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Wednesday October 21, 2020

Finances

Finances
 

Stitch Fix Reports Earnings

Stitch Fix, Inc. (SFIX) posted its latest quarterly and full-year earnings on Tuesday, September 22. The company posted an 11% increase in revenue for both the quarter and the full year.

Revenue came in at $443.4 million for the fourth quarter. This was up from $432.1 million during the same quarter last year.

"I'm very pleased with our strong Q4 results and our return to topline growth. We grew active clients to 3.5 million, an increase of 9% year over year, and generated $443 million in net revenue, reflecting 11% adjusted year-over-year growth," said Stitch Fix founder and CEO Katrina Lake. "I'm proud of our team for successfully navigating through the deepest impacts of COVID-19 and am excited to bring our model of an individual and deeply personalized shopping experience to even more consumers as they transition to a future of online shopping."

The company reported a $44.5 million loss for the quarter. Last year at this time, Stitch Fix posted net income of $7.2 million.

Stitch Fix is an online retailer of clothing that provides customized periodic deliveries. The company added 3.5 million active clients during the quarter. This was up 9% from the same quarter last year. Net revenue per active client reached $486, up 2% from last year.

Stitch Fix, Inc. (SFIX) shares ended the week at $26.24, down 5.0%.

AutoZone Posts Earnings Report


AutoZone, Inc. (AZO) released its fourth quarter earnings report on Tuesday, September 22. The auto parts company reported increased year-over-year sales and net income.

The company reported net sales of $4.5 billion during the quarter. This was up 14% from $3.9 billion in sales during the same time last year.

"As a result of the COVID-19 global pandemic, our primary focus has been and continues to be to protect the health and wellness of our customers and AutoZoners," said AutoZone CEO Bill Rhodes. "I'm very proud of the steps our team has taken in this regard and I'm very appreciative of the phenomenal efforts of our AutoZoners who have continued to provide exceptional service to our customers throughout this entire extraordinary season!"

AutoZone reported net income of $740 million during the quarter, up 31% from $565 million in net income during the same quarter last year. The company's shares rose $30.93 per share, up 37% from $22.59 per share in the same quarter last year.

Analysts believe that auto parts demand has increased due to consumers being more inclined to buy used rather than new vehicles amid the current economic concerns. As a result, the average age of vehicles on the road hit a new record high of 11.9 years old, driving up the demand for auto parts. Due to the increased demand, AutoZone announced a plan to add 20,000 new jobs to meet the retail and commercial demand. During the quarter, the company opened 49 new stores in the U.S., 11 in Mexico and five new stores in Brazil.

AutoZone, Inc. (AZO) shares ended the week at $1,135.02, down 5.1%.

Darden Restaurants Reports Earnings


Darden Restaurants, Inc. (DRI) posted its first quarter earnings on Thursday, September 24. The parent company of restaurants such as Olive Garden, LongHorn Steakhouse and The Capital Grille saw revenue fall by 28% due to the coronavirus pandemic.

Revenue came in at $1.53 billion for the first quarter. This was down from $2.13 billion during the same quarter last year.

"The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations," said Darden CEO Gene Lee. "I'm incredibly proud of how our restaurant teams have adapted to our new operating environment and their ongoing dedication to safety and delivering exceptional guest experiences."

The company reported net income of $36.1 million or $0.28 per share. Last year at this time, Darden posted net income of $170.6 million or $1.38 per share.

Darden is optimistic about upcoming quarters and expects second quarter sales to reach approximately 82% of sales from the same quarter in 2020. Net income for the second quarter is expected to reach between $200 to $215 million with earnings of $0.65 to $0.75 per share. Darden announced it repaid $270 million of its term loan credit on August 10, leaving the company with access to $1.4 billion in cash and credit.

Darden Restaurants, Inc. (DRI) shares ended the week at $97.17, up 12.9%.

The Dow started the week at 27,485 and closed at 27,174 on 9/25. The S&P 500 started the week at 3,286 and closed at 3,298. The NASDAQ started the week at 10,610 and closed at 10,914.
 

Treasury Yields Decrease

Yields on U.S. Treasurys fell slightly this week following mixed reports on economic indicators. The drop in yields followed reports of steady initial jobless claims along with a rise in orders for capital goods.

On Thursday, the Labor Department released its report of weekly jobless claims. Seasonally adjusted initial jobless claims reached 870,000. This was up 4,000 from the prior week.

"We're getting to that point where the easy hiring is behind us," said Ryan Sweet of Moody's Analytics. "This next leg of the recovery is going to be much more driven by the underlying strength of the economy rather than businesses just recalling workers."

The benchmark 10-year Treasury note yield closed at 0.669% on Thursday after opening the week at 0.701%. The 30-year Treasury bond yield closed on Thursday at 1.410%, down from Monday's opening yield of 1.455%.

On Friday, the U.S. Commerce Department released its Monthly Advance Report on Durable Goods Manufacturers' Shipments, Inventories and Orders for August. The report showed a 0.4% increase in durable goods orders. In July, durable goods orders increased 11.7%.

"Momentum has slowed since the strong bounce from reopenings but the signal from the core orders and shipments is still positive," said Rubeela Farooqi, Chief U.S. Economist at High Frequency Economics. "The manufacturing sector is continuing to recover from low levels."

The 10-year Treasury note yield closed at 0.66% on 9/25, while the 30-year Treasury bond yield was 1.40%.
 

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 24. The report showed an increase in rates.

The 30-year fixed rate mortgage averaged 2.90%, up from 2.87% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.64%.

This week, the 15-year fixed rate mortgage averaged 2.40%, up from 2.35% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.16%.

"Mortgage rates set several record lows over the last few months and have remained low into September," said Freddie Mac's Chief Economist Sam Khater. "While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we've been seeing."

Based on published national averages, the national savings rate was 0.05% on 9/25. The one-year CD finished at 0.19%.

Published September 25, 2020

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