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Tuesday July 14, 2020

Finances

Finances
 

Simply Good Foods Reports Earnings

Simply Good Foods (SMPL) released its quarterly earnings report on Wednesday, July 8. The nutritional food and snacks developer reported increased revenue and earnings, causing shares to jump 9.5% in pre-market trading following the report's release.

Simply Good Foods reported quarterly net sales of $215.1 million. This is up 54.2% from last year's third quarter revenue of $139.5 million.

"The impact of COVID-19 during our fiscal third quarter was unprecedented," said Simply Good Foods President and CEO Joseph E. Scalzo. "Despite the challenges of working remotely, our employees performed admirably, adjusting to the evolving market changes while continuing to execute well against our plans. I want to thank our employees, suppliers and co-manufacturers for their commitment to our customers and consumers and operating at the highest standards during this challenging time."

The company announced net earnings of $16.4 million for the quarter, an increase from earnings of $13.5 million one year ago. On an adjusted earnings per share basis, the company reported earnings of $0.17 per share, which was an increase year-over-year from earnings of $0.16 per share.

In November 2019, Simply Good Foods completed its acquisition of Quest Nutrition. Simply Good Foods is best known as the maker and seller of Atkins branded nutrition bars, ready-to-drink shakes and snacks. The revenue increase generated from Quest products partially offset declines in legacy Atkins sales. The company expects its 2020 fiscal year net sales to reach $790 to $800 million.

Simply Good Foods (SMPL) shares ended the week at $21.02, up 1.5% for the week.

Levi Strauss Reports Earnings


Levi Strauss & Co. (LEVI) announced its second quarter financial results on Tuesday, July 7. The ten-week temporary closure of most of the company and its franchise stores resulted in significant adverse impacts to revenue and earnings.

Levi reported revenue of $498 million for the second quarter, which was down 62% from their revenue of $1.3 billion in the same quarter of 2019. Analysts expected revenue of $504.4 million in the quarter.

"The pandemic is accelerating retail landscape shifts and consumer behavior in ways that play to the strength of the Levi's brand," said Chip Bergh, president and chief executive officer of Levi Strauss. "We believe this will enable us to further grow our market leadership position and emerge from this crisis a stronger company."

The company reported a second quarter net loss of $364 million or a loss of $0.91 per share. This is in stark contrast to net income of $29 million or $0.07 earnings per share reported during the same quarter last year.

The blue jean inventor declined to offer a 2020 outlook due to uncertainty stemming from the COVID-19 pandemic. Levi's earnings report highlighted growth in the company's e-commerce business, which experienced 80% growth in the month of May offsetting further losses in the quarter. Approximately 90% of company-operated and franchise stores have reopened, as well as the majority of third-party retailers. However, Levi's stated the uncertainty of COVID-19 and potential closures will continue to have significant adverse impacts on the company for the duration of fiscal 2020.

Levi Strauss & Co. (LEVI) shares ended at $12.63, down 8% for the week.

Bed Bath & Beyond's Shares Fall


Bed Bath & Beyond Inc. (BBBY) announced quarterly earnings on Wednesday, July 8. The home goods retailer's earnings fell short of Wall Street's expectations, causing shares to fall more than 10%.

Revenue for the first quarter reached $1.31 billion. This was down 49% from the $2.57 billion reported during the same quarter last year and less than the $1.39 billion in revenue that analysts expected.

"The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital," said Bed Bath & Beyond President and CEO Mark Tritton. "From the beginning of this crisis, we have taken measured, purposeful steps to help keep our people safe and our customers serviced, and we are proud of the way our teams have navigated this unprecedented challenge with speed and agility."

Bed Bath & Beyond reported net losses of $302.3 million, which is an improvement from last year's first quarter loss of $371.1 million. On an adjusted earnings per share basis, the company posted a loss per share of $2.44.

Bed Bath & Beyond's revenue was significantly impacted from temporary store closures in the quarter. Net sales generated through its digital segment increased 82% and represented over 60% of the company's total net sales in the quarter. The company announced planned closures of approximately 200 stores over the next two years as part of its strategy to optimize operations. Bed Bath & Beyond declined to provide an outlook for fiscal 2020 due to volatility related to COVID-19.

Bed Bath & Beyond Inc. (BBBY) shares ended the week at $8.19, down 26% for the week.

The Dow started the week of 7/6 at 25,996 and closed at 26,075 on 7/10. The S&P 500 started the week at 3,155 and closed at 3,185. The NASDAQ started the week at 10,360 and closed at 10,617.
 

Treasury Yields Hold at Lows

U.S. Treasury yields decreased in response to the release of the unemployment benefits report that indicated a decrease in applications and continuing unemployment claims. Yields remained relatively steady at lows on Friday after reports that an antiviral drug may improve the risk of mortality in COVID-19 patients.

On Thursday, the U.S. Department of Labor released the Unemployment Insurance Weekly Claims report for the week ending July 4. Initial unemployment insurance claims for the week were 1.31 million. Economists expected claims to come in higher at 1.39 million.

Continuing unemployment claims, meaning individuals collecting benefits for at least two weeks, were down 698,000 from the week prior. The unemployment rate dropped from its high of 14.7% to 11.1%.

The benchmark 10-year Treasury yield hit a low of 0.596% on Thursday after opening the week at 0.673%. The 30-year Treasury bond yield dropped to 1.301% on Thursday after opening the week at 1.433%. Bond yields move inversely to prices, so as yields fall, prices rise, signaling increased demand.

"These are lower yields than we started at the week," said Patrick Leary, chief market strategist at Incapital. "It's telling you that the bond market is nervous about what's happening in the general economy and specifically the labor markets. And the economic data is also not taking into account the latest round of shutdowns in two very large economies: Florida and Texas."

Gilead announced that its antiviral drug remdesivir improved the risk of mortality by 62% when compared with standard care. The news came after the U.S. reached a single-day record of new COVID-19 cases on Thursday with more than 63,000 new cases.

"The rising case count in the sunbelt combined with solid receptions to the 10- and 30-year [Treasury] auctions have been credited for the bulk of the bid," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. "The daily Covid-19 stats will presumably contribute to the overall direction of US rates and the backdrop of bullish momentum has already set the tone."

The 10-year Treasury note yield closed at 0.63% on 7/10, while the 30-year Treasury bond yield was 1.33%.
 

Mortgage Rates Reach Record Low

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, July 9. Rates dropped further to new historic lows this week.

The 30-year fixed rate mortgage averaged 3.03% for the week, down from last week's average of 3.07%. At this time last year, the 30-year fixed rate mortgage averaged 3.75%.

This week, the 15-year fixed rate mortgage averaged 2.51%, down from 2.56% last week at this time. During the same period last year, the 15-year fixed rate mortgage averaged 3.22%.

"The summer is heating up as record low mortgage rates continue to spur homebuyer demand," said Freddie Mac's Chief Economist Sam Khater. "However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth."

Based on published national averages, the savings rate was 0.06% for the week of 7/6. The one-year CD averaged 0.24%.

Published July 10, 2020
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