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Thursday July 24, 2014

Finances

Finances
 

Family Dollar Reports Quarterly Earnings

Family Dollar Stores, Inc. (FDO), a discount retail store, reported its quarterly earnings on January 9, 2014. Although the retailer's sales and net income were in line with previous quarters, investors worry about the company moving forward.

Family Dollar reported net sales of $2.5 billion for the quarter. This represents a slight increase from the comparable quarter last year when the company reported net sales of $2.42 billion.

The company reported quarterly net income of $78 million or $0.68 per share. This represents a decrease of 2.8% from the same period last year when the company reported net income of $80.28 million or $0.69 per share.

"Today, we reported sales and earnings for the first quarter of fiscal 2014 that were in-line with our previously provided guidance," said Howard R. Levine, Chairman and CEO of Family Dollar Stores. "While the top line was pressured, we expanded gross margin and managed inventory levels well. In addition, we continued to make progress in our longer-term initiatives. We opened 126 new stores and renovated, relocated or expanded 179 stores."

While sales and net income have remained relatively stable for Family Dollar, analysts and investors are somewhat concerned moving forward. The company lowered guidance for fiscal year 2014 and prepared investors for lower margins and comparable store sales. The discount retailer has a number of headwinds in 2014 that may make the year a difficult one.

Family Dollar Stores, Inc. (FDO) shares ended the week at $67.48, up 1.76% for the week.

Bed, Bath & Beyond Reports Earnings


Bed, Bath & Beyond, Inc. (BBBY), a home goods retailer, reported its quarterly earnings on January 8, 2014. The company reported increased earnings, but analysts were disappointed in the company's performance when compared to other home goods retailers.

Bed, Bath & Beyond reported net sales of $2.86 billion for the quarter. This represents an increase from last year at this time when the company reported net sales of $2.70 billion.

The company reported net income of $237.20 million or $1.12 per share. This represents an increase from the comparable quarter last year when the company reported net income of $232.75 million or $1.03 per share.

After its earnings report, Bed, Bath & Beyond's stock price declined almost 13% during trading on January 9. Analysts had expected a larger increase in sales and net income for the quarter. The slower-than-expected growth concerned investors since increased sales of home improvement products caused companies like Williams-Sonoma and Home Depot to surge last year. In 2013, the share prices for Williams-Sonoma and Home Depot increased 27% and 29%, respectively. During the same period, Bed Bath & Beyond's share price increased only 22%.

Bed, Bath & Beyond (BBBY) shares ended the week at $69.94, down 12.8% for the week.

WD-40 Reports Quarterly Earnings


WD-40 Company (WDFC), a company that sells multi-purpose maintenance products, reported its quarterly earnings on January 8, 2014. The company had a record level of sales this quarter and is expanding into new geographic areas.

The company reported quarterly net sales of $95.54 million. This represents an increase from the comparable period last year when the company reported net sales of $95.26 million.

WD-40 Company announced net income of $11.48 million or $0.74 per share for the quarter. This represents an increase from last year when the company reported net income of $10.94 million or $0.69 per share.

"We are pleased with our results in the quarter coming off a great fiscal year 2013," said Garry Ridge, WD-40 Company President and CEO. "While we only had a small increase in sales across the globe due to the timing of promotional activities, the first quarter was the largest sales quarter in our history. We remain confident that the base business we have established along with the continued focus on our revised strategic initiatives will produce solid results for the year."

WD-40 Company has been growing. They launched their WD-40 Specialist product line in eight new countries in the first quarter of fiscal 2014 including Australia and Turkey. The WD-40 brand's global reach now includes 188 countries.

WD-40 Company (WDFC) shares ended the week at $73.24, down 4.09% for the week.

The Dow started the week of 1/6 at 16,474 and closed at 16,437 on 1/10. The S&P 500 started the week at 1,832 and closed at 1,842. The NASDAQ started the week at 4,137 and closed at 4,175.
 

Treasuries Rise on Slow Jobs Growth

On January 10, the U.S. Department of Labor reported that the economy added fewer jobs than expected for the month of December. As a result, treasury prices rose and yields fell to their lowest level in two weeks.

The Department of Labor announced that the U.S. economy only added 74,000 jobs in December. This number was well below the average forecast by economists that 194,000 jobs would be added. In 2013, job growth has averaged 182,000 jobs per month.

The unemployment rate decreased from 7% in November to 6.7% in December. However, this was likely due to individuals leaving the labor force. The labor participation rate dropped slightly to 62.8%, the lowest level in three decades. "This has been a two steps forward and one step back recovery," said Mark Hamrick, Washington Bureau Chief at Bankrate.com.

The bond market responded with lower yields. The 10-year Treasury yield fell from 2.97% to 2.88% in early trading on Friday, January 10. The 30-year bond yield fell from 3.88% to 3.82%. "I don't think yields will break out of the 2.8% to 3% range," said Ira Jersey, an Interest-Rate Strategist at Credit Suisse Group. "A lot of shorts have to be covered particularly going into the weekend." A short position is a bet that an asset will decline in value.

Given the recent employment figures, many investors and analysts wonder if the Federal Reserve will reconsider their current course. The Fed has decided to begin reducing its bond purchases by $10 billion dollars per month starting this month. In addition, the unemployment rate is reaching the 6.5% trigger set by the Fed for increasing the Federal Funds rate. However, with the U.S. recovery proving to be so fragile it will be interesting to see whether new Fed Chair Janet Yellen will encourage a change in the direction of Fed policy.

The 10-year Treasury note yield finished the week of 1/6 at 2.86% while the 30-year Treasury note yield finished the week at 3.80%.
 

Interest Rates Remain Largely Unchanged

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 9. The results show average fixed mortgage rates staying largely stagnant for the week.

The 15-year fixed rate mortgage averaged 3.56% this week. This is a slight increase from last week when it averaged 3.55%. One year ago at this time, the 15-year fixed rate mortgage averaged 2.66%.

This week, the 30-year fixed rate mortgage averaged 4.51%. This is a slight decrease from last week when it averaged 4.53%. Last year at this time, the 30-year fixed rate mortgage averaged 3.4%.

"Mortgage rates were little changed amid a week of light economic reports," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "Of the few releases, the private sector added an estimated 238,000 jobs in December, which exceeded the market consensus and followed an upward revision of 14,000 jobs in November, according to the ADP Research Institute. Also, the Institute for Supply Management reported a greater slowing in growth in the non-manufacturing industry in December than the market forecast."

The money market fund finished the week of 1/6 at 0.4%. The 1-year CD finished at 0.7%.

Published January 10, 2014


Previous Articles

More Milk Needed in General Mills' Bowl

Scholastic Reports Strong Results

Nike Reports Strong Earnings

Men’s Wearhouse on the Comeback Trail

Dollar General Delivers Strong Results

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