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Thursday August 18, 2022



Campbell Soup's Sales Slide

Campbell Soup Company (CPB) released its latest quarterly earnings on Wednesday, September 1. The company's profit rose despite a dip in sales.

Net sales came in at $1.87 billion for the quarter. This was down from $2.11 billion last year at this time.

"The fourth quarter was a positive finish to a solid year during which we successfully navigated a difficult environment, made significant progress advancing our strategic plan and addressed the executional pressures we experienced in the third quarter," said Campbell's President and CEO Mark Clouse. "Our growth in adjusted EPS during fiscal 2021 on comparable organic sales, coupled with our expanded share growth across the majority of our core categories, demonstrated strong performance especially when compared to the significant growth in the prior year."

The company reported net earnings of $288 million, or $0.95 per share. During the same quarter last year Campbell Soup posted net earnings of $86 million, or $0.28 per share.

The company's Meals & Beverages segment, which includes its flagship line of canned soups, reported $851 million in sales for the quarter, a 16% decrease from the prior year's quarter. Segment operating earnings fell 30% to $129 million. The company's Snacks segment led the way with $1.02 billion in sales. However, this was still a 6% decrease from the same quarter last year.

Campbell Soup Company (CPB) shares ended the week at $43.05, up 4.4%.

Land's End Posts Sales Growth

Land's End, Inc. (LE) reported earnings for the second quarter on Thursday, September 2. The online retailer's income soared year over year but supply chain issues have clouded the company's outlook.

The company reported revenue of $384.1 million for the quarter. This was up 23.1% from $312.1 million in income last year at this time.

"We are very pleased with our performance this quarter, delivering record second quarter revenue and strength across all of our financial metrics," said Land's End CEO Jerome Griffith. "Our improved product assortment and increased digital marketing spend drove the strength in our Global eCommerce business."

The company's quarterly net income was $16.2 million for the second quarter. During the same quarter last year, Land's End reported $4.4 million in net income.

Despite the strong quarter, Land's End's stock fell more than 9% following the earnings release. Company CEO Jerome Griffith noted that shutdowns at several overseas factories have created uncertainty in the supply chain, which creates difficulty setting the company's outlook for the near future. The company expects net revenue for the third quarter to come in between $390 million and $405 million. Net income is expected to be between $6.5 million and $9.0 million for the upcoming quarter.

Land's End, Inc. (LE) shares ended the week at $28.25, down 22.2% for the week.

Zoom Shares Fall Despite Solid Earnings

Zoom Video Communications, Inc. (ZM) released its second quarter earnings on Monday, August 30. Despite strong earnings, the company's stock fell over 15% the day after the report's release.

The videoconferencing technology company reported revenue of $1.02 billion for the quarter. This was an increase of 54% year over year and up from $663.52 million reported at this time last year.

"In Q2, we achieved our first billion-dollar revenue quarter while delivering strong profitability and cash flow," said Zoom CEO Eric S. Yuan. "Q2 also marked several milestones on our expansion beyond the [unified communications] platform. We launched Zoom Apps, bringing over 50 apps directly into the Zoom experience, and Zoom Events, an all-in-one digital events service. Today we are a global brand counting over half a million customers with more than 10 employees, which we believe positions us extremely well to support organizations and individuals as they look to reimagine work, communications, and collaboration."

Zoom posted net income attributable to common stockholders of $316.93 million for the quarter. This was up from $185.74 million of net income at this time last year.

Zoom rose in popularity during the pandemic as businesses and households turned to remote meetings. The company updated its third quarter guidance and expects revenue to be between $1.015 and $1.020 billion. For the full year, the company expects revenue between $4.005 billion and $4.015 billion. Zoom's guidance anticipates difficulties in the online business due to individual consumers and small businesses holding more meetings in-person.

Zoom Video Communications, Inc. (ZM) shares ended the week at $298.29, down 12.7% for the week.

The Dow started the week at 35,472 and closed at 35,369 on 9/3. The S&P 500 started the week at 4,514 and closed at 4,535. The NASDAQ opened the week at 15,166 and closed at 15,364.

Treasury Yields Fluctuate on Jobs Report

Yields on U.S. Treasury bonds fell, then rose again shortly after release of the U.S. Labor Department August jobs report. While job additions were disappointing, the unemployment rate was a bright spot in the report.

On Friday, the Labor Department reported employers added 235,000 jobs in August. This was far below the 720,000 job additions analysts had predicted. The report shows the U.S. economy is still down 5.3 million jobs since February 2020. Analysts partially attribute the drop in new jobs to heightened fears stemming from increased COVID-19 Delta variant cases.

"I think the fingerprints of the Delta variant were all over this report," said Chief Economist at Bank of the West in San Francisco, Scott Anderson. "We saw a big pullback in pandemic-impacted industries, and it was a pretty broad-based disappointment."

The benchmark 10-year Treasury note yield hit a low of 1.268% on Wednesday, down from Monday's opening rate of 1.305%. The 30-year Treasury bond yield also hit a low of 1.881% on Wednesday after opening at 1.918% on Monday.

Meanwhile the unemployment rate fell from 5.4% in July to 5.2% for the month of August. While the number of those unemployed has decreased to 8.4 million, this is well-above the 5.7 million unemployed in February of 2020. Some analysts attribute unemployment rates to a mismatch between the jobs which are available and employees' expectations.

"Delta is a game-changer," said Chief Economist at Grant Thornton accounting firm, Diane Swonk. "It's not that people are laying off workers in reaction to Delta, but people are pulling back on travel and tourism and going out to eat and that has consequences."

The 10-year Treasury note yield closed at 1.33% on 9/3, while the 30-year Treasury bond yield was 1.95%.

Mortgage Rates Relatively Unchanged

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 2. The report showed interest rates remaining fixed.

This week, the 30-year fixed rate mortgage averaged 2.87%, unchanged from last week's average. Last year at this time, the 30-year fixed rate mortgage averaged 2.93%.

The 15-year fixed rate mortgage averaged 2.18% this week, up slightly from last week's average of 2.17%. At this time last year, the 15-year fixed rate mortgage averaged 2.42%.

"Economic growth and the acceleration in inflation have moderated in the last month, giving the markets comfort and leading to a stabilization in mortgage rates," said Freddie Mac's Chief Economist Sam Khater. "Heading into the fall, home purchase demand is stable, home sales remain firm and above pre-pandemic levels, and inventory of unsold homes is tight but improving modestly. These factors will allow for home price pressures to ease over the remainder of the year."

Based on published national averages, the savings rate was 0.06% as of 8/16. The one-year CD averaged 0.14%.

Published September 3, 2021

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