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Friday April 18, 2014



Home Depot Reports Quarterly Results

The Home Depot (HD) reported its first quarter earnings on May 21.

Home Depot reported first quarter 2013 sales of $19.1 billion, a 7.4% increase from the first quarter of 2012. Although first quarter sales benefited from a seasonal timing change that added $574 million to sales, comparable store sales from the first quarter of 2013 were still 4.3% higher.

The company also reported net earnings for the quarter of $1.2 billion, or $0.83 per diluted share, compared to net earnings of $1.0 billion, or $0.68 per diluted share, in the first quarter of 2012.

Frank Blake, Chairman and CEO, said, "In the first quarter, we saw less favorable weather compared to last year, but we continue to see benefit from a recovering housing market that drove a stronger-than-expected start to the year for our business. I would like to thank our associates for their hard work and commitment to our customers."

The Home Depot (HD) shares ended the week at $78.99.

DICK'S Sporting Goods Reports First Quarter Results

DICK'S Sporting Goods (DKS) reported its first quarter 2013 results on May 21.

The company reported net sales for the quarter of $1.3 billion, an increase of 4.1% compared to the same period last year. Adjusting for the shifted calendar due to the 53rd week in 2012, consolidated same store sales decreased 3.8%. First quarter 2012 consolidated same store sales increased 8.4%.

On a non-GAAP basis, DICK'S reported consolidated net income of $60.5 million, higher than the $57.2 million they reported for the first quarter of 2012. On a GAAP basis, the company reported consolidated net income for the first quarter of $64.8 million.

Edward W. Stack, Chairman and CEO, commented on the results: "In the first quarter, we generated earnings in line with our original guidance, but were not pleased with our sales results, which came in below our expectations. To drive sales and preserve margins in the near-term, we will work with our vendor partners, particularly in golf, to provide value offerings; we will aggressively execute our store remodel program, with approximately 75% of the identified stores expected to be completed by the end of the second quarter; and we will continue to tightly manage clearance inventory, which has declined meaningfully."

Mr. Stack continued, "Over the long-term, we have significant opportunity to profitably grow our business by doubling the size of our store base, aggressively building our eCommerce business, and further strengthening our Omni-channel platform."

DICK'S Sporting Goods (DKS) shares ended the week at $51.68.

Best Buy Announces First Quarter Results

Best Buy Co., Inc. (BBY) announced its first quarter 2014 results on May 21.

The company reported revenue of $9.38 billion for the quarter, which represents a decrease compared to the first quarter of 2013 when the company reported revenue of $10.37 billion.

On a GAAP basis, the company reported diluted earnings per share from continuing operations of $0.29 compared to $0.49 for the first quarter of 2012. On a non-GAAP basis, the diluted earnings per share figure was $0.32 for the quarter compared to $0.76 during the first quarter of 2012.

Hubert Joly, President and CEO, commented, "In the first quarter, we continued to make substantial progress on our Renew Blue priorities. This progress included (1) driving a 16% increase in Domestic comparable online sales; (2) improving our customer Net Promoter Score by over 300 basis points over the last five months; (3) reaching an agreement with Samsung to establish Samsung Experience Shops in our retail stores and beginning their roll out; (4) negotiating overall rent reductions for a number of stores and closing one large format store; and (5) eliminating $175 million in annualized SG&A and supply chain costs in addition to $150 million eliminated last quarter. In addition, we are pleased that we were able to reach a definitive agreement to sell our 50% interest in our European business."

Best Buy Co., Inc. (BBY) shares ended the week at $26.03.

The Dow started the week at 15,354 and closed at 15,303. The S&P 500 started the week at 1,666 and closed at 1,650. The NASDAQ started the week at 3,499 and closed at 3,459.

Treasuries Rise after Durable Goods News

Treasuries rose and yields fell on Friday after a better-than-expected durable goods report provided some investors with evidence of a strengthening U.S. economy. The durable goods report came only a couple days after Fed Chairman Ben Bernanke indicated the central bank may curtail its stimulus program in the near future.

During early Friday trading, the benchmark 10-year note yields fell 1 basis point to 2.01%. Yields on the 30-year bond were down 1.5 basis points to 3.18% while the 5-year note was down slightly to 0.895%.

A Commerce Department report on Friday showed that orders for durable goods rose 3.3% last month, beating expectations of a 1.4% rise. The orders for durable goods was a significant improvement over the 5.9% drop in March and gave some investors confidence that the economy is strengthening.

Even though yields on the benchmark 10-year note were down Friday, yields were up 4 basis points for the week and close to 40 basis points since the beginning of May. Much of this rise has been attributed to speculation that the Fed will soon begin to wind down its $85 billion per month bond purchasing program.

Bernanke reaffirmed this speculation on May 22 in testimony before Congress: "If we see continued improvement, and we have confidence that that is going to be sustained, then we could in—in the next few meetings—we could take a step down in our pace of purchases."

Bernanke's comments contributed to the continuing selloff of Treasuries, a trend the rising stock market is not helping to stop.

"The selloff in Treasuries is to be expected when equity markets are reaching new highs but undoubtedly the move was multiplied by Bernanke's comments," said Peter Chatwell, a senior fixed-income strategist at Credit Agricole SA (ACA) in London.

The 10-year Treasury note yield finished the week at 2.01% while the 30-year Treasury note yield finished the week at 3.18%.

Interest Rates Continue to Rise

Freddie Mac released the results of its weekly Primary Mortgage Market Survey (PMMS) on May 23. The results show average fixed mortgage rates continuing their upward trend for the third consecutive week.

The 30-year fixed rate mortgage averaged 3.59% this week. This represents an increase from last week when it averaged 3.51%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.78%.

The 15-year fixed rate mortgage averaged 2.77% this week. This represents an increase from last week when it averaged 2.69%. Last year at this time, the 15-year fixed rate mortgage averaged 3.04%.

"Fixed-rates moved up for the third consecutive week, with the average 30-year fixed-rate mortgage about a quarter-percentage point higher than three weeks ago," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks. For instance, in April, single family housing permits rose to the strongest pace since May 2008 while existing home sales for the same month grew the most since November 2009. Moreover, the National Association of Realtors® reported that the median number of days on the market for these sales fell from 62 to 46 days, the fewest since it began collecting the data in May 2011."

The money market fund finished this week at 0.5%. The 1-year CD finished at 0.6%.

Published May 24, 2013

Previous Articles

Macy's Reports Quarterly Earnings

Walt Disney Reports Second Quarter Results

DreamWorks Animation Reports Quarterly Earnings

Apple Reports Second Quarter Results

Google Reports Quarterly Earnings


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