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Thursday October 1, 2020



Nike's Earnings Hit Record High

NIKE, Inc. (NKE) released its first quarter earnings report on Tuesday, September 24. The company surpassed Wall Street's earnings and revenue predictions. Shares jumped more than 6% in after-hours trading, following the report's release.

Nike reported quarterly revenue of $10.66 billion. This is up 7% from last year's first quarter revenue of $9.95 billion. Revenue in the quarter topped the $10.43 billion Wall Street expected.

"Our targeted strategic investments are accelerating NIKE's digital transformation and extending our competitive advantage," said Nike President and CEO Mark Parker. "Even amidst the increasingly volatile macroeconomic and geopolitical environment, we expect our unrelenting focus on better serving the consumer to continue fueling strong, broad-based growth across our global portfolio."

The company announced net income of $1.37 billion, up 25% year-over-year from earnings of $1.09 billion. Nike reported adjusted quarterly earnings of $0.86 per share, exceeding the $0.71 per share that analysts predicted.

Nike's adjusted sales jumped 10% in the quarter. The company's Asia-Pacific and Latin America division sales growth reached 13%, with the Europe, Middle East and Africa division close behind at 12% growth. The sales growth caused shares to reach a record high.

NIKE, Inc. (NKE) shares ended the week at $92.31, up 6.13% for the week.

Pier 1 Posts Earnings

Pier 1 Imports, Inc. (PIR) reported quarterly earnings on Wednesday, September 25. The home furnishings retailer posted an earnings loss and company revenue fell short of expectations.

Pier 1 announced revenue of $304.6 million for the second quarter. This is down 14.3% from revenue of $355.3 million reported in the same quarter last year and below Wall Street's expectation of $315.2 million in revenue.

"As we expected, sales and margins remained under pressure in the second quarter," said Pier 1 Imports Interim CEO Cheryl Bachelder. "We exited non-go-forward products through aggressive clearance actions, which was the primary driver of our net loss in the quarter."

The company reported an earnings loss of $100.6 million for the quarter, compared to an earnings loss of $51.1 million one year ago. On an adjusted earnings per share basis, the company posted a loss of $24.29 per share, which exceeded analysts' estimates of a loss of $15.88 per share.

The Texas-based company's comparable sales fell 12.6% year-over-year. Pier 1 attributed the drop to a decrease in store traffic, changes in store inventory and lower average customer spending. Prior to the earnings report release, Pier 1 stock dropped over 9%.

Pier 1 Imports, Inc. (PIR) shares ended the week at $10.90, up 7.81% for the week.

Carnival Reports Earnings

Carnival Corporation & plc (CCL) reported quarterly earnings on Thursday, September 26. The cruise ship operator posted better-than-expected revenue and profit.

Carnival announced revenue of $6.5 billion for the third quarter. This is up from revenue of $5.8 billion reported in the same quarter last year and exceeded Wall Street's expectations.

"We achieved additional cost improvements largely driven by leveraging our scale, offsetting the earnings impact due to voyage disruptions from the combined impact of Hurricane Dorian, the tensions in the Arabian Gulf and the delayed delivery of Costa Smeralda," said Carnival CEO Arnold Donald. "A further reduction in guidance for ticket and onboard revenue worth $0.06 per share in part contributed to by the high level of close-in voyage disruptions was also offset."

The company reported net earnings of $1.8 billion, up from $1.7 billion reported one year ago. On an adjusted earnings per share basis, the company reported profit of $2.63 per share, surpassing the $2.53 per share that analysts predicted.

The Miami-based cruise line's quarterly earnings have exceeded analysts' expectations for the past four consecutive quarters. Carnival noted in the earnings report that its full-year expectations will be impacted by higher fuel costs. The company announced that it expects its full-year earnings to fall between $4.23 and $4.27 per share, reflecting a decrease from the prior guidance of a range of full-year earnings of $4.25 to $4.35 per share.

Carnival Corporation & plc (CCL) shares ended the week at $43.54, down 9.06% for the week.

The Dow started the week of 9/23 at 26,851 and closed at 26,716 on 9/27. The S&P 500 started the week at 2,984 and closed at 2,962. The NASDAQ started the week at 8,106 and closed at 7,940.


Treasury Yields Rise as Trade Concerns Recede

The 10-year U.S. Treasury note marked its largest daily dip in a month on Tuesday. Yields rose Friday, an optimistic response regarding trade talks scheduled for early October between the U.S. and China.

On Tuesday, yields fell after the Conference Board released its consumer confidence index reflecting an almost 10-point drop month-over-month. The index was 125.1, its lowest level since June. The index fell from 134.2 in August and fell below analysts' expectation of 131.1.

"The escalation in trade and tariff tensions in late August appears to have rattled consumers," said the Conference Board director of economic indicators, Lynn Franco. "While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers' confidence in the expansion."

During early trading on Friday, the benchmark 10-year Treasury note yield was at 1.716%, up from Thursday's closing yield of 1.698%. The 30-year Treasury bond was at 2.163% after closing Thursday at 2.143%.

On Thursday, Wang Yi, China's top diplomat said, "[A]nd so, the Chinese side, we are willing to buy more products that are needed by the Chinese market." He continued, "We hope both sides can take more enthusiastic measures, reduce pessimistic language and actions. If everyone does this, talks will not only resume, but will proceed and yield results."

Yields rose on Friday in response to Mr. Yi's remarks. The U.S. and China are scheduled to resume trade negotiations on October 10.

The 10-year Treasury note yield closed at 1.68% on 9/27, while the 30-year Treasury bond yield was 2.12%.


Mortgage Rates Dip

Freddie Mac released it latest Primary Mortgage Market Survey on Thursday, September 26. Mortgage rates declined this week.

The 30-year fixed rate mortgage averaged 3.64% this week, down from last week's average of 3.73%. Last year at this time, the 30-year fixed rate mortgage averaged 4.72%.

This week, the 15-year fixed rate mortgage averaged 3.16%, down from 3.21% last week. Last year at this time, the 15-year fixed rate mortgage averaged 4.16%.

"With both the unemployment rate and mortgage rate below 4% and near historic lows, it is no surprise that the housing market regained momentum with home sales and construction at or near decade highs," said Sam Khater, Chief Economist at Freddie Mac. "The fall housing market is poised to continue with steady gains in prices and solid sales activity."

Based on national averages, the savings rate was at 0.73% on 9/27. The one-year CD finished at 1.30%.

Published September 27, 2019

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