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Wednesday August 27, 2014

Finances

Finances
 

Macy’s Reports Disappointing Revenue

Macy’s, Inc. (M), a department store established in 1830, reported its latest quarterly earnings on Wednesday, May 14. The company reported an increase in net income year-over-year, but a decrease in quarterly revenue.

Macy’s reported quarterly revenue of $6.28 billion. This represents a slight decrease from the same period last year when the company reported revenue of $6.39 billion.

“Overall, business trends were soft in January through March, with the exception of the Valentine’s Day shopping period,” said Terry Lundgren, Macy’s Chairman and CEO. “The trend improved in April when the weather began to turn in northern climate zones. We see this as a good sign moving forward into the second quarter. We continue to have a positive outlook for 2014 and are reaffirming the full-year guidance we provided in January. The fundamentals of our business and our ongoing strategies remain strong. This, combined with the momentum we have built over the past five years, leads us to feel confident about the company’s prospects.”

The company reported net income of $224 million. This represents a slight increase from the comparable period last year when the company reported net income of $217 million.

Macy’s is calling on charitable organizations to sign up for its ninth annual Shop For A Cause Day. Qualified organizations can apply by going to shopforacause.macysinc.com and filling out an application. Customers can purchase $5 Shop For A Cause passes from a Macy’s store or a participating charity. These passes may be used to purchase Macy’s merchandise on August 23, 2014. 100% of the proceeds from passes sold in Macy’s stores will go to the March of Dimes. If a customer wishes to benefit a particular charity they must search for participating charities at shopforacause.macysinc.com/ListCharities.aspx and purchase passes from that charity.

Macy’s Inc. (M) shares ended the week of 5/12 at $58.06.

Nordstrom’s Earnings Impress


Nordstrom, Inc. (JWN), a fashion specialty retailer, reported its latest quarterly earnings on Thursday, May 15. The company’s earnings exceeded expectations in a poor retail climate.

The company reported revenue of $2.93 billion. This represents an increase over the comparable period last year when the company reported revenue of $2.75 billion.

Nordstrom President Blake Nordstrom commented on the company’s current strategy during an earnings conference call on February 20, 2014. “We strongly believe in the customer strategy we are in the midst of executing. We are focused squarely on improving the customer experience and the sustainable platform for long-term, profitable growth that it’s enabling. We’re encouraged by the progress we’ve achieved to date and the multiple opportunities ahead of us.”

Nordstrom reported net income of $140 million. This represents a decrease from the same period last year when the company reported net income of $145 million. Earnings per share came in at $0.72, ahead of expectations of $0.70 per share.

Nordstrom recently launched nordstromrack.com. The site will include merchandise from both Nordstrom Rack and HauteLook. The site will market products discounted up to 75%. In addition to giving Nordstrom Rack an online presence, Nordstrom opened four new Nordstrom Rack stores in April 2014.

Nordstrom, Inc. (JWN) shares ended the week of 05/12 at $70.57.

Wal-Mart Learns Bigger Isn’t Always Better


Wal-Mart Stores, Inc. (WMT), an international retailer, reported its latest quarterly earnings on Thursday, May 15. The company’s earnings disappointed investors, but there were signs that Wal-Mart is heading in the right direction.

Wal-Mart reported revenue of $114.96 billion for the quarter. This is an increase of 0.8% compared to the same period last year when Wal-Mart reported revenue of $114.07 billion.

“Wal-Mart’s underlying business is solid, and I’m confident in our long-term strategies,” said Doug McMillon, Wal-Mart Stores President and CEO. “We’ll continue to invest in price and enhance our service to improve sales. We remain focused on growth across the enterprise, especially in small formats like Neighborhood Market in the U.S.”

The company reported quarterly net income of $3.58 billion. This represents a decrease of 5.1% from the comparable period last year when the company reported net income of $3.78 billion.

While Wal-Mart’s revenue and net income figures largely missed expectations, Wal-Mart’s Neighborhood Market stores impressed with a 5% increase in sales. These Neighborhood Market stores are 20% of the size of Wal-Mart supercenters. It is becoming increasingly common for consumers to buy big-ticket items like televisions and furniture online, making big-box retail stores like Wal-Mart supercenters less relevant in today’s consumer culture. The branding of Wal-Mart’s Neighborhood Market stores is similar to that of the grocery chain Whole Foods. Wal-Mart currently operates 400 Neighborhood Markets and over 3,300 supercenters.

Wal-Mart Stores, Inc. (WMT) shares ended the week of 05/12 at $77.01.

The Dow started the week of 5/12 at 16,585 and closed at 16,491 on 5/16. The S&P 500 started the week at 1,880 and closed at 1,878. The NASDAQ started the week at 4,093 and closed at 4,091.
 

Treasuries Fall on Housing Data

Treasuries fell on Friday, May 16 for the first time in four days amid concerns that the recent rally in the 30-year bond was premature as signs pointed to a strengthening U.S. economy. In addition, comments from central bankers worldwide indicated they plan to keep current monetary stimulus policies intact in order to aid further economic recovery.

Data released this week showed that the pace of U.S. home construction increased in April to the highest level since November. The data showed U.S. housing starts climbed 13.2% in April to an annualized rate of 1.07 million. This was higher than March’s pace of 947,000 and beat estimates that April’s figure would be only 980,000.

Positive housing data caused Treasury yields to rise, pushing prices down. As of early Friday, May 16, yields on the 10-year note rose two basis points to 2.51%. The yield on the 30-year bond rose one basis point to 3.33%. This year the 30-year bond yield has returned 13%, its best start to a year in almost two decades. It lost 15% for all of 2013.

“The housing numbers were good and the market is using that to take a pause from the strong and fast rally we’ve seen,” said Sean Murphy, a trader in New York at Societe Generale SA. “The market is very gun shy to make a big push for higher yields. It’s not clear that the rally momentum is over.”

Bonds have not only rallied in the U.S. but in Europe as well because traders believe central bankers will continue to maintain monetary stimulus policies. Last week Federal Reserve Chair Janet Yellen said there are no immediate plans to raise interest rates, which have been held close to zero since 2008. In addition, central bankers in Japan, Europe and England have all indicated their support for additional forms of monetary stimulus. As such, the rally in bond yields appears poised to continue for the near future.

The 10-year Treasury note yield finished the week of 5/12 at 2.52% while the 30-year Treasury note yield finished the week at 3.35%.
 

Interest Rates Decline

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, May 15. The results showed mortgage rates dropping slightly to a six month low.

The 30-year fixed rate mortgage averaged 4.20% this week. This represents a decrease from last week when it averaged 4.21%. Last year at this time, the 30-year fixed rate mortgage averaged 3.51%.

This week, the 15-year fixed rate mortgage averaged 3.29%. This represents a decrease from last week when it averaged 3.32%. One year ago, the 15-year fixed rate mortgage averaged 2.69%.

“Mortgage rates were little changed amid a week of light economic reports. These lower than expected rates are welcome news with the spring home buying season underway and may even provide those who haven’t already refinanced possibly a reason to take another look. Of the few releases, advanced retail sales rose 0.1% in April, but below the market forecast consensus of a 0.4% increase. Also, the Producer Price Index for final demand rose 0.6% in April which followed a 0.5% boost from the prior month.”

The money market fund finished the week of 5/12 at 0.4%. The 1-year CD finished at 0.7%.

Published May 16, 2014


Previous Articles

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Twitter User Growth Declines

Another Great Quarter for Netflix

Google Reports Quarterly Earnings

International Speedway Looks to Gain Speed

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