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Saturday August 8, 2020

Finances

Finances
 

Kroger Posts Strong Quarterly Sales

The Kroger Co. (KR) released its latest quarterly earnings on Thursday, June 18. The company posted increases in both sales and earnings for the quarter.

The grocery store chain reported quarterly sales of $41.55 billion. This was up from $37.25 billion during the same quarter last year.

“The COVID-19 pandemic and the most recent instances of racial injustice have changed our country in unmistakable ways, not the least of which is the devastating loss of life and livelihood that has affected so many Americans,” said Kroger CEO Rodney McMullen. “Kroger remains guided by our purpose and our values. I am proud of our associates who stepped up when we were called to be there for our customers, communities and each other.”

Kroger posted net earnings of $1.21 billion. This was up from $772 million in net earnings at this time last year.

The parent company of Ralph’s, Fry’s, Harris Teeter and Kroger grocery stores posted a strong quarter, as many consumers were limited to shopping at grocery stores during the quarter. The company’s digital sales soared, marking a 92% increase over the prior year. Identical store sales jumped 19%.

The Kroger Co. (KR) shares ended the week at $32.24, virtually unchanged for the week.

Groupon Posts Quarterly Loss


Groupon, Inc. (GRPN) reported earnings for the most recent quarter on Tuesday, June 16. The company’s revenue fell year-over-year and resulted in an increased net loss.

Revenue for the quarter came in at $374.15 million. This was down from revenue of $578.41 million during the same quarter last year.

“COVID-19 has had a major impact on our business and we have moved quickly to position Groupon to weather the pandemic and to help our merchants face these unprecedented challenges," said Aaron Cooper, Interim CEO of Groupon. "At the same time, during the first half of 2020, we created a more agile organization that is focused on improving the long-term health of our marketplace.”

The company posted a net loss of $210.48 million, or $7.53 per share. This was an increased loss from $42.49 million, or $1.49 per share at the same time last year.

Groupon’s North America segment posted a 31% decrease in gross profit. Internationally, the company’s gross profit fell 40%. These drops were attributed mainly to the loss of demand and refunds issued in response to the coronavirus pandemic.

Groupon, Inc. (GRPN) shares ended the week at $21.59, up 2.6% for the week.

CarMax Reports Earnings


CarMax, Inc. (KMX) released its latest quarterly earnings on Friday, June 19. The company’s sales suffered during the quarter due to widespread lockdowns.

The used car retailer reported revenue of $3.23 billion for the quarter. This was a 39.8% drop from $5.37 billion in sales at this time last year.

“We accomplished a lot this quarter, despite the challenges the pandemic posed,” said CarMax President and CEO Bill Nash. “We continued our omni-channel rollout and launched new initiatives, such as contactless curbside pickup, a temporary extension of our 90-day warranty and [CarMax Auto Finance] payment assistance to meet the near term needs of our customers; we introduced social distancing and enhanced sanitation procedures; and we shifted our entire wholesale business from in-person to online auctions.”

CarMax posted net earnings of $5.0 million. This was a 98% drop from the prior year’s quarterly earnings of $266.7 million.

As with other businesses deemed nonessential during the pandemic, CarMax suffered from the loss of foot-traffic in its stores. Despite the implementation of online purchasing options and contactless pickup, the company’s sales fell dramatically during the quarter. The company’s comparable store used vehicle sales fell 41.8% compared to the same quarter last year, while wholesale vehicle sales dropped 47.6%.

CarMax (KMX) shares ended the week at $91.87, up 6.1% for the week.

The Dow started the week at 25,270 and closed at 25,871 on 6/19. The S&P started the week at 2,994 and closed at 3,098. The NASDAQ started the week at 9,427 and closed at 9,946.
 

Treasury Yields Fall as Unemployment Remains Relatively Steady

Yields on U.S. Treasurys dropped this week following a report that indicated a slight drop in applications for unemployment benefits. Despite the decrease in claims, the unemployment rate remained at a high level.

On Thursday, the U.S. Department of Labor released the Unemployment Insurance Weekly Claims report for the week ending June 13. The number of initial unemployment insurance claims for the week was 1.51 million. This was down 58,000 from the week prior.

The benchmark 10-year Treasury yield hit a low of 0.69% on Thursday after opening at 0.73%. The 30-year Treasury bond yield dropped to 1.46% on Thursday after opening the day at 1.53%.

“You’re going to see elevated levels of layoffs because some businesses will permanently close,” said Roiana Reid of Berenberg Capital Markets. “But hiring and rehiring will outweigh that this summer, especially as you see big cities, such as New York, reopen.”

On Friday, Federal Reserve Chairman Jerome Powell testified before a House panel regarding monetary policy. He indicated during his remarks that he believes continued economic support efforts are necessary.

“I do think it would be appropriate to think about continuing support for people who are newly out of work and for smaller businesses who are struggling,” said Chairman Powell. “The economy is just now beginning to recover. It’s a critical phase, and I think that support would be well-placed at this time.”

The 10-year Treasury note yield closed at 0.70% on 6/19, while the 30-year Treasury bond yield was 1.47%.
 

Mortgage Rates Reach Record Lows

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 18. Mortgage rate averages hit record lows for the week.

The 30-year fixed rate mortgage averaged 3.13% for the week, down from last week’s average of 3.21%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.84%.

This week, the 15-year fixed rate mortgage averaged 2.58%, down from 2.62% last week. During the same time last year, the 15-year fixed rate mortgage averaged 3.25%.

“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market,” said Freddie Mac Chief Economist Sam Khater. “Purchase demand activity is up over 20% from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many homebuyers in the buying mood.”

Based on published national averages, the savings rate was 0.06% for the week of 6/15. The one-year CD averaged 0.26%.

Published June 19, 2020
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