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Tuesday February 27, 2024

Finances

Finances
 

Walmart Releases Earnings Report

Walmart Inc. (WMT) announced its fourth quarter and full-year results on Tuesday, February 20. The company’s shares rose more than 5% after beating fourth-quarter projections.

The company posted quarterly revenue of $173.39 billion, up 5.7% from $164.05 billion reported during the same quarter last year. This exceeded analysts’ expectations of $170.33 billion. Full-year revenue came in at $648.13 billion.

“Our team delivered a great quarter, finishing off a strong year,” said Walmart CEO, Doug McMillon. “We crossed $100 billion in eCommerce sales and drove share gains as our customer experience metrics improved, even during our highest volume days leading up to the holidays. We are proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members.”

For the quarter, Walmart reported net income of $5.49 billion or $2.03 per adjusted share. This was down 12.5% from the $6.28 billion or $2.32 per adjusted share reported in the same quarter the previous year. The company reported net income of $15.51 billion for the year.

The Arkansas-based retailer reported Walmart U.S. eCommerce sales growth of 17% for the quarter, primarily driven by the company’s strong performance in pickup and delivery. Walmart’s Global advertising business grew 33% for the quarter, which includes 22% for Walmart Connect in the U.S. Walmart’s U.S. membership-based warehouse store, Sam’s Club saw a 10% growth in membership income, leading to a record total membership and its advertising business was up 11% at the end of the fourth quarter. The company reaffirmed its full-year outlook and expects net sales to increase between 3% and 4%. Full-year adjusted earnings per share are expected to be between $2.23 to $2.37 post stock split.

Walmart, Inc. (WMT) shares ended the week at $175.56, up 3.6% for the week.

Home Depot Hammers Out Earnings


The Home Depot, Inc. (HD) released its fourth quarter and full-year earnings report on Tuesday, February 20. The home improvement retailer reported lower sales for the quarter, causing its shares to fall 1% following the release of the report.

Home Depot reported fourth quarter revenue of $34.79 billion, down 2.9% from $35.83 billion during the same quarter last year. Analysts’ expected revenue of $34.64 billion for the quarter. Revenue for the full year came in at $152.67 billion.

“After three years of exceptional growth for our business, 2023 was a year of moderation,” said Home Depot CEO, Ted Decker. “During fiscal 2023, we focused on several initiatives to strengthen the business while also staying true to our strategic investments of creating the best interconnected experience, growing our pro wallet share through our unique ecosystem of capabilities, and building new stores. We remain excited about the future for home improvement and our ability to grow share in our large and fragmented market, which we estimate to be over $950 billion.”

Home Depot reported quarterly net earnings of $2.80 billion or $2.82 per adjusted share. This was a 16.7% decrease from net earnings of $3.36 billion or $3.30 per adjusted share during the same quarter last year. For the full year, net income reached $15.14 billion.

The Atlanta, Georgia-based home improvement retailer reported that its U.S. comparable store sales declined 4% during the fourth quarter. Home Depot also reported a decrease of 1.7% in customer transactions during the quarter and the average ticket fell 1.3% to $88.87. The company opened 13 new stores in fiscal 2023 including eight in the U.S. and five in Mexico and plans to open 12 new stores for fiscal 2024. The company anticipates opening 80 new stores over the next five years. Home Depot invested $1.5 billion dollars in three acquisition purchases in fiscal 2023 and returned approximately $8 billion dollars to its shareholders in the form of share repurchases.

The Home Depot, Inc. (HD) shares ended the week at $371.83, up 4.7% for the week.

La-Z-Boy Delivers Earnings Report


La-Z-Boy, Inc. (LZB) announced its third quarter earnings on Tuesday, February 20. The residential furniture retailer missed revenue estimates, causing the company’s stock to plummet 9% following the report’s release.

The company posted quarterly sales of $500.4 million, down 13% from $572.7 million reported during the same quarter last year. This missed analysts’ expectations of $523.1 million in sales.

“We remain optimistic about the mid-to-long-term growth potential for our industry, given structural housing shortages and the expectation of improvements in interest rates and housing affordability, and our ability to disproportionately grow with the consumer,” said La-Z-Boy CEO, Melinda D. Whittington. “After January’s weather disruptions, production and deliveries are now back to normal as we focus on servicing our customers and consumers with the high quality, comfortable products they expect from us.”

For the quarter, La-Z-Boy reported net income of $28.6 million or $0.66 per adjusted share. This was a decrease from net income of $31.7 million or $0.74 per adjusted share in the same quarter last year.

The Michigan-based furniture manufacturer, known for its recliners, sofas and chairs, experienced a decline in delivered sales for the company-owned Furniture Galleries stores, falling 18% to $205 million in the quarter. Wholesale sales decreased 13% to $356 million, attributed to a decline in delivered volume compared to the same time last year. The company expects revenue for the fourth quarter of fiscal 2024 to be between $505 million to $535 million.

La-Z-Boy, Inc. (LZB) shares ended the week at $36.93, down 2% for the week.

The Dow started the holiday week of 2/20 at 38,576 and closed at 39,132 on 2/23. The S&P 500 started the week at 4,989 and ended at 5,089. The NASDAQ started the week at 15,680 and finished at 15,997.
 

Treasury Yields Vary

U.S. Treasury yields declined at the start of the week amid lingering uncertainty surrounding both the economic outlook and interest rates. Yields continued downward at the end of the week as investors contemplated the trajectory of interest rates following recent remarks from Federal Reserve officials.

On Wednesday, the Federal Reserve released the minutes from the Federal Open Market Committee (FOMC) meeting on January 30 and 31, 2024. At the meeting, policy makers agreed to leave its overnight borrowing rate unchanged and indicated that any future cuts would only occur once the FOMC had stronger confidence in the decline of inflation.

According to the minutes, “In discussing the policy outlook, participants judged that the policy rate was likely at its peak for this tightening cycle. Participants generally noted that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2%.”

The benchmark 10-year Treasury note yield opened the week of February 19 at 4.28% and traded as high as 4.35% on Thursday. The 30-year Treasury bond opened the week at 4.43% and traded as high as 4.50% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 12,000 to 201,000 for the week ended February 17. This came in lower than economists’ forecast of 218,000 claims for the week. Continuing unemployment claims decreased by 27,000 to 1.86 million.

“Job layoffs remain minimal so wage pressures from a tight labor market will continue to push off the day when Fed officials can safely lower interest rates without reigniting inflation," said chief economist at FWDBONDS, Christopher Rupkey. "The key economic indicator of whether the economy is slowing down has been and always will be job losses."

The 10-year Treasury note yield finished the week of 2/19 at 4.25%, while the 30-year Treasury note yield finished the week at 4.37%.
 

Mortgage Rates Edge Higher

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 22. The survey showed mortgage rates remain elevated, approaching the 7% mark.

This week, the 30-year fixed rate mortgage averaged 6.90%, up from last week’s average of 6.77%. Last year at this time, the 30-year fixed rate mortgage averaged 6.50%.

The 15-year fixed rate mortgage averaged 6.29% this week, up from last week’s 6.12%. During the same week last year, the 15-year fixed rate mortgage averaged 5.76%.

"Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates,” said Freddie Mac’s Chief Economist, Sam Khater. “Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market. The current cycle is different than historical norms, as housing affordability is so low that good economic news equates to bad news for homebuyers, who are sensitive to even minor shifts in affordability.”

Based on published national averages, the savings rate was 0.46% as of 2/20. The one-year CD averaged 1.83%.

Editor’s Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published February 23, 2024
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