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Sunday December 9, 2018



Urban Outfitters Posts Earnings Beat

Urban Outfitters, Inc. (URBN) reported its quarterly earnings on Monday, November 20. The clothing company's sales exceeded Wall Street's estimates.

The company reported third quarter sales of $892.8 million, well above analysts' expectations of $861 million. Urban Outfitters reported an increase of 3.5% from the same period last year when the company reported net sales of $862.5 million.

Urban Outfitters reported net income of $45.1 million for the third quarter. This represents a decrease from the same period last year when it reported net income of $47.4 million, but exceeded analysts' expectations of $37 million.

"I am pleased to announce record third quarter sales, positive Retail segment comps at all three brands and another strong performance from Free People wholesale," said Urban Outfitters CEO Richard A. Hayne. "Record sales were driven by improved apparel execution across all channels and brands."

Urban Outfitters operates through three brands: its namesake, Anthropologie and Free People, which includes a wholesale segment. The company opened 16 new locations, while closing 6 other locations, during the 2017 fiscal year. Urban Outfitters has been hard pressed in recent quarters, with analysts' projecting a decline in comparable sales. Urban Outfitters exceeded expectations as all three brands experienced an increase in comparable sales.

Urban Outfitters, Inc. (URBN) shares ended the week at $30.16, up 7.3% for the week.

Campbell's Revenue Misses Expectations

Campbell Soup Company (CPB) released its quarterly earnings report on Tuesday, November 21. The company's revenue missed analysts' expectations.

Revenue for the quarter was $2.16 billion, just missing the $2.17 billion anticipated. The company's revenue fell 2% from $2.20 billion during the prior year's quarter.

"This was a difficult quarter, particularly for our U.S. soup business," said Campbell President and CEO Denise Morrison. "The operating environment remains volatile with a rapidly evolving retailer landscape and competitive activity pressuring the top line. Our bottom line performance was negatively impacted by a lower adjusted gross margin rate due in part to cost inflation, higher carrot costs and escalating transportation and logistics costs following the hurricane season."

Campbell posted quarterly net earnings of $275 million, or $0.91 per share. During the same quarter last year, the company posted a loss of $292 million, or $0.94 per share.

Campbell, the largest soup making company in the world, issued its 2018 guidance indicating that it expects continued decline in overall sales of up to 2% for the upcoming year. Campbell lowered its earnings outlook based on the gross margin performance of the first quarter. The company recently joined the Plant Based Food Association, as part of a strategy to increase sales. Plant-based food is a fast growing sector in the food industry. Campbell is the first major food company to join the association.

Campbell Soup Company (CPB) shares ended the week at $46.04, down 7.1% for the week.

Cracker Barrel Outperforms in its Industry

Cracker Barrel Old Country Store, Inc. (CBRL) released its latest quarterly earnings report on Tuesday, November 21. The restaurant chain's comparable sales outperformed in its industry.

The company reported revenue of $710.37 million for the first quarter. This is slightly up from $709.97 million during the same quarter last year.

"We delivered positive comparable store restaurant sales in the first quarter, outperformed our casual dining peers, and exceeded our earnings expectations, despite the challenges presented by the impact of hurricanes Harvey and Irma on many of the communities in which we, our customers and our employees live and work," said Cracker Barrel President and CEO Sandra B. Cochran. "In addition, our field and leadership teams made significant progress on the introduction of several key business initiatives, including the system-wide rollout of our off-premise platform. While being more cautious in our industry outlook and in our expectations for continued wage and commodity pressure, we remain well-positioned to deliver top-line performance and earnings growth as a result of our fiscal 2018 initiatives."

Net income for the quarter was $46.38 million, or $1.93 per share. This is in comparison to $48.36 million, or $2.01 per share, at this time last year.

Cracker Barrel operates over 600 restaurant and retail locations under its two brands, Cracker Barrel Old Country Store and Holler & Dash Biscuit House. The company reported the hurricanes disrupted its business causing a negative impact on the earnings per share of about $0.07 for the quarter. During the first quarter, Cracker Barrel experienced an increase of 0.2% in comparable restaurant sales. In the first quarter, the company's comparable retail sales decreased by 3.6%. Cracker Barrel experienced a decline of 1.8% in its comparable restaurant traffic in the first quarter.

Cracker Barrel Old Country Store, Inc. (CBRL) stock ended the week at $147.25, down 7.3% for the week.

The Dow started the week of 11/20 at 23,371 and closed at 23,558 on 11/24. The S&P 500 started the week at 2,579 and closed at 2,602. The NASDAQ started the week at 6,789 and closed at 6,889.

Treasury Yields Slip

Yields on U.S. Treasury bonds rose in response to better-than-expected economic growth early in the week. This week, current Federal Reserve Chair Janet Yellen offered her resignation from the Federal Reserve's Board of Governors.

On Monday, Yellen announced her resignation from her position as governor. Her original term as a governor was set to end in 2024, but she will end her term early when Jerome Powell is confirmed and sworn in. There was little market reaction, as economists believe Powell will continue on the same policy path.

"The Federal Reserve has been and remains a strong institution, focused on carrying out its vital public mission with integrity, in a professional, nonpartisan manner," said Federal Reserve Chairwoman Janet Yellen in her resignation letter. "I am confident that my successor as Chair, Jerome H. Powell, is deeply committed to that mission and I will do my utmost to ensure a smooth transition."

The Conference Board released its latest U.S. Leading Economic Index (LEI) Summary on Monday, November 20. The report showed a 1.2 % increase in October, which is double what economists had projected. Following the release, the 10-year Treasury note, which opened at 2.34% on Monday, jumped to 2.37% by closing time.

"The US LEI increased sharply in October, as the impact of the hurricanes dissipated," said Conference Board Director of Business Cycles and Growth Research Ataman Ozyildirim. "The growth of the LEI, coupled with widespread strengths among its components, suggests that solid growth in the US economy will continue through the holiday season and into the new year."

On Wednesday, Treasury yields fell to 2.318% in response to an unexpected drop in U.S.-made capital goods orders in October. Economists expected a slight increase in new orders, but were met with a decrease of 1.2% after three consecutive months of increase.

The 10-year Treasury note yield finished the week of 11/20 at 2.34%, while the 30-year Treasury note yield was 2.76%.

Mortgage Rates Dip

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Wednesday, November 22. The report revealed that the 15 and 30-year fixed mortgage rates were lower than last week's averages, with the 30-year fixed rate dropping slightly.

The 30-year fixed rate mortgage averaged 3.92% this week. This represents a decrease from last week when it averaged 3.95%. Last year at this time, the 30-year fixed rate mortgage averaged 4.03%.

This week, the 15-year fixed rate mortgage averaged 3.32%. This was higher than last week's average of 3.31%. The 15-year fixed rate mortgage averaged 3.25% one year ago.

"Rates dipped slightly in a short week leading up to the Thanksgiving holiday," said Sean Becketti, Chief Economist at Freddie Mac. "The 10-year Treasury yield fell roughly 4 basis points, while the 30-year mortgage rate dropped 3 basis points to 3.92%. Mortgage rates continue to remain low."

Based on published national averages, the money market account finished the week of 11/20 at 0.74%. The 1-year CD finished at 1.65%.

Published November 24, 2017
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