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Tuesday May 17, 2022



Nordstrom Posts Earnings

Nordstrom, Inc. (JWN) reported its first quarter earnings on Tuesday, May 25. Shares dropped around 7% after the company reported a larger-than-anticipated loss for the quarter.

Nordstrom's total revenue for the quarter reached $3.01 billion. This was up from $2.12 billion at the same time last year and exceeded analysts' estimates of $2.90 billion.

"We are encouraged by sales trends both in our stores and our digital business, supported by an improving consumer environment and strong execution," said Nordstrom's CEO, Erik Nordstrom. "Looking ahead to summer, we are well-positioned to continue to capitalize on pent-up demand, and are further strengthening our position as we execute on our strategy to win in our most important markets, broaden the reach of Nordstrom Rack and increase our digital velocity."

The company reported a net loss of $166 million, or $1.05 per share. Analysts had anticipated a loss of $0.57 per share. In the same quarter last year, the company reported a net loss of $521 million, or $3.33 per share.

The Seattle-based retailer reported that total net sales for the first quarter increased 44% year-over-year. During the same period last year, the company's stores were closed for approximately half of the quarter. Improving trends in categories such as occasion-based apparel, handbags, sunglasses and swimwear also contributed to the year-over-year increase. Digital sales represented 46% of total sales. Digital sales were up 23% compared to the same period in 2020, and up 28% compared to the same period in 2019. The company expects revenue to grow by 25% or more this fiscal year.

Nordstrom, Inc. (JWN) shares ended the week at $33.54, down 12.2% for the week.

Intuit Reports Third Quarter Earnings

Intuit Inc. (INTU) released its third quarter earnings on Tuesday, May 25. The provider of TurboTax, QuickBooks and Mint reported increases in both revenue and profits.

Revenue for the quarter came in at $4.2 billion. This was up 39% from $3.0 billion in revenue at this time last year.

"We had a strong quarter across the company, and as a result we are raising our full year guidance," said Intuit CEO Sasan Goodarzi. "We had a great tax season growing our share of total tax returns and executing our strategy of expanding our lead in the DIY category and transforming the assisted category. Small Business and Self-Employed Group delivered strong double-digit revenue growth and Credit Karma revenue reached an all-time high in the quarter."

The company reported net income of $1.46 billion, or $5.30 per share. This was up from $1.08 billion, or $4.11 per share during the same quarter last year.

Intuit announced in early May that revenue and income for its third quarter would be lower than expected due to the extension of the federal tax filing deadline. Despite this caution, the company raised its yearly revenue forecast from a range of 15% to 17% up to 22% in light of its strong third quarter earnings. Noting its commitment to offering free tax preparation for simple tax returns, the company reported that nearly 100 million TurboTax customers have utilized their platform at no cost over the last eight years.

Intuit Inc. (INTU) shares ended the week at $439.09, virtually unchanged for the week.

Cracker Barrel Serves Up Earnings

Cracker Barrel Old Country Store, Inc. (CBRL) released its third quarter earnings report on Tuesday, May 25. The rustic-themed restaurant and gift store reported increased revenue and earnings as dining room capacity restrictions have eased.

Cracker Barrel posted quarterly revenue of $713.4 million, up 65% from $432.5 million reported at the same time last year. This exceeded analysts' expectations of $675.6 million in revenue.

"The pace of our sales and margin recovery in the quarter exceeded expectations as we welcomed guests back into our dining rooms and our off-premise business remained strong," said Cracker Barrel CEO Sandra B. Cochran. "I'm pleased with the way our teams continue to deliver on our mission of Pleasing People as they care for guests and care for one another. As the ongoing recovery from the pandemic brings us closer to 2019 sales levels, I am confident our solid execution, unique brand, and the strategic initiatives implemented during the pandemic will support growth in long-term shareholder value."

Cracker Barrel reported net income of $33.47 million, or $1.41 per share. This is up from a net loss of $161.9 million, or $6.81 per share, reported at this time last year.

The Tennessee-based company reported average per-store restaurant sales increased from approximately $55,500 per fiscal week in January to approximately $70,000 per fiscal week in April. Compared to the same quarter last year, comparable retail sales were up 102.8% and comparable restaurant sales were up 56.5%. The company declared a quarterly dividend of $1.00, payable to shareholders in August 2021.

Cracker Barrel Old Country Store, Inc. (CBRL) shares closed at $157.72, down 2.3% for the week.

The Dow started the week at 34,254 and closed at 34,529 on 5/28. The S&P 500 started the week at 4,170 and closed at 4,204. The NASDAQ started the week at 13,557 and closed at 13,749.

U.S. Treasury Yields Increase

After dipping early in the week of May 24, U.S. Treasury yields rose on Thursday after the jobs report revealed unemployment claims continued to fall. Yields remained steady at the end of the week despite new data indicating a rise in inflation.

On Thursday, the Department of Labor reported that initial jobless claims fell to 406,000, down 38,000 from the previous week, and below analysts' estimates of 425,000. Continuing claims were down 96,000 to 3.64 million.

"Many of the factors that sidelined workers earlier in the recovery are changing to contribute to fast job gains in the rest of 2021," said PNC Senior Economist Bill Adams. "The pandemic is coming under control in the U.S., assuaging health fears."

The 10-year Treasury note opened the week of May 24 at 1.619% and reached a high of 1.628% during trading on Monday. The 30-year Treasury bond yield opened the week at 2.321% and reached a high of 2.327% on Monday.

On Friday, the Bureau of Economic Analysis reported that April's core personal consumption expenditures (PCE) price index rose 3.1%, surpassing estimates of a 2.9% increase. The PCE is a key measure of inflation, and the Federal Reserve targets an inflation rate of 2%.

"My judgment right now is that the recent inflation that we have seen will be temporary," said Treasury Secretary Janet Yellen. "It's not something that's endemic. I expect it to last, however, for several more months, and to see high annual rates of inflation through the end of this year."

The 10-year Treasury note yield closed at 1.58% on 5/28, while the 30-year Treasury bond yield was 2.26%.

Mortgage Rates Decrease

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, May 27. Mortgage rates dropped slightly this week.

This week, the 30-year fixed rate mortgage averaged 2.95%, down from last week's average of 3.00%. Last year at this time, the 30-year fixed rate mortgage was at 3.15%.

The 15-year fixed rate mortgage averaged 2.27% this week, down from 2.29% last week. During the same time last year, the 15-year fixed rate mortgage averaged 2.62%.

"Mortgage rates are down below 3%, continuing to offer many homeowners the potential to refinance and increase their monthly cash flow," said Freddie Mac Chief Economist Sam Khater. "In fact, homeowners who refinanced their 30-year fixed-rate mortgage in 2020 saved more than $2,800 dollars annually. Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point."

Based on published national averages, the national savings rate was 0.06% as of 5/17. The one-year CD averaged 0.14%.

Published May 28, 2021

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