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Monday August 8, 2022

Finances

Finances
 

Levi Strauss Reports Earnings

Levi Strauss & Co. (LEVI) announced its second quarter financial results on Thursday, July 7. The denim-maker reported increased revenue and earnings, causing shares to increase more than 3% following the earnings release.

Levi reported revenue of $1.47 billion for the second quarter, which was up 15% from revenue of $1.28 billion in the same quarter last year. Analysts expected revenue of $1.43 billion in the quarter.

"Our second quarter results demonstrate the power of our strategy, which continues to support strong revenue growth and margin expansion," said Chip Bergh, CEO of Levi Strauss. "Our brands are resonating with consumers across geographies, channels and product categories. By continuing to advance our most impactful growth drivers - being brand-led, direct to consumer first and diversifying the portfolio, we are well-positioned to continue to drive growth and create significant value for all our stakeholders."

The company reported a second quarter net income of $50 million or $0.29 per adjusted share. This is down from net income of $65 million or $0.23 per adjusted share reported during the same quarter last year.

Levi's earnings report highlighted growth across all business segments. The company's global direct-to-consumer revenue increased 16%, while global wholesale revenue increased 15%. Levi's digital channels revenue growth contributed to the strong second quarter earnings, reaching approximately 20% of total quarterly revenues. The company increased the quarterly dividend by 20%.

Levi Strauss & Co. (LEVI) shares ended at $16.58, up 5.3% for the week.

WD-40 Company Reports Earnings


WD-40 Company (WDFC) released its third quarter earnings report on Thursday, July 7. The San Diego-based company reported a drop in revenue and earnings.

WD-40 posted quarterly revenue of $123.67 million. This is down 9% from $136.41 million in revenue reported at the same time last year.

"In the third quarter we were up against very strong sales comparisons and had to manage through several global disruptions that negatively impacted our current quarter sales results," said Garry Ridge, WD-40 CEO. "In addition, we are operating in a challenging macroeconomic environment which has continued to deteriorate our gross margin. Although we remain committed to managing our business to restore gross margin to our target of 55% over the longer-term, we continue to experience short-term margin pressures due to inflation."

For the quarter, WD-40 reported net income of $14.48 million. This is down 31% from $21.01 million reported at this time last year.

The household name, which has grown into a global company, began with the goal of creating rust-prevention solvents and degreasers for use in aerospace. The company's maintenance products segment revenue decreased 9% for the quarter. The revenue dip was due to lockdown measures stemming from COVID-19 in China and the Asia-Pacific region and suspension of sales in Russia. WD-40 reported its selling, general and administrative expenses decreased 12% in the quarter.

WD-40 Company (WDFC) shares closed at $174.30, down 12.3% for the week.

National Beverage's Earnings Exceed Estimates


National Beverage Corp. (FIZZ) released its full year earnings report on Wednesday, June 29. The juice, soft drink and sparkling water company reported better-than-expected revenue and earnings for the quarter.

National Beverage reported quarterly revenue of $258.92 million. Revenue for the full year reached $1.14 billion.

"We feel confident that our purpose and diligence have allowed us to react to the untimeliness of these conditions, as evidenced by the slight increase in gross profit per case throughout this unprecedented volatility," said a spokesperson from National Beverage Corp. "We have also heightened our focus on our brands and consumers and were rewarded by brand LaCroix achieving volume gains despite excessive discounting by various competitors. We are fortunate to have retail partners that continuously give their support and brands that respond positively."

The company announced net income of $34.34 million for the quarter, down 12% from earnings of $39.13 million one year ago. For the full year, net income reached $158.51 million.

Best known for brands such as Shasta, Faygo and the LaCroix line of seltzer drinks, National Beverage Corp. reported record full year sales. The LaCroix line of sparkling waters introduced a new unique flavor, Cherry Blossom, which was voted the winner of the flavored water category by PEOPLE magazine.

National Beverage Corp. (FIZZ) shares ended the week at $50.32, up 2.8% for the week.

The Dow started the week at 30,903 and closed at 31,338 on 7/8. The S&P 500 started the week at 3,793 and closed at 3,899. The NASDAQ opened the week at 10,964 and closed at 11,635.
 

Jobs Report Pushes Treasury Yields Up

Treasury yields increased in reaction to the June jobs report. Treasury yields continued an upward trend as unemployment claims ease to pre-pandemic levels.

The U.S. economy added 372,000 jobs in June, outpacing estimates of 250,000 jobs added. The jobs report revealed that the private sector has recovered to pre-COVID-19 employment levels. Average hourly wages increased 5.1% year-over-year, slightly higher than the 5% economists expected.

"We've essentially ground our way back to where we were pre-Covid," said Christian Lundblad, a professor of finance at the University of North Carolina. "So this doesn't necessarily look like a dire situation, despite the fact that we're struggling with inflation and economic declines in some other dimensions."

On Friday, the U.S. Department of Labor reported that initial claims for unemployment increased to 235,000 for the week ending July 2. Continuing unemployment claims increased to 1.375 million. The unemployment rate held steady at 3.6%.

"Employers are beginning to respond to financial pressures and slowing demand by cutting costs," said Andrew Challenger, the Challenger, Gray & Christmas' senior vice president. "While the labor market is still tight, that tightness may begin to ease in the next few months."

The 10-year Treasury note yield finished the week of 7/8 at 3.10%, while the 30-year Treasury note yield finished the week at 3.27%.
 

Mortgage Rates Fall Further

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, July 7. The report revealed a further drop in rates.

The 30-year fixed rate mortgage rate averaged 5.30%, down from 5.70% last week. At this time last year, the 30-year fixed rate mortgage averaged 2.09%.

This week, the 15-year fixed rate mortgage averaged 4.45%, down from 4.83% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.20%.

"Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise," said Sam Khater, Freddie Mac's Chief Economist. "While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown."

Based on published national averages, the savings rate cap was 1.58% as of 6/21. The one-year CD national rate cap averaged 3.25%.

Published July 8, 2022

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