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Saturday September 24, 2022



Lululemon Reports Second Quarter Earnings

Lululemon Athletica, Inc. (LULU) released its quarterly earnings report on Wednesday, September 8. The athletic-apparel company's quarterly revenue and earnings increased year-over-year, causing its shares to jump more than 13% following the report's release.

Lululemon reported quarterly revenue of $1.45 billion. This is up 61% from last year's second quarter revenue of $902.94 million.

"We launched exciting new products, experienced strength across channels and geographies, and announced new partnerships that will allow us to become a leader in product sustainability," said Lululemon CEO, Calvin McDonald. "I'm inspired every day by our teams around the world for their continued enthusiasm, agility, and commitment to the brand."

The company announced net income of $208.07 million for the quarter. This is up from net income of $86.80 million one year ago.

Lululemon's North America sales grew 63% in the quarter, while international sales increased 49% for the quarter. The company opened 11 new company-operated stores in the second quarter. This brought the total number of open stores to 534 by the end of the quarter.

Lululemon Athletica, Inc. (LULU) shares closed at $425.58, up 7.8% for the week.

GameStop Reports Earnings

GameStop Corp. (GME) announced its second quarter earnings on Wednesday, September 8. The largest video game, consumer electronics and gaming merchandise retailer's shares dropped more than 7% following the report's release.

GameStop reported quarterly revenue of $1.18 billion. This was up from $942 million reported at this time last year.

"We are focused on positioning GameStop to scale while obsessing over competitive pricing, expensive selection, and fast shipping," said GameStop CEO, Matt Furlong in the company's earnings call. "Our actions included continuing to add technology talent across the organization, including individuals with experience in e-commerce, [user interface], [user experience], operations and supply chain."

GameStop reported a second quarter net loss of $61.6 million or $0.85 per share. This is an improvement from a net loss of $111.3 million or $1.71 per share year-over-year.

For the second quarter, in pursuit of its mission to focus on ecommerce sales, the company expanded into a 530,000 square foot center for its online sales fulfillment. The company plans to transform its ecommerce segment, but has been light on details. GameStop continues to withhold guidance for the year.

GameStop Corp. (GME) shares ended the week at $190.28, down 7.7% for the week.

National Beverage's Earnings Exceed Estimates

National Beverage Corp. (FIZZ) released its quarterly earnings report on Thursday, September 9. The juice, soft drink and sparkling water company reported better-than-expected revenue and earnings for the quarter.

National Beverage reported quarterly revenue of $311.71 million. This is up from last year's first quarter revenue of $293.37 million and is above the $288.83 million that Wall Street predicted.

"Considering the headwinds that we faced, our financial results for the first quarter reflect extraordinary execution by Team National," said a spokesperson from National Beverage Corp. "Although labor, raw material and transportation availability issues impacted our ability to meet customer demand, we were able to increase sales over last year's pantry-loading spike while maintaining the margins posted for our previous ‘best ever' quarter."

The company announced net income of $53.82 million for the quarter, which is up from earnings of $51.16 million one year ago. On an earnings per share basis, the company reported earnings of $0.58 per share, which was more than the $0.48 per share that analysts predicted.

Best known for brands such as Shasta, Faygo and the LaCroix line of seltzer drinks, National Beverage Corp. increased its brand volume by 5.6%, while selling prices were increased to cover transportation and other costs in the quarter. The LaCroix line of sparkling waters introduced new unique flavors, which became the most successful to date. The company plans to continue its mission to "make America healthy," by providing healthier beverage options.

National Beverage Corp. (FIZZ) shares ended the week at $52.55, up 13.1% for the week.

The Dow started the week at 35,373 and closed at 34,608 on 9/10. The S&P 500 started the week at 4,535 and closed at 4,459. The NASDAQ opened the week at 15,376 and closed at 15,115.

Treasury Yields Relatively Unchanged

U.S. Treasury yields rose late in the week following the latest release of unemployment claim numbers. The latest producer price index also pushed yields upward.

On Friday, the Bureau of Labor released the producer price index. For the month of August, the index rose 0.7%, which is above the 0.6% economists expected. Year-over-year, the index jumped 8.3%, marking the largest annual increase since November 2010.

"Supply chain bottlenecks have persisted longer and more intensely than most predicted at the beginning of this year, and widespread labor shortages are among the main input issues producers are dealing with," said Senior Economist at FHN Financial, Will Compernolle. "This means consumer price inflation should remain elevated for a while."

The benchmark 10-year Treasury note yield hit a high of 1.38% on Tuesday, but reached a low of 1.29% on Thursday. The 30-year Treasury bond yield also reached a high of 2.00% on Tuesday, while falling to a low of 1.89% on Thursday.

On Thursday, the Department of Labor reported weekly initial jobless claims at 310,000. This is below the 345,000 initial claims reported last week and 335,000 that analysts' expected. The four-week moving average dipped to 339,500. Continuing claims decreased by 22,000 to 2.78 million for the most recent week for which data is available.

"As the market struggles to snap out of its losing streak this week, the pandemic-era low for jobless claims could be a potential catalyst," said E*TRADE Financial Managing Director of Investment Strategy, Mike Loewengart.

The 10-year Treasury note yield closed at 1.34% on 9/10, while the 30-year Treasury bond yield was 1.93%.

Mortgage Rates Hold Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 9. The report showed interest rates held relatively steady week-over-week.

This week, the 30-year fixed rate mortgage averaged 2.88%, up from last week's average of 2.87%. Last year at this time, the 30-year fixed rate mortgage averaged 2.86%.

The 15-year fixed rate mortgage averaged 2.19% this week, up slightly from last week's average of 2.18%. At this time last year, the 15-year fixed rate mortgage averaged 2.37%.

"While the economy continues to grow, it has lost momentum over the last two months due to the current wave of new COVID cases that has led to weaker employment, lower spending and declining consumer confidence," said Freddie Mac's Chief Economist, Sam Khater. "Consequently, mortgage rates dropped early this summer and have stayed steady despite increases in inflation caused by supply and demand imbalances. The net result for housing is that these low and stable rates allow consumers more time to find the homes they are looking to purchase."

Based on published national averages, the savings rate was 0.06% as of 8/16. The one-year CD averaged 0.14%.

Published September 10, 2021
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