Market Update
ECB's Plan to Lift Rates Lags Soaring Inflation
Brian Turner
09 Jun, 2022
New York City
The European Central Bank's monetary policy committee lowered its economic growth assessment, lifted inflation outlook and struck a cautionary note on economic conditions.
The European Central Bank said it plans to lift rates at its next meeting on July 1 and lower economic growth outlook.
After the meeting of the Governing Council, the central bank said it plans to lift rates by 25 basis points at its next meeting in July and expects additional hikes at the September meeting.
The central bank had previously guided that any rate increases will be announced only after the end of the net asset purchase program on July 1.
The euro declined after the ECB announcement but managed to rebound 0.5% by mid-day trading.
For now the main lending rate from the ECB was held at 0.00%, marginal lending rate at 0.25%, and bank deposits with the central bank earned -0.5%.
Annual consumer price inflation jumped to a 4-decade high of 8.1% in May, and rate hikes of 15 basis points are likely to have no or minimal impact on inflationary pressures.
The ECB revised higher its 2022 inflation estimate to 6.8% from the previous estimate 5.1% and lowered economic growth estimate to 2.8% from the 3.7% estimate in March.
The central bank also lowered 2023 and 2024 growth estimates and said inflation pressures are likely to subside in the next two years but are expected to remain above its 2% target rate in 2023.
Reliance, Apollo Submit Offer for Boots Controlled by Walgreens
Arjun Pandit
09 Jun, 2022
New York City
Reliance Industries in partnership with Apollo Management has submitted a binding bid to acquire the international operations of Walgreens Boots Alliance Inc.
The news about the binding offer was first reported by several leading news outlets in India and confirmed by ticker.com.
The U.K.-based Boots has about 2,200 retail locations and employs 51,000 across the island nation with about one third of stores needing improvement.
The company also owns optical stores and hearing centers.
In addition, the U.K. is facing economic headwinds from the rising food and energy prices and consumers are sticking to basic items.
The U.S.-based Walgreens is looking to sell its international operation for at least 8 billion pounds, significantly higher than 5 billion pound estimated by most analysts.
in 2012 Walgreens acquired a 45% stake in Switzerland-based Alliance Boots for $6.7 billion with the option to buy the remaining 55%, which was later completed at the end of 2014 for $15.3 billion.
About a year ago, Walgreens sold a majority stake in Alliance Healthcare to AmerisourceBergen for $6.5 billion.
Alliance Healthcare is one of the largest drug wholesalers in Europe and supplies to 115,000 pharmacies, individual doctor practices, and healthcare centers in 13 countries.
The U.K.-based Sky News earlier had reported that Bain Capital and CVC Capital Partners had considered and later abandoned a joint bid for Boots.
Five Below Lowers Earnings and Sales Outlook
Scott Peters
08 Jun, 2022
New York City
Five Below struck a cautious note after facing weak consumer spending and rising costs headwinds and lowered its annual sales and earnings outlook.
The company is still planning to keep its store size and chain expansion plans intact despite the weakening economic conditions.
Net sales in the first quarter 2022 ending on April 30 decreased 7% $639.6 million on 3.6% fall in comparable sales.
Operating income margin plunged to about 6.6% from 10% a year ago after selling, general and administrative expenses surged from $137.2 million to $167.7 million.
Net income in the quarter declined to $32.7 million from $49.6 million a year ago and diluted earnings per share fell to 59 cents from 88 cents.
Net income margin in the quarter declined to 5.1% from 8.2% a year ago.
At the time of the previous quarter results, the retailer had guided first quarter sales between $644 million and $658 million, net income between $30 million and $35 million, and earnings per share between 54 cents and 62 cents.
The company opened 35 new stores and ended the quarter with 1,225 stores in 40 states, an increase of 12.7%.
The company repurchased 247,132 shares in the first quarter of fiscal 2022 at a cost of approximately $40.0 million.
Inventories in the quarter increased to $504.2 million from $326.7 million a year ago largely on higher store counts and rising import and supply costs.
About 30% stores in the chain are now in a new format and larger 9,000 square foot size.
Guidance and Outlook
Second Quarter
Net sales are expected to be in the range of $675 million to $695 million based on opening approximately 30 new stores and assuming an approximate 2% to 5% decrease in comparable sales.
Net income in the quarter is expected to be in the range of $41 million to $48 million and diluted earnings per share between 74 cents to 86 cents on approximately 55.8 million diluted weighted average shares outstanding.
Full-year Fiscal 2022
The retailer guided net sales in the full-year between $3.04 billion and $3.12 billion on comparable sales to range between a decline of 2% to flat.
The retailer plans to open additional 160 net new stores.
Net income is expected to be between $271 million and $293 million and diluted earnings per share between $4.85 and $5.24 on approximately 55.8 million diluted weighted average shares outstanding.
In the full-year, gross capital expenditures are expected to be approximately $225 million.
At the time of the previous quarter's results, the company had guided full-year sales between $3.16 and $3.26 billion, net income between $292 million and $320 million, and diluted earnings per share between $5.19 and $5.70.
Company and Stock
Five Below, Inc is headquartered in Philadelphia, Pennsylvania and operates 1,225 stores across the nation.
The company's "triple-double" vision is to double its store count to 2,000 by the end of 2025 and double sales and earnings per share.
Five Below declined 7.4% to $125.30 in the aftermarket trading and in the year has fallen 34.83%.
Ollie's Bargain Confronts Weak Consumer Spending and Higher Costs
Scott Peters
08 Jun, 2022
New York City
Ollie's Bargain Outlet sales sales, earnings and margins dropped sharply on lower sales, higher inventories amid challenging economic environment.
Net sales in the first quarter ending in April declined 10.1% to $406.7 million on 17.3% fall in comparable sales.
Sales in the quarter year ago were lifted higher on new store openings and also the third round of stimulus lifted consumer spending.
Net income decreased 77.3% to $12.5 million and net income per diluted share decreased 76.2% to $0.20 from a year ago.
Gross margin decreased 560 basis points to 34.8% on higher import and labor costs partially offset by merchandise price increase.
Selling, general and administrative expense as a percentage of sales increased 550 basis points to 28.6% partially because of deleveraging as a result of lower sales compared to a year ago.
Lower gross margin and higher selling and general expenses dragged the operating margin down 150 basis points to 4.2%.
Net income plunged 77.3% to $12.5 million, or $0.20 per diluted share compared to $55.2 million or $0.84 per diluted share a year ago.
Net income margin dropped to 3.1% from 12.2% a year ago.
Cash and cash equivalents balance at the end of the quarter declined to $205.5 million from $472.2 million and the retailer had no borrowings outstanding under its $100 million revolving credit facility and $90.9 million of availability under the facility at the end of the first quarter.
The retailer ended the quarter with total borrowings, consisting solely of finance lease obligations, of $1.1 million.
After the close of the quarter, the company invested $10.0 million of cash to repurchase 238,485 shares of its common stock, and has $170.0 million remaining under its current share repurchase program.
Inventories at the end of the quarter increased 45.6% to $517.0 million compared with $355.2 million and about one third of the increase was linked to higher merchandise cost, timing of the purchase, and higher number of stores.
The higher sales activities in the quarter a year ago also depressed the inventories in the quarter a year ago.
Capital expenditure in the quarter was $9.7 million compared to $9.5 million a year ago.
The company opened 9 new stores and closed one store in connection with a relocation, ending the quarter with 439 stores in 29 states, an increase of 10.6% from a year ago.
Guidance and Outlook
For the second quarter of fiscal 2022, the company anticipates sales between $450.0 million and $460.0 million and comparable sales to range between flat to 3% increase.
In the second quarter, gross margin is expected to be stable at 34.5% and operating income of $27.0 million to $30.0 million.
In the fiscal 2022, net sales are expected to range between $1.870 billion to $1.900 billion and comparable sales to range between 2% decline and flat.
The gross margin is expected to hover between 36.5% and 36.7% and operating income between $155.0 million and $168.0 million and capital expenditure between $53.0 million and $58.0 million.
The company plans to open 46 to 48 new stores, including two relocations and expand its distribution center in York, Pennsylvania.
- Company and Stock
Ollie's Bargain Outlet Holdings is headquartered in Harrisburg, Pennsylvania and operates 439 stores in 29 states as of the end of April 2022 and employs about 8,500 people.
Ollie's Bargain declined 6.8% to $50.99 after the deep discount retailer released earnings but managed to close up 4.7% to $53.38.
In the year so far, Ollie's Bargain has increased 1.9%.
Mortgage Market Index Drops to 22-year Low
Brian Turner
08 Jun, 2022
New York City
Total mortgage application volume declined 6.5% to 288.4 for the week ending June 3 from the previous week and plunged 55% from a year ago to 288.4, according to the Mortgage Bankers Association's seasonally adjusted index.
The Refinance Index declined 6% from the previous week and dropped a whopping 75% from a year ago and the seasonally adjusted Purchase Index dropped 7% from the previous week and dropped 21% from a year ago.
The housing market slow down is in full swing after 30-year fixed rate mortgage rates in the week ending on June 3 rose to 5.4% from 5.33% in the previous week, according to the MBA release.
S&P 500 Drops 1% On Fears of Economic Slowdown
Barry Adams
08 Jun, 2022
New York City
Market indexes turned lower after a volatile day of trading as twin worries of economic slowdown and rising rates resurfaced.
The World Bank lowered its global growth estimate to 2.9% from the previous estimate of 4.1% in January.
Separately, the Organization for Economic Cooperation and Development also trimmed its outlook to 3% from the previous estimate of 4.5% in December.
Both institutions cited rising food and energy prices, the ongoing war in Ukraine, and extended lockdown in China impacting global growth rates.
The S&P 500 index edged down 1.08% to 4,115.72 and the Nasdaq Composite index decreased 0.7% to 12,086.27.
Nervous investors are looking for clues whether the economy is slowing down faster than anticipated and how consumers are reacting to higher fuel and food prices.
Total mortgage application volume declined 6.5% to 288.4 for the week ending June 3 from the previous week and plunged 55% from a year ago to 288.4, according to the Mortgage Bankers Association's seasonally adjusted index.
The index is at the lowest level in 22 years.
The Refinance Index declined 6% from the previous week and dropped a whopping 75% from a year ago and the seasonally adjusted Purchase Index dropped 7% from the previous week and dropped 21% from a year ago.
The housing market slow down is in full swing after 30-year fixed rate mortgage rates in the week ending on June 3 rose to 5.4% from 5.33% in the previous week, according to the MBA release.
Movers: Campbell, Credit Suisse, DocuSign, Novavax, Ollie's Bargain, Thor, Western Digital
Barry Adams
08 Jun, 2022
New York City
Campbell Soup increased 2.1% to $47.60 after the food products company said sales in the third quarter ending on May 1 increased 7% to $2.1 billion and net income rose 17.5% to $188.0 million.
For the full-year the company revised higher its sales outlook to increase between flat and 1% from the previous estimate of flat to decline of 2%.
Credit Suisse dropped 6.7% to 6.26 francs after the company said it is likely to report a loss in the second quarter on "challenging market conditions."
The financial group is also looking to cut staff amid dwindling profitability and slowing activities.
DocuSign Inc jumped 3.5% to $90.85 after the company signed a global partnership agreement helping remote working and prepare, sing, and manage agreements in the cloud.
Novavax, Inc jumped 4.4% to $49.52 after the company won a recommendation from the FDA advisory panel for its Covid-19 vaccine. The vaccine will now be reviewed by the entire FDA panel for its approval or rejection.
Ollie's Bargain Outlet declined 6.8% to $50.99 after the deep discount retailer said net sales in the first quarter ending in April declined 10.1% to $406.7 million on 17.3% fall in comparable sales.
Net income decreased 77.3% to $12.5 million and net income per diluted share decreased 76.2% to $0.20 from a year ago.
Thor Industries, Inc was flat after rising as much as 5% in early trading after the company reported net sales in the third quarter ending in April jumped 34.6% to $4.66 billion.
Earnings per share jumped 92% to $6.32 from $3.29 a year ago and consolidated backlog at the end of the quarter increased to $13.88 billion from $17.73 billion at the end of the previous quarter.
Western Digital declined 2.8% to $58.63 after the company signed a standstill agreement with activist shareholder Elliott Management till the 2022 annual shareholder meeting while the company is conducting strategic review of the business.
The company is evaluating different options including splitting its flash memory business from hard disk business, according to a regulatory filing with the SEC today.
Elliott Management, which controls 6% of Western Digital, has been pushing for splitting two businesses.
European Markets Drop 1%, German Production Rises 0.7%
Bridgette Randall
08 Jun, 2022
New York City
In European trading, market indexes declined after the World Bank and OECD lowered global growth outlook.
The World Bank lowered its global growth estimate to 2.9% from the previous estimate of 4.1% in January.
Separately, the Organization for Economic Cooperation and Development also trimmed its outlook to 3% from the previous estimate of 4.5% in December.
Both institutions cited rising food and energy prices, the ongoing war in Ukraine, and extended lockdown in China impacting global growth rates.
Industrial production in Germany rose less than expected 0.7% in April from March but fell 2.2% from a year ago.
March production decline was revised to 3.7% decline from the previous estimate of 3.9% fall, according to the data released by the statistics office Destatis.
The DAX index fell 0.7% to 14,455.67, CAC 40 index declined 0.9% to 6,442.12, and the FTSE 100 index dropped 0.6% to 7,555.26.
The eurozone economic growth in the first quarter was revised higher to 0.6% from the previous quarter and 5.4% increase on an annual basis.
Credit Suisse dropped 6.7% to 6.26 francs after the company said it is likely to report a loss in the second quarter on "challenging market conditions."
The financial group is also looking to cut staff amid dwindling profitability and slowing activities.
Pernod Ricard SA declined 2.8% to 176.75 euros and the spirit and wine maker said it is looking to digital channels and boost sales.
Schneider Electric declined 1.7% to 127.62 euros after the French electric automation and energy management company said it has agreed to sell Eutotherm business unit to the U.S. based Watlow Electric Manufacturing Company.
Financial terms of the deal were not disclosed.
Inditex jumped 4.8% to 23.29 euros after the textile and apparel maker said first quarter profit increased 80% to 760 million euros and sales jumped 36% to 6.7 billion euros.
U.S. Stocks Decline, Global Growth Estimates Lowered
Barry Adams
08 Jun, 2022
New York City
After two days of gains, stock market indexes took a breather awaiting inflation data on Friday.
The World Bank lowered its global growth estimate to 2.9% from the previous estimate of 4.1% in January.
Separately, the Organization for Economic Cooperation and Development also trimmed its outlook to 3% from the previous estimate of 4.5% in December.
Both institutions cited rising food and energy prices, the ongoing war in Ukraine, and extended lockdown in China impacting global growth rates.
Futures of the S&P 500 index edged down 0.5% to 4,137.75 and the Nasdaq Composite index decreased 0.6% to 12,634.0.
Nervous investors are looking for clues whether the economy is slowing down faster than anticipated and how consumers are reacting to higher fuel and food prices.
Investors also reacted to the latest earnings news.
Ollie's Bargain Outlet declined 6.8% to $50.99 after the deep discount retailer said net sales in the first quarter ending in April declined 10.1% to $406.7 million on 17.3% fall in comparable sales.
Net income decreased 77.3% to $12.5 million and net income per diluted share decreased 76.2% to $0.20 from a year ago.
Campbell Soup increased 2.1% to $47.60 after the food products company said sales in the third quarter ending on May 1 increased 7% to $2.1 billion and net income rose 17.5% to $188.0 million.
For the full-year the company revised higher its sales outlook to increase between flat and 1% from the previous estimate of flat to decline of 2%.
In European trading, market indexes declined after the World Bank and OECD lowered global growth outlook.
Industrial production in Germany rose less than expected 0.7% in April from March but fell 2.2% from a year ago.
March production decline was revised to 3.7% decline from the previous estimate of 3.9% fall, according to the data released by the statistics office Destatis.
The DAX index fell 0.7% to 14,455.67, CAC 40 index declined 0.9% to 6,442.12, and the FTSE 100 index dropped 0.6% to 7,555.26.
The eurozone economic growth in the first quarter was revised higher to 0.6% from the previous quarter and 5.4% increase on an annual basis.
Credit Suisse dropped 6.7% to 6.26 francs after the company said it is likely to report a loss in the second quarter on "challenging market conditions."
The financial group is also looking to cut staff amid dwindling profitability and slowing activities.
Pernod Ricard SA declined 2.8% to 176.75 euros and the spirit and wine maker said it is looking to digital channels and boost sales.
Schneider Electric declined 1.7% to 127.62 euros after the French electric automation and energy management company said it has agreed to sell Eutotherm business unit to the U.S. based Watlow Electric Manufacturing Company.
Financial terms of the deal were not disclosed.
Inditex jumped 4.8% to 23.29 euros after the textile and apparel maker said first quarter profit increased 80% to 760 million euros and sales jumped 36% to 6.7 billion euros.
Trade Deficit In April Narrows After Imports Drop
Brian Turner
07 Jun, 2022
New York City
The U.S. trade deficit in April declined to $87.1 billion from the revised $107.7 billion deficit in March.
The first estimate of deficit in March was $109.8 billion.
The goods deficit decreased $19.1 billion in April to $107.7 billion and the services surplus increased $1.5 billion to $20.7 billion.
Exports of goods and services rose 3.5% to $252.6 billion and imports declined 3.4% to $339.7 billion.
U.S. Indexes Advance 1% After Volatile Session
Barry Adams
07 Jun, 2022
New York City
Stocks were under pressure after Target issued an earnings alert highlighting inventory challenges but managed to shake off recession worries and climbed higher.
The S&P 500 index increased 0.95% to 4,160.50 and the Nasdaq Composite index advanced 0.94% to 12,175.25.
Target Inc dropped 2.02% to $156.65 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned about its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
The company reiterated its full-year revenue increase in the low- to mid-single digit and expects to maintain or gain market share in 2022.
After the Target announcement, Walmart Inc dropped 1.3% to $123.30.
Stocks closed higher on Tuesday but retailers remained under pressure. Energy stocks led the gainers again after crude oil prices advanced to a new 8-year high.
Crude oil futures of immediate month gained $1.50 to $120.05 a barrel and natural gas futures edged up a cent to $9.33 a unit.
Investors are still confronting rising energy prices and elevated inflation pressures and assessing the health of the U.S. economy and consumers.
The yield on 10-year Treasury notes decreased to 2.98%.
The U.S. trade deficit shrank in April to $87.1 billion after imports fell on account of supply chain disruptions and lockdowns in China.
Exports of goods and services rose 3.5% to $252.6 billion and imports declined 3.4% to $339.7 billion.
Apple Inc advanced 1.8% to $148.78 after the company released several new products at its annual conference for developers.
J.M. Smucker jumped 5.7% to $130.31 after the pet food, coffee, and other food products maker reported 6% in net sales on 10% price increase across all business segments.
Net income jumped 37% to $202.1 million.
Investors are looking ahead to consumer price index data on Friday and hoping that the inflation measure shows a decline offering a respite to consumers and investors.
In Europe, market indexes turned lower after German factory orders declined for the third month in a row in April.
The German statistics office said orders fell 2.7% from March and plunged 6.2% from a year ago on weak foreign demand and harsh China lockdown measures.
A separate report from the German Machinery Industry Trade Association said machinery orders declined 7% in April from a year ago on slower growth demand from China, supply chain disruptions, and the Ukraine war.
The orders declined for the second month in a row and domestic orders plunged 17% and orders from foreign markets fell 2%.
The DAX index declined 0.7% to 14,556.22, the CAC-40 dropped 0.7% to 6,500.35, and the FTSE 100 index fell 0.1% to 7,598.93.
The U.K. Prime Minister Boris Johnson survived a no-confidence vote after 211 of 359 Conservative Party members of parliament expressed confidence in his premiership.
Prime Minister Johnson led the party to its largest victory in many decades but with multiple scandals voters discontent is rising and several members of his party are looking for a leadership change.
However, Prime Minister Johnson has a tough road ahead in keeping his job as 148 members expressed dissatisfaction with his leadership, just shy of majority 180 needed to remove him from his office.
J.M. Smucker Price Increases Drive Quarterly Sales and Income Higher
Scott Peters
07 Jun, 2022
New York City
J.M. Smucker Company, the maker of food products said price increase across all business segments helped to offset product recall costs.
Fiscal 2022 fourth quarter ending in April sales increased 6% to $2.03 billion and net income increased 37% to $202.1 million.
Diluted earnings per share increased to $1.88 from $1.35 a year ago.
The company lifted its quarterly dividend to 99 cents from 90 cents a year ago.
Net sales increase was driven by 10% increase in prices across all product segments partially offset by 1% decline in volume and product mix and a 1% unfavorable impact of estimated customer returns related to the Jif peanut butter product recall.
The current quarter results reflect the divestiture of dry pet food, natural beverage and grain businesses.
Gross profit decreased 9% to $69.0 million, including 7% unfavorable impact of unsaleable Jif peanut butter inventory and estimated customer return as of April 30.
Operating income increased 27% to $302.0 million largely on lower selling and administration costs and also includes estimated recovery of insurance related peanut butter product recall.
Free cash flow increased to $220.7 million compared to $183.0 million a year ago.
Segment Results
U.S. pet food sales in the quarter increased 6% to $718.1 million and segment profit margin improved 180 basis points to 16.8% and segment profit increased 19% to $120.7 million.
U.S. coffee sales, including brands Folgers, Dunkin, and Cafe Bustelo, increased 11% to $647.2 million and 440 basis points to 25.4% segment profit decreased 5% to $164.2 million.
U.S. consumer food products sales, including jams, jellies, and peanut butter, declined 5% to $397.2 million and segment profit margin improved 130 basis points to 23.9% and segment profit was nearly flat at $95.0 million.
International sales increased 12% to $271.2 million, segment profit rose 18% to $34.5 million, and segment profit margin improved 70 basis points to 12.7%.
Full-Year Results
For the full-year net sales were flat at $8 billion and net income decreased to $631.7 million or $5.83 per share from $878.3 million or $7.79 a share a year ago.
For the year, the company dividend increased 10% to $3.96 from $3.60 a year ago.
Through stock repurchases and dividends, the company returned $369.7 million in the quarter and $688.5 million in the full year.
The company repurchased 2.0 million common shares for $262.7 million in the fourth quarter.
Guidance and Outlook
The food products maker guided full-year fiscal 2023 sales to increase between 3.5% and 4.5%, capital expense of $550 million, and free cash flow of $500 million.
The company sales growth estimate includes 2% unfavorable impact related to manufacturing downtime and customer returns linked to Jif peanut butter product recall.
Company and Stock
J.M. Smucker makes pet food, coffee, jams, and jellies and peanut butter.
J.M. Smucker Company jumped 4.5% to $128.80 after the food products maker reported higher-than-expected quarterly results.
J.M. Smucker stock has declined 4.5% so far this year.
Movers: G III, Gitlab, JM Smucker, Kohl's, Mosaic, Target, United Natural
Barry Adams
07 Jun, 2022
New York City
Buzzfeed Inc surged 10.8% to $2.47 after plunging 41% in the previous session following the post-IPO lockup period expiration.
The company guided fiscal 2023 sales to increase between 3.5% and 4.5% and adjusted earnings per share between $7.85 and $8.25.
GIII Apparel Group, Ltd was nearly unchanged at $27.36 after the company reported net sales in the fiscal 2023 first quarter ending in April increased 32.5% to $688.8 million and net income soared 16.3% to $30.6 million.
Diluted earnings per share increased to 62 cents from 53 cents a year ago.
For fiscal 2023, the company expects net sales of approximately $3.24 billion and net income between $205.0 million and $215.0 million, or between $4.23 and $4.33 a diluted share.
Gitlab Inc soared 22.5% to $48.81 after the cloud database company reported better-than-expected quarterly results.
Net sales in fiscal first quarter 2023 ending in April increased 75% to $87.4 million and net income declined to $26.1 million or 18 cents a share from $27.9 million or 53 cents a share.
For the second quarter the company guided between $93.5 million and $94.5 million and for fiscal 2023 between $398.0 million and $402.0 million.
J.M. Smucker Company jumped 4.5% to $128.80 after the food products maker reported higher-than-expected quarterly results.
Fiscal 2022 fourth quarter ending in April sales increased 6% to $2.03 billion and net income increased 37% to $202.1 million.
Diluted earnings per share increased to $1.88 from $1.35 a year ago.
Kohl's Corporation jumped 7.4% to $44.97 after the company said it is in advanced and exclusive talks with Franchise Group, the parent of Vitamin Shopee. The deal values the company at $60 a share or $8 billion.
Franchise Group jumped 7.7% to $39.83 and owns several brands including Sylvan Learning and Badcock Furniture.
Mosaic Co dropped 5.01% to $56.55 after a news report indicated that Brazilian ports are overflowing with fertilizers suggesting a near-term price decline.
Peloton Interactive Inc declined 1% to $12.34 after the company announced the departure of Chief Financial Office Jill Woodworth.
Liz Coddington, former executive at Amazon and Netflix, will replace Woodworth on June 13.
Target Inc dropped 7.2% to $148.20 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
United Natural Foods dropped 6.8% to $41.80 and the food distributor reported net sales in the fiscal 2022 third quarter ending in April rose 9.2% to $7.2 billion.
Net income surged 39.6% to $67 million or $1.10 a share.
The company lifted its full-year sales outlook to a new range between $28.8 billion and $29.1 billion, an increase of 7% on the midpoint basis from a year ago and earnings per share between $3.75 and $4.00, an increase of 56% on a midpoint from a year ago.
Stocks Waver After Target Cites Inventory Challenges
Barry Adams
07 Jun, 2022
New York City
Stocks were under pressure after Target issued an earnings alert highlighting inventory challenges.
Futures of the S&P 500 index declined 0.9% to 4,082.50 and the Nasdaq Composite index dropped 1.3% to 12,449.05.
Target Inc dropped 7.2% to $148.20 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
The company reiterated full-year revenue increase in the low- to mid-single digit and expects to maintain or gain market share in 2022.
After the Target announcement, Walmart Inc dropped 2.8% to $124.87.
Stocks generally closed higher on Monday in a muted trading in the absence of economic news and light earnings calendar.
Investors are still confronting rising energy prices and elevated inflation pressures and assessing the health of the U.S. economy and consumers.
Investors are looking ahead to consumer price index data on Friday and hoping that the inflationary pressures would recede and provide support for market advance.
In Europe, market indexes turned lower after German factory orders declined for the third month in a row in April.
The German statistics office said orders fell 2.7% from March and plunged 6.2% from a year ago on weak foreign demand and harsh China lockdown measures.
A separate report from the German Machinery Industry Trade Association said machinery orders declined 7% in April from a year ago on slower growth demand from China, supply chain disruptions, and the Ukraine war.
The orders declined for the second month in a row and domestic orders plunged 17% and orders from foreign markets fell 2%.
The DAX index declined 1.1% to 14,489.27, the CAC-40 dropped 1.1% to 6,478.20, and the FTSE 100 index fell 0.4% to 7,581.65.
The U.K. Prime Minister Boris Johnson survived a no-confidence vote after 211 members of parliament of Conservative Party expressed confidence in his premiership.
Prime Minister Johnson led the party to its largest victory in many decades but with multiple scandals voters discontent is rising and several members of his party are looking for a leadership change.
U.S. Stocks Climb, Bond Yields Stay Above 3%
Barry Adams
06 Jun, 2022
New York City
U.S stocks retained a positive bias after a week of losses but struggled in the afternoon trading after bond yields stayed above 3%.
The yield on the 10-year Treasury note increased to 3.038%.
The S&P 500 index jumped 0.3% to 4,121.45 and the Nasdaq Composite index advanced 0.4% to 12,061.73.
Stocks gained after the Department of Commerce announced a pause on tariffs on solar power products imported from four countries for the next 24 months.
Tariffs will be paused on solar panel modules and chips imported from Cambodia, Malaysia, Thailand, and Vietnam but existing duties on solar products from China and Taiwan will remain in effect, according to a statement from the Commerce Department.
The Commerce Department added it will continue its investigation whether Chinese makers are circumventing U.S. duties by funning products through these neighboring countries.
China loosened mobility and gathering restrictions after the coronavirus spread subsided.
Crude oil inched lower 65 cents to $118.22 a barrel and international trading Brent crude crossed above $121.50 a barrel.
Saudi Arabia announced a $2.10 a barrel increase to base price for the shipment of its leading Arab light crude to Asia and increased premium to $6.50 a barrel.
The price increase came only a week after a meeting of OPEC+ nations agreed to roll forward a three month increase in supply to two months totaling 648,000 barrel a day.
Investors also looked ahead to the European Central Bank's policy meeting on Wednesday that may offer more clarity on the rate decision on July 21.
Investors are battling multiple global shocks not seen in a century.
Economies around the world are impacted by once a century pandemic, war in Europe after 75 years, and global food and fuel price surge lifting the inflation to a 4-decade high.
In addition, central banks in Europe and the U.S. are set to lift rates after fifteen years or near zero rates or negative rates.
Stocks reacted to company specific news.
Spirit Airlines jumped 5.7% to $20.74 after JetBlue sweetened its bid to $31.50 a share and proposed to increase breakup fee to $350 million.
Didi Global surged on news that Chinese authorities are concluding investigations of the company and the ride-hailing company will be permitted to add new users.
The news was first reported by the Wall Street Journal.
Apple Inc jumped 1.6% to $146.90 and the company is set to kick-off its annual Worldwide Developers Conference today.
Apple announced a new MacBook, MacBook Pro, M2 Chip
ON Semiconductor jumped 6.1% to $62.94, VICI Properties gained 6.4% to $31.39, Keurig Dr Pepper advanced 5.9% to $34.93 after three companies were selected to be included in the popular S&P 500 index.
Under Armour declined 0.8% to $10.08 after the company's stock was dropped from the S&P 500 index.
European markets traded higher after the U.S. proposed to roll-back tariffs on China products.
The DAX index gained 1.4% to 14,655.95, the CAC-40 index rose 1.35% to 6,573.11, and the FTSE 100 index added 1.3% to 7,629.77.
Asian markets advanced after China eased mobility restrictions as life returns to normal after two months of severe lockdowns to halt the spreading of coronavirus.
The Nikkei index jumped 0.5% to 27,915.89, the Hang Seng Index soared 2.7% to 21,653.90, and the Sensex index edged down 0.2%.
The Reserve Bank of India is set to lift its rate tomorrow by 50 basis points after inflation indexes jumped to eight-year highs.
The ASX 200 Index dropped 0.5% to 7,206.30 and the broader All Ordinaries Index fell 0.5% lower to 7,433.10.
The Reserve Bank of Australia is also set to lift its benchmark interest rate between 25 and 40 basis points.