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Friday April 18, 2014



Men's Wearhouse Likes the Look of Its Earnings

Men's Wearhouse, Inc. (MW) reported its quarterly earnings on Wednesday, June 12. This year's first quarter included five weeks of prom season compared with only three last year, helping Men's Wearhouse beat analyst expectations.

Men's Wearhouse reported total net sales of $616.54 million, representing an increase of 5.1% over the same period last year. One major driver of this increase in revenue was an increase in tuxedo rentals. The earlier Easter holiday caused the first quarter to include five weeks of prom season compared to only three last year. This calendar shift drove a 25% increase in tuxedo rentals for the quarter.

Men's Wearhouse announced net income of $33.09 million. This represents an increase of 23.1% over the same figure from last year.

Doug Ewert, Men's Wearhouse President and CEO, said, "Net sales at our core flagship brand Men's Wearhouse stores, which represented 65% of our total first quarter sales, got off to a slow start in February and were comping negatively until about President's weekend. After that we began to pick up in both clothing sales and tuxedo revenues."

Men's Wearhouse just recently launched its fully redesigned website. The site is designed to mimic the in-store experience of Men's Wearhouse and help men develop an entire look that fits their daily activities.

After an impressive earnings report, Men's Wearhouse, Inc. (MW) shares finished the week at $36.84, up about 2.68% from last week's close.

Tommy Hilfiger and Calvin Klein Boost PVH Quarterly Earnings

PVH Corp. (PVH), an international apparel company, reported its quarterly earnings on June 12. Though the company reported a loss, the loss was not as great as analysts expected. This was due in large part to the strong performance of the company's top two brands: Tommy Hilfiger and Calvin Klein.

PVH announced total revenue of $1.91 billion for the quarter, representing an increase of almost 34% from the same period last year. Much of this increase was due to the acquisition of Warnaco. Warnaco owned the Calvin Klein jeans and underwear licenses until PVH acquired Warnaco in February of this year. As a result, PVH announced an increase of 143% in revenue from their Calvin Klein segment during the latest quarter compared to the same quarter last year.

PVH reported a net loss of $20.01 million. The company reported net income of $95.47 million during the same period last year. Despite this first quarter loss, the company expects total revenue for this year to be $8.2 billion.

Emanuel Chirico, PVH Chairman and CEO, stated, "We are very pleased with our first quarter performance, which included our newly acquired Warnaco businesses and significantly exceeded our guidance." Mr. Chirico went on to say, "We are optimistic that the expansion of our brands globally and the sound execution of our business strategies will continue to drive long-term growth and stockholder value."

PVH now owns the Calvin Klein and Tommy Hilfiger brands. Also, PVH licenses other well known brands Geoffrey Beene and Kenneth Cole.

PVH shares ended the week at $123.30, up 8.44% from last week's close.

H&R Block Quarterly Earnings Fail to Meet Expectations

H&R Block, Inc. (HRB) reported its quarterly earnings on Wednesday, June 12. Although the company's revenue grew year-on-year, it missed analyst estimates for the quarter.

H&R Block announced quarterly revenue of $2.2 billion. This is an increase from the $2 billion in revenue reported during the same quarter last year, but it missed analyst's estimates of $2.29 billion. The company explained the shortfall by pointing to the tax changes at the beginning of the year, the IRS's delay in opening their e-filing system and increased fraud controls at the IRS.

H&R Block reported net income of $664.34 million. This represents an increase of 13.3% over the same period last year.

Greg Macfarlane, H&R Block's CEO, stated, "While we would have preferred to see stronger revenue growth, I'm pleased that we remained disciplined and exceeded our previously stated goal of reducing costs [by] $85 to $100 million. Despite the industry challenges we faced, we were able to deliver modest growth along with significant expansion in our EBITDA margin, which increased four full points to 30%." EBITDA is an acronym for the phrase "earnings before interest, taxes, depreciation and amortization." It is simply the net income of a company before interest, taxes, depreciation and amortization are taken out. It is often used to compare the profitability of one company to another because it eliminates the effect of the accounting decisions that are part of the final net income number.

H&R Block is one of the world's largest consumer tax services providers. The company was founded in 1946 and is headquartered in Kansas City, Missouri.

H&R Block (HRB) shares finished the week at $28.62, down 4.09% from last week's close.

The Dow started the week at 15,248 and closed at 15,069. The S&P 500 started the week at 1,645 and closed at 1,627. The NASDAQ started the week at 3,476 and closed at 3,424.

A Rollercoaster Week for Treasuries

The week provided plenty of ups and downs for Treasuries as investors tried to navigate a market full of uncertainty. Treasuries fell earlier in the week and then finished the week with two days of steady gains.

On Wednesday, June 12, the World Bank released its semi-annual Global Economic Prospects report. The report projected growth in the world's gross domestic product ("GDP") of 2.2% in 2013. In the same report in January 2013, the World Bank had projected growth in world GDP of 2.4%. The report explained the adjustment by stating that we are entering "a period of more stable, but slower growth."

After the report was released, Treasuries fell, driving yields up. The prospect that growth will continue to be slow prompted investors to seek the security of fixed income assets. The 10-year yield reached 2.26% on June 12, its highest level in 14 months.

However, the drop in Treasuries was not to last. The same slower-than-expected growth that initially caused investors to enter the bond market also caused some investors to believe that the Fed will postpone cutting back on their bond-purchasing program. As a result, Treasuries gained on Thursday and Friday causing yields to fall. The 10-year Treasury yield fell three basis points to 2.12% in early Friday trading.

"The market is in the process of refining Fed policy expectations," said Ian Lyngen, a government-bond strategist at CRT Capital Group LLPC. "Investors are curtailing expectations for the Fed to be more aggressive on the tapering front."

The 10-year Treasury note yield finished the week at 2.11% while the 30-year Treasury note yield finished the week at 3.29%.

Interest Rates Rise for Sixth Consecutive Week

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) on June 13. The results showed fixed mortgage rates rising for a sixth consecutive week. The average 30-year fixed rate mortgage rate has risen over 0.5% in the past six weeks.

The 15-year fixed rate mortgage averaged 3.1% this week. This is an increase from last week when it averaged 3.03%. One year ago at this time the 15-year fixed rate mortgage averaged 2.98%.

The 30-year fixed rate mortgage averaged 3.98% this week. This is an increase from last week when it averaged 3.91%. Last year at this time the 30-year fixed rate mortgage averaged 3.71%.

"Fixed mortgage rates crept up further this week following a solid employment report for May," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "The economy added 175,000 new jobs and the number of discouraged workers fell by 780,000 to the fewest since September 2009. And although the unemployment rate ticked up to 7.6%, it was due to a 420,000 increase in the size of the labor force; the underemployment rate fell from 13.9% to 13.8% in May."

The money market fund finished this week at 0.4%. The 1-year CD finished at 0.6%.

Published June 14, 2013

Previous Articles

Despite Good Results, Dollar General's Stock Stumbles

Is Tiffany & Co. a Diamond in the Rough?

Home Depot Reports Quarterly Results

Macy's Reports Quarterly Earnings

Walt Disney Reports Second Quarter Results

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