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Sunday September 19, 2021



HD Supply Reports Earnings

HD Supply Holdings, Inc. (HDS) released its latest earnings report on Wednesday, September 9. The company's sales and profits fell year-over-year.

Net sales came in at $1.55 billion for the quarter. This was down from $1.62 billion during the same quarter last year.

"Our highest priority remains the health and safety of our associates and our customers as we continue to support the operations and re-opening of living spaces, job-sites and work places," said HD Supply Chairman and CEO Joe DeAngelo. "Our financial strength and steadily improving results reflect the strength of our team and their dedication to safely delivering best-in-class service."

The company's net income was $131 million for the quarter. This was down 3% from $135 million in net income last year at this time.

HD Supply is a distributor of facility maintenance hardware and supplies. The company's Facilities Maintenance segment saw an 8.3% decrease in net sales to $761 million for the quarter. The Construction & Industrial segment's net sales dropped 0.3% to $793 million. Given the coronavirus pandemic, the company did not provide further guidance for 2020.

HD Supply Holdings, Inc. (HDS) shares ended the week at $40.09, up 3.3% for the week.

Dave & Buster's Releases Earnings

Dave & Buster's Entertainment, Inc. (PLAY) posted its latest quarterly earnings on Thursday, September. 10. The dining and entertainment company continues to struggle with the effects of store closures during the COVID-19 pandemic.

The company's revenue came in at $50.8 million for the quarter. This was down 85% from sales of $344.5 million during the same quarter last year.

"I am extremely pleased with the agility, resilience and commitment demonstrated by our team members," said Dave & Buster's CEO Brian Jenkins. "We have made steady progress re-opening our stores while rapidly implementing numerous initiatives that are accelerating our business recovery and positioning us for long-term success."

The company reported a net loss of $58.6 million, or $1.24 per share. This was down from a net income of $32.4 million, or $0.90 per share at the same time last year.

In response to the coronavirus pandemic, Dave & Buster's temporarily closed all of its stores by March 20, 2020. Starting at the end of April, the company began reopening stores in compliance with individual state guidelines, with most reopenings happening near the end of the quarter. By the end of the quarter, it had reopened 84 stores. The company reported an 87% decrease in comparable store sales for the quarter.

Dave & Buster's (PLAY) shares ended the week at $16.53, down 11.9% for the week.

Chewy Posts Earnings Report

Chewy, Inc. (CHWY) released its second quarter financial results on Thursday, September 10. The company reported a sharp increase in sales, pushing share prices higher.

The company's net sales reached $1.70 billion during the quarter. This was a 47% increase from $1.15 billion during the same quarter last year.

"Chewy's advantageous positioning in the pet industry's race towards e-commerce, our culture of innovation, and our singular focus on customer experience resulted in another quarter of outperformance," said Sumit Singh, CEO of Chewy. "We are proud of our teams, who continued to execute under difficult, pandemic-related circumstances, while again setting new records for both net sales growth and new customer additions, and producing our second consecutive quarter of positive adjusted EBITDA."

The company posted a net loss of $32.82 million. This was an improvement over a net loss of $82.88 million at this time last year.

Chewy, which was founded in 2011, is an online retailer of pet products. Given its online-only presence, the company has been able to increase its revenues during the quarter as consumers continued to shop from their homes rather than in stores. Following the earnings release, the company's share prices fell 2.7%.

Chewy, Inc. (CHWY) shares ended the week at $53.81, down 10.2% for the week.

The Dow started the week at 27,925 and closed at 27,666 on 9/11. The S&P 500 started the week at 3,372 and closed at 3,341. The NASDAQ started the week at 10,901 and closed at 10,854.

Treasury Yields Drop

Yields on U.S. Treasurys fell this week as consumer prices rose and government leaders sparred over the next round of coronavirus relief. Growing uncertainty as to whether a new relief package is forthcoming offset a moderately optimistic increase in the consumer price index.

On Thursday, Congressional leaders reached an impasse over additional coronavirus relief measures as the November election approaches. With the apparent stalemate, White House officials have signaled a willingness to take executive action.

"They're trying to figure out what they can do legally, what authorities they have, and there are differences of opinion on that," said White House economic adviser Stephen Moore. "Trump would like to do another flurry of executive orders that would jump-start the economy."

On Friday, the U.S. Department of Labor released the Consumer Price Index (CPI) for August. The CPI rose 0.4% in August. This beat analysts' expected rise of 0.3% for the month. The report largely attributed the rise to an increase in used vehicle prices.

"Much of the increase reflects an unwinding of earlier aggressive discounts during the worst of the pandemic," said Sal Guatieri, Senior Economist at BMO Capital Markets. "Elevated joblessness and increased automation should keep inflation under wraps for some time."

The 10-year Treasury note yield closed at 0.67% on 9/11, while the 30-year Treasury bond yield was 1.42%.

Mortgage Rates Fall Further

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 10. The 30-year fixed rate mortgage set an all-time low this week.

The 30-year fixed rate mortgage averaged 2.86% this week, down from last week's average of 2.93%. Last year at this time, the 30-year fixed rate mortgage was at 3.56%.

This week, the 15-year fixed rate mortgage averaged 2.37%, down from 2.42% last week. During the same time last year, the 15-year fixed rate mortgage averaged 3.09%.

"Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery," said Freddie Mac's Chief Economist, Sam Khater. "These low rates have ignited robust purchase demand activity, which is up twenty-five percent from a year ago and has been growing at double digit rates for four consecutive months. However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity."

Based on published national averages, the savings rate was 0.05% on 9/11. The one-year CD finished at 0.19%.

Published September 11, 2020
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