Finances

Costco Wholesale Corporation (COST), an owner and operator of 608 wholesale discount warehouse stores, announced its quarterly and annual earnings on October 10, 2012.

The company reported quarterly revenue of $31.52 billion and annual revenue of $97.06 billion. The company's annual revenue represents an increase of 12% from the same period last year when the company reported revenue of $87.05 billion. The company's quarterly revenue represents an increase of 14% from the same period last year when the company reported revenue of $27.59 billion.

Costco reported net income of $609 million for the quarter and annual net income of $1.71 billion for Fiscal 2012. The company's annual net income represents an increase of 17% from the same period last year when annual net income was $1.46 billion. The company's quarterly net income was an increase of 27% from the same period last year when quarterly net income was $478 million.

In a conference call, Richard Galanti, Chief Financial Officer of Costco, commented on the quarterly results: "In terms of E-commerce, Costco.com and Costco.ca sales were up 14% for the quarter and up 9% for the entire year." He went on to add, "[D]uring the fourth quarter we launched Costco.com apps for both the Android and the Apple devices. And three weeks ago on September 16th, we transitioned Costco.com and Costco.ca sites to its new platform. The new platform certainly improves the visibility of the sites when using search engines and also we believe made several improvements to the sites from the end user perspective."

Costco Wholesale Corporation operates 608 wholesale discount warehouses, many of which also include discount gas stations. The company also operates a robust online business to aid its well-known warehouse stores.

Costco Wholesale Corporation (COST) shares ended the week at $97.55.

Safeway Announces Quarterly Earnings

Safeway, Inc. (SWY), North America's second-largest supermarket chain, announced its quarterly earnings on October 11, 2012.

The company reported third quarter revenues of $10 billion. The company's quarterly revenue represents a decrease of 0.2% from the same period last year when the company reported revenue of $10.1 billion.

Safeway announced that its net income for the quarter was $108 million. This represented a decrease from the same period last year when it reported net income of $130.3 million.

"Our just for U^™ loyalty program continues to gain momentum with our customers, and it is helping them save money every time they shop," said Steve Burd, Chairman and CEO. "The incremental sales driven by just for U helped to offset lower inflation in the third quarter and improve volume share. We are pleased with our progress in operating profit. While our operating profit margin declined 30 basis points in the quarter, the decline is explained by items that will not continue in the fourth quarter." Burd added that he expects sales to "be driven by increased just for U engagement, the roll out of our partner fuel loyalty program and the launch of our Wellness initiative."

Safeway, Inc. is a Fortune 500 company that operates 1,694 stores throughout the western and central United States and western Canada.

Safeway, Inc. (SWY) shares ended the week at $15.57.

Winnebago Industries Reports Quarterly and Annual Earnings

Winnebago Industries, Inc. (WGO), a manufacturer of a popular brand of motor homes, announced its quarterly and annual earnings on October 11, 2012.

The company reported quarterly revenue of $162.5 million and annual revenue of $581.7 million. The company's annual revenue represents an increase of 17.2% from the same period last year when the company reported revenue of $496.4 million. The company's quarterly revenue represents an increase of 24.5% from the same period last year when the company reported revenue of $130.5 million.

Winnebago Industries also reported net income of $40.9 million for the quarter and annual net income of $45 million for Fiscal 2012. The company's annual net income represents an increase from the same period last year when annual net income was $11.8 million. The company's quarterly net income was an increase from the same period last year when quarterly net income was $3.5 million.

"We were pleased with the results for the fourth quarter," said Winnebago Industries' Chairman, CEO and President Randy Potts, "particularly as they related to our motor home business. Our new value priced Winnebago Vista and Itasca Sunstar 26HE models introduced to our dealers at the Dealer Days event in May have been very popular in the marketplace and contributed to the increased demand in our fourth quarter, along with the continued success of our Class A and C diesel products."

"The dramatic increase in our sales order backlog reflects the positive dealer response to our new 2013 model year products," said Potts. "As a result of the improved demand, we ramped up production throughout the fourth quarter. We will continue to increase production during Fiscal 2013 to meet the growing demand for our products."

Winnebago Industries (WGO) shares ended the week at $11.22.

The Dow started the week at 13,610 and closed at 13,328. The S&P 500 started the week at 1,461 and ended at 1,428. The NASDAQ started the week at 3,136 and finished at 3,044.

On October 11, 2012, Treasury 30-year bonds rose for the third straight day. The rise resulted from buyers taking advantage of an uptick in yields after a weak $13 billion auction of the securities. The bonds drew a yield of 2.90%, which was higher than the 2.88% anticipated in a survey of eight of the Federal Reserve's primary dealers, according to Bloomberg News.

One interest rate strategist, Suvrat Prakash of BNP Paribas, said, "We saw too much of a concession and the investors are buying the rise in yields. People are still comfortable being long, given the global economic backdrop. We still have a lot of questions and uncertainty to wade through, which means less growth and less probability of a rate market selloff."

According to Bank of America Merrill Lynch, Treasury 30-year bonds have returned 2.5% this year, which is higher than the 2% gain in the overall U.S. Treasuries market. The yield on 30-year bonds fell to 2.83% and 10-year note yields fell to 1.69%. This is lower than last week when the 10-year Treasury note finished at 1.74% and the 30-year Treasury note yield finished at 2.97%.

On the same day, the Labor Department reported that last week applications for jobless benefits fell by 30,000 to 339,000. This number is the lowest reported since February, 2008. The lower-than-expected jobless claims appear to be the result of one state. The Labor Department said the unidentified state underreported its claims, tempering the good news surrounding the low claims number.

The 10-year Treasury note yield finished the week at 1.69% while the 30-year Treasury note yield finished the week at 2.83%.

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) on October 11, 2012. The results showed average fixed mortgage rates edging slightly higher while remaining near their all-time record lows coming off the employment report for September.

The 30-year FRM averaged 3.39% this week. That represented an increase from last week when it averaged 3.36%. Last year at this time, the 30-year FRM averaged 4.12%.

The 15-year FRM this week averaged 2.70%. This number was an increase from last week when it averaged 2.69%. A year ago at this time, the 15-year FRM averaged 3.37%

"Mortgage rates were little changed this holiday week following the employment report for September," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "Payroll employment increased by 114,000 workers, although manufacturing jobs dipped for the second month in a row. Employment in the prior two months was revised up 86,000 and the unemployment rate fell to 7.8%, marking the lowest rate since January 2009."

The money market fund finished this week at 0.5%. The 1-year CD finished at 0.7%.