Thursday November 30, 2023
CarMax Earnings Stall
CarMax reported net sales of $5.7 billion during the quarter, down 25.6% from $7.7 billion in net sales at this time last year. This fell short of analysts' expected quarterly revenue of $6.1 billion. For the full year, revenue reached at $29.7 billion, down 6.9% from $31.9 billion in the previous fiscal year.
"Our deliberate steps to navigate the pressures facing the used car industry are driving sequential improvements in our business, and we will continue to prioritize initiatives to increase efficiencies and create better experiences for our associates and customers across our diversified business model," said CarMax CEO, Bill Nash. "We also enhanced our wholesale shopping experience by launching a modernized, mobile-friendly vehicle detail page. We are confident that we are well positioned to continue leading the used car industry and to accelerate growth when the market improves."
The company reported quarterly net income of $69.0 million or $0.44 per adjusted share. This was down 56.8% from $159.8 million or $0.98 per adjusted share one year ago. For the full year, the company reported net income of $484.8 million, down from net income of $1.2 billion reported last year.
CarMax sold 290,214 vehicles in the quarter, a decrease of more than 15% from the same time last year. CarMax's retail used sales declined almost 13% to 169,884 vehicles. The company's comparable store used sales decreased 14%. CarMax attributed the decline to inflationary pressures, rising interest rates, tighter borrowing standards and low consumer confidence. During the fourth quarter, CarMax added five new locations for a total of 240 retail locations. The company announced plans to add another five store locations in 2024. The auto retailer reaffirmed its long-term goal to sell between 2 million to 2.4 million vehicles and earn between $33 billion and $45 billion in revenue for fiscal 2026.
CarMax, Inc. (KMX) shares ended the week at $69.46, up 8.9% for the week.
Albertsons Reports Earnings
Albertsons Companies, Inc. (ACI) reported its fourth quarter and full-year earnings report on Tuesday, April 11. While the grocery chain stayed ahead of analyst expectations, the company's shares moved down 2% after release of the report.
The company reported fourth quarter net sales of $18.27 billion. This is up 5.1% from $17.38 billion reported in the same quarter last year and exceeded analysts' estimates of $18.2 billion. For the full year, revenue returned at $77.65 billion, up 8.0% from $71.89 billion in the previous fiscal year.
"We are pleased with our fourth quarter financial results and the suite of capabilities we continue to build in our business," said Albertsons' CEO, Vivek Sankaran. "These results, and our results for fiscal 2022 overall, were fueled by the rollout of our Customers for Life transformation strategy, which places the customer at the center of everything we do, with the ultimate goal of supporting them every day, every week, and for a lifetime. As we look ahead to fiscal 2023, we believe we are well-positioned to drive top-line growth by deepening relationships with our customers even as inflation continues."
The company reported net income of $311.1 million or $0.54 per adjusted share. This was a decrease from the same quarter last year when Albertsons reported net income of $455.1 million or $0.79 per adjusted share. For the full year, the company reported net income of $1.51 billion, down from net income of $1.62 billion reported last year.
Albertsons' increase in net sales was driven by the company's 5.6% increase in same store sales, primarily due to retail price inflation and growth in pharmacy and digital sales segments. During the quarter, digital sales increased by 16% and the number of loyalty members grew by 15% to 34 million members. During fiscal year 2022, Albertsons completed remodeling of 173 stores and opened five new stores, ending the year with 2,276 total stores. In January, the state court order preventing payment of a special dividend of $6.85 per share to stockholders of record on October 24, 2022 was lifted and Albertsons paid the special dividend.
Albertsons Companies, Inc. (ACI) shares ended the week at $20.69, down 1.6% for the week.
Delta Air Lines Announces Quarterly Earnings
Delta Air Lines (DAL) announced its first quarter earnings on Thursday, April 13. The Atlanta-based airline's shares dropped almost 2% following the release of the report.
Revenue for Delta's first quarter increased to $12.76 billion. This is up 36% from $9.35 billion in revenue at this time last year and nearly equals the $12.77 billion that analysts predicted.
"Thanks to the outstanding work and dedication of the Delta team, 2023 is off to a strong start," said Delta's CEO, Ed Bastian. "We provided well-deserved pay increases for our people and paid more profit sharing than the rest of the industry combined. Delta is building momentum, with the best people in the industry generating nearly $5 billion of operating profit over the last twelve months."
Delta reported a net loss of $363 million or $0.57 per adjusted share. This is an improvement from a net loss of $940 million or $1.48 per adjusted share in the same quarter last year.
Delta's total passenger revenue for the quarter reached $10.4 million, a 51% increase from the prior year. The company attributes the increase to better overall demand and growth in premium products and loyalty revenue. March quarter fuel prices increased to $2.7 billion, a 30% increase compared to the same period last year. Unit costs excluding fuel were up 4.7% due in part to winter storms that reduced flights. The airline announced record advance bookings for the summer and expects full-year revenue growth of 15% to 20% and earnings of $5 to $6 per share.
Delta Air Lines (DAL) shares ended the week at $33.77, up 0.2% for the week.
The Dow started the week of 4/10 at 33,425 and closed at 33,886 on 4/14. The S&P 500 started the week at 4,085 and closed at 4,138. The NASDAQ started the week at 11,975 and closed at 12,123.
Treasury Yields Rise
On Wednesday, the U.S. Department of Labor announced that the consumer price index (CPI), which measures the cost of dozens of everyday consumer goods, rose 0.1% in March, a slowdown from economists' expected growth of 0.2%. The CPI year-over-year fell to 5.0% from 6.0% the prior month and marked the smallest 12-month increase since May 2021.
"As the economy slows, consumer prices will decelerate further and should bring inflation closer to the Fed's long-run target of 2%," said chief economist at LPL Financial, Jeffrey Roach. "Markets will likely react favorably to this report as investors gain more confidence that the next Fed meeting may be the last meeting when the Committee raises the fed funds target rate."
The benchmark 10-year Treasury note yield opened the week of April 10 at 3.41% and traded as high as 3.46% on Wednesday. The 30-year Treasury bond opened the week at 3.62% and traded as high as 3.70% on Thursday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 11,000 to 239,000 for the week ending April 8. Continuing unemployment claims decreased 13,000, reaching 1.81 million.
"We expect the health of the labor market to deteriorate at a gradual pace in the second quarter but then weaken more quickly in the second half as the economy suffers a mild recession," said lead U.S. economist at Oxford Economics in New York, Oren Klachkin. "The upcoming labor market downturn will be modest since the drop in demand is expected to be fairly modest."
The 10-year Treasury note yield finished the week of 4/14 at 3.52%, while the 30-year Treasury note yield finished the week at 3.74%.
Mortgage Rates Continue Decline
This week, the 30-year fixed rate mortgage averaged 6.27%, down from last week's average of 6.28%. Last year at this time, the 30-year fixed rate mortgage averaged 5.00%.
The 15-year fixed rate mortgage averaged 5.54% this week, down from 5.64% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.17%.
"Mortgage rates decreased for the fifth consecutive week," said Freddie Mac's Chief Economist, Sam Khater. "Incoming data suggest inflation remains well above the desired level but showing signs of deceleration. These trends, coupled with tight labor markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer."
Based on published national averages, the savings rate was 0.37% as of 3/20. The one-year CD averaged 1.49%.
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