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Thursday August 13, 2020

Finances

Finances
 

Tiffany Posts Earnings

Tiffany and Co. (TIF) released its latest quarterly earnings report on Tuesday, June 9. Despite lower-than-expected revenue, Tiffany's stock was up 2% after the report's release.

Revenue for the first quarter came to $556 million, down 45% from $1 billion at this time last year. This fell short of analysts' expectation of $701 million in revenue.

"The character and strength of Tiffany & Co. have been tested many times over the past 183 years and, because of its exceptionally talented and devoted employees, the Company has always been able to persevere and succeed," said Tiffany's CEO Alessandro Bogliolo. "That is why we
took balanced and appropriate steps, like much of the luxury industry, to protect our valued employees who are the heart and soul of the Brand."

The company reported a net loss of $64.6 million, or a loss of $0.53 per share, missing Wall Street's predicted earnings of $0.03 per share. At this time last year, Tiffany reported earnings of $125.2 million, or $1.03 per share.

Tiffany's earnings suffered during the quarter due in large part to temporary store closures during the global pandemic. Engagement jewelry sales declined almost 50%, the largest category decline for the company. In November, LVMH, also known as Mot Hennessy – Louis Vuitton SE, agreed to purchase Tiffany for $16.2 billion. The deal has cleared antitrust hurdles in Russia and Mexico, while other regulatory approval is pending. Some analysts expect the deal may be renegotiated due to the pandemic's impact on Tiffany's earnings.

Tiffany and Co. (TIF) shares ended the week at $119.12, down 2.6% for the week.

Lululemon Reports First Quarter Earnings


Lululemon Athletica Inc. (LULU) released its quarterly earnings report on Thursday, June 11. The athletic-apparel company's revenue and earnings missed expectations, sending shares sliding more than 7% in after-hours trading.

Lululemon reported quarterly revenue of $651.96 million. This is down 17% from last year's first quarter revenue of $782.31 million and missed the $688.4 million in revenue that Wall Street predicted.

"I'm proud of how lululemon has navigated these unexpected and unprecedented time," said Lululemon CEO Calvin McDonald. "We are learning more every day about our guests -- how they enjoy interacting with us online and what makes them comfortable as stores reopen."

The company announced earnings of $28.6 million for the quarter, which was down from earnings of $96.6 million one year ago. On an adjusted earnings per share basis, the company reported earnings of $0.22 per share, which was less than the $0.74 per share that analysts predicted.

Lululemon's online sales grew 125% in the month of April. The company's e-commerce sales comprised 54% of its total revenue, compared to the same quarter last year where e-commerce was 26.8% of total revenue. The company did not provide same-store comparison sales due to temporary store closures stemming from COVID-19.

Lululemon Athletica Inc. (LULU) shares closed at $296.36, down 8% for the week.

Adobe Reports Strong Earnings


Adobe (ADBE) released its quarterly earnings report on Thursday, June 11. The software company reported strong revenue and earnings for the quarter.

Adobe reported quarterly revenue of $3.13 billion. This is up 14% from last year's first quarter revenue of $2.74 billion, but below the $3.16 billion that Wall Street predicted.

"Adobe's strategy to empower customers to create the world's content, automate critical document processes and enable enterprises to engage with their customers digitally, drove record revenue in Q2," said Adobe President and CEO Shantanu Narayen. "The tectonic shift towards 'all things digital' across all customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis."

The company announced earnings of $1.10 billion for the quarter, which was up from earnings of $633 million one year ago. On an adjusted earnings per share basis, the company reported earnings of $2.27 per share, which was less than the $2.32 per share that analysts predicted.

Adobe reported 18% year-over-year growth in its digital media segment. The company's annualized recurring revenue for its digital media segment increased to $9.17 billion while, analysts had forecast growth of $9.11 billion. The annualized recurring revenue is the company's software-as-a-service metric generated from subscriptions.

Adobe (ADBE) shares closed at $406.54, up 4% for the week.

The Dow started the week at 27,233 and closed at 25,606 on 6/12. The S&P 500 started the week at 3,200 and closed at 3,041. The NASDAQ started the week at 9,823 and closed at 9,589.
 

Yields Fall on Weak Economic Projections

The yield on the 10-year Treasury note fell early in the week as investors waited on economic projections from the Federal Reserve. Yields continued on a downward trend throughout the week, stoked by fears of a second wave of coronavirus.

On Wednesday, the Federal Reserve's economic projections indicated an expectation of low interest rates at least until the year 2022. The Federal Open Market Committee projected a 6.5% economic contraction in 2020 and indicated it would continue buying bonds to support the economy.

"To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions," said the Federal Open Market Committee said in a statement.

On Monday, the World Health Organization indicated that the coronavirus pandemic is not over. Record reports of new daily cases have increased, suggesting that the pandemic has not reached its peak in some regions, including Central America.

"I know that people are eager to return to normal activities and way of life," said Robert Redfield, Centers for Disease Control and Prevention Director. "However, it's important that we remember this situation is unprecedented and that the pandemic has not ended."

The 10-year Treasury note yield closed at 0.70% on 6/12, while the 30-year Treasury bond yield was 1.45%.
 

Mortgage Rates Up Slightly

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, June 11. The report revealed that the 30-year mortgage rate had a slight uptick from last week.

The 30-year fixed rate mortgage averaged 3.21% this week, up from 3.18% last week. During this time last year, the 30-year fixed rate mortgage averaged 3.82%.

This week, the 15-year fixed rate mortgage averaged 2.62%, unchanged from last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.26%.

"The rebound in homebuyer demand continued this week, driven by mortgage rates that hover near record lows," said Sam Khater, Chief Economist at Freddie Mac. "This turnaround in demand, particularly by those who have higher incomes than the typical household, also reflects deferred sales from the Spring."

Based on published national averages, the savings rate was 0.06% for the week of 6/8. The one-year CD averaged 0.25%.

Published June 12, 2020
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