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Tuesday September 23, 2014

Finances

Finances
 

H&R Block Sees Positive Annual Gains

H&R Block, Inc. (HRB) announced its financial results for fiscal 2014 on Thursday, June 11. The company saw increases in both revenue and net income for the year.

H&R Block reported revenue for the year of $3.024 billion. This was a 4.1% increase over the $2.906 billion it reported for fiscal 2013.

H&R Block’s President and CEO, Bill Cobb, had this to say about the company’s fiscal 2014 results: “We delivered a strong year of both revenue and earnings growth and lived up to our long-standing tradition of being the world's leading tax services provider. Though we anticipated an overall decline in return counts, our Tax Plus strategy is working, and we will continue to focus on enhancing the client experience and delivering best-in-class products and services to drive profitable growth. Our improving client satisfaction scores are a testament to the value we bring to our clients, positioning us well for 2015 and beyond.”

Net income for the year was $500 million or $1.81 per share. This was an 8% increase over the $465 million, or $1.69 per share, reported for fiscal 2013.

H&R Block also announced that during fiscal 2014 they prepared 24.2 million tax returns. This was a 2.6% decrease from the prior year. The company primarily attributed this decline to its decision to discontinue its U.S.-based free federal 1040EZ promotion. The discontinuance of this promotion was part of the company’s strategy to increase revenues through a balance of an improved return mix and changes to its pricing strategy. In addition to its traditional return preparation services, H&R Block also develops and markets tax preparation software known as H&R Block At Home.

H&R Block, Inc. (HRB) shares ended the week at $32.49.

Burlington Stores Announces Results


Burlington Stores, Inc. (BURL), a retailer of branded apparel, announced its first quarter results on Tuesday, June 10. Burlington Stores pleased investors with increases in net sales and net income.

Burlington Stores net sales for the quarter were $1.13 billion, an increase of 5.9% or $63.3 million over the same period last year. Net sales were bolstered by a 2.7% increase in comparable sales.

Tom Kingsbury, President and CEO of Burlington Stores, had this to say about the company’s quarter: “We are extremely pleased with our solid results in the first quarter as we continued to build upon our momentum from 2013 with both strong sales and bottom line performance. We achieved a comparable store sales increase of 2.7%, on top of a 3.4% increase last year, which we believe is a direct result of the continued improvement in the execution of our off-price model. We remain focused on delivering great value, brands and fresh product to our customers every day as well as executing our growth initiatives to improve comparable store sales, expand our retail store base and enhance our operating margins.”

Net income for the quarter was $18.6 million or $0.25 per share. This was a marked improvement over the net income of $6.1 million, or $0.08 per share, reported during the comparable period last year.

As CEO Tom Kingsbury mentioned, Burlington’s 2.7% increase in comparable store sales during the first quarter follows on the heals of a 3.4% increase from last year. The company also saw an increase of $40.3 million from new and non-comparable stores during the quarter. Burlington Stores attributed these increases to improved execution of its off-price model. It was good news for investors that the company was able to continue its momentum from the prior year to start its next fiscal year.

Burlington Stores, Inc. (BURL) shares ended the week at $26.69.

RadioShack’s Woes Continue


RadioShack Corporation (RSH) announced its first quarter results on Tuesday, June 10. For a company that has seen consecutive quarters of losses, the first quarter for RadioShack did not provide any relief.

RadioShack reported that net sales for the quarter were $736.7 million, a substantial fall from the $848.4 million reported during the same period last year. Compounding the bad news, comparable store sales fell 14% from the comparable period last year.

RadioShack’s CEO, Joseph C. Magnacca, commented on the quarterly results: “Overall, our first quarter performance was challenged by an industry-wide decline in consumer electronics and a soft mobility market which impacted traffic trends throughout the quarter. In particular, our mobility business was weak due to lackluster consumer interest in the current handset assortment and increased promotional activities across the industry including the wireless carriers. This resulted in disappointing sales and gross margin performance.”

RadioShack reported a loss of $98.3 million or $0.97 per share. This loss was a significant decrease over the $23.3 million loss reported during the comparable period last year.

This past quarter showed that RadioShack’s hard times seem unstoppable and are in fact continuing to worsen. Last year the company closed 22 stores and expects to close an additional 200 stores this year. With the bad news for RadioShack only getting worse, many analysts predict the company could soon file bankruptcy. Right now all eyes are on whether the company can find some way to get out of its current tailspin.

RadioShack (RSH) shares ended the week at $1.16.

The Dow started the week of 6/9 at 16,926 and closed at 16,776 on 6/13. The S&P 500 started the week at 1,949 and closed at 1,936. The NASDAQ started the week at 4,324 and closed at 4,311.
 

Treasuries Fall on Rate Hike Speculation

Treasury prices fell on Friday, June 13 as speculation regarding future interest rate hikes kicked into high gear following comments from Bank of England Gov. Mark Carney. In addition, Treasury prices responded to mixed data released this week regarding the U.S. economic recovery.

Short-term Treasury bonds, such as the three and five-year bonds, responded negatively on Friday, June 13 to comments late Thursday from Bank of England Gov. Mark Carney. In a speech yesterday, Gov. Carney suggested that the central bank may need to raise interest rates earlier than previously expected. That news caused tremors across the Atlantic as analysts and investors speculated that the Federal Reserve could announce similar news at its monthly meeting next week.

Fears that the Federal Reserve may soon announce interest rate hikes were echoed by Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group AG. “You have a hawkish statement out of a central bank,” he said. “That could mean the Fed may not be too far behind.”

Shorter Treasury bonds, such as the three and five-year bonds, are more susceptible to interest rates. As such, the 3-year bond yield was headed for its highest close early Friday morning since September, having risen four basis points on the day to 0.939%. The 5-year Treasury note rose four basis points to 1.701%.

Treasuries were able to cut losses on Friday, however, after a flurry of mixed economic data drove investors to the safety of U.S. government bonds. The Thomson/Reuters consumer sentiment index fell from 81.9 to 81.2 for June. This was well below the forecast for a rise to 83.

Wholesale prices also surprisingly fell last month by 0.2%. Economists had expected a rise of 0.1%. Import prices, which help measure inflation, increased 0.1% during May. That was half the increase economists had predicted.

The 10-year Treasury note yield finished the week of 6/13 at 2.60% while the 30-year Treasury note yield finished the week at 3.41%.
 

Interest Rates Rise on Jobs Data

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, June 12. The results show mortgage rates rising after a positive jobs report last week.

The 30-year fixed rate mortgage averaged 4.20% this week. This represents an increase from last week when the 30-year fixed rate mortgage averaged 4.14%.

This week, the 15-year fixed rate mortgage averaged 3.31%. This was an increase from last week when the 15-year fixed rate mortgage averaged 3.23%.

Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on this week’s increase in rates: “Mortgage rates continued to climb for the second week in a row following the increase in 10-year Treasury yields. Also, the economy added 217,000 jobs in May, following a 282,000 surge in April and a 203,000 increase in March. Meanwhile, the unemployment rate in May held steady at 6.3%.”

The money market fund finished the week of 6/13 at 0.4%. The 1-year CD finished at 0.7%.

Published June 13, 2014


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