in transactions and a 7.3% increase in average ticket.
Gross margin in the quarter edged up to 40.1% from 38.9% and operating margin rose to 18.7% from 15.8% a year ago.
Merchandise inventories rose 14% to $1.57 billion and the increase was primarily driven by additional 28 stores and launch of new brands.
Net income in the quarter increased to $331.4 million or $6.30 per share from $230.3 million or $4.10 a year ago.
During the first quarter of fiscal 2022 the company spent $132.8 million in repurchasing 331,834 of its stock.
The company said $1.87 billion of the $2.0 billion share repurchase program was still available at the end of the quarter.
Guidance and Outlook
The company revised its fiscal 2022 revenue outlook to range between $9.35 billion and $9.55 billion from the previous estimate of $9.05 billion and $9.15 billion.
Comparable sales growth rate was revised higher between 6% and 8% from the previous estimate of 3% and 4%.
For fiscal 2022 the company revised higher its estimate of diluted earnings per share to range between $19.10 to $20.10 from the previous estimate of $18.20 to $18.70.
The company reiterated its plan to open 50 net new stores and remodel 35 stores in the current year.
Company and Stock
Ulta Beauty operated 1,318 stores totaling 13.9 million square feet at the end of April 2022.
Ulta Beauty Inc soared 11.2% to $420.49 after the cosmetic retailer and beauty salon operated quarterly results.
Ulta Beauty stock in the year-so-far has gained 0.7%.