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Saturday September 23, 2023

Finances

Finances
 

Dave and Buster's Releases Earnings

Dave and Buster's Entertainment, Inc. (PLAY) announced its third quarter earnings report on Tuesday, December 6. Despite record earnings, the arcade company's stock fell 5% following the release of the report.

Revenue reached $481.2 million for the third quarter, increasing 51% from revenue of $318.0 million reported in the same quarter last year. Compared to the company's 2019 third quarter, revenue increased 61% from $299.4 million.

"We are pleased to report strong financial results for the third quarter," said Dave and Buster's CEO, Chris Morris. "We delivered record revenue driven by double-digit comparable sales growth which resulted in record Adjusted EBITDA. Our outstanding team continues to strongly execute our integration plan and deliver exceptional results, despite the challenging macro and inflationary environment."

Dave and Buster's reported quarterly net income of $1.9 million or $0.04 per adjusted share. Last year at this time, the company reported net income of $10.6 million or $0.21 per adjusted share.

Dave and Buster's pro forma combined comparable store sales increased 13.3% from last year's third quarter at Dave & Buster's and Main Event branded stores. This is the first full quarter including revenues from Dave & Buster's acquisition of Main Event, which was completed on June 29, 2022. The company's combined walk-in comparable store sales increased 8.0%. Special Event comparable store sales increased 110.3% as compared to the same period last year but decreased 6.7% compared to the same period in 2019. The company opened three new Dave & Buster's brand stores in the quarter.

Dave and Buster's Entertainment, Inc. (PLAY) shares closed at $34.69, down 10.2% for the week.

GameStop Announces Earnings


GameStop Corp. (GME) announced its third quarter earnings on Wednesday, December 7. The video game and consumer electronic retailer's shares rose more than 8% following the report's release despite missing earnings estimates.

GameStop reported quarterly revenue of $1.2 billion. This was down from $1.30 billion reported at this time last year and fell below analysts' expectations of $1.4 billion.

"Throughout 2021 and 2022, we were extremely focused on repairing our decayed foundation, reestablishing a culture of operational intensity, and setting the right long-term priority," said GameStop CEO, Matt Furlong in the company's earnings call. "This translated to building a strong balance sheet, modernizing a crumbling infrastructure, and putting together teams that are now able to operate with the nimbleness and efficiency our stockholders and customers expect."

GameStop reported a net loss of $94.7 million or $0.31 per adjusted share. This was an improvement from the net loss of $105.4 million or $0.35 per adjusted share the previous year.

For the third quarter, Hardware and Accessories, which includes new and pre-owned hardware and physical software, accounted for $627.0 million in sales, a decrease from $669.9 million in the same quarter last year. Software sales decreased to $352.1 million from $434.5 million while Collectibles showed improvement of $207.3 million from $192.2 million in net sales. During the quarter, the company incurred a $50 million loss to cover refunds to customers impacted by the collapse of FTX. Gamestop announced last month it plans to cut ties with FTX, a cryptocurrency exchange that filed for bankruptcy protection.

GameStop Corp. (GME) shares ended the week at $22.63, down 17.1% for the week.

Campbell Soup Serves Up Earnings


Campbell Soup Company (CPB) released its first quarter earnings report on Wednesday, December 7. After reporting better-than-expected earnings, the company's shares rose 4.8% following the release.

Net sales came in at $2.58 billion for the quarter, up more than 15% from $2.24 billion in net sales during the same quarter last year. This exceeded analysts' expectations of $2.45 billion.

"Our strong first-quarter results reflect our continued success in driving the relevance of our brands and improving our execution across our supply chain," said Campbell's CEO Mark Clouse. "Through a combination of inflation-driven pricing actions and productivity improvements, we have substantially mitigated significant inflationary pressure in the quarter while continuing to provide quality and value to consumers."

For the quarter, Campbell Soup reported net income of $297.0 million, or $0.99 per adjusted share. This was up from $261.0 million in net income, or $0.86 per share at this time last year.

The company's Meals & Beverages segment, which includes its line of soups and beverages under Swanson, Prego, Pace, V8 and Pacific Foods, posted revenues of $1.46 billion, a 15% increase. The Snacks segment, which includes Pepperidge Farm cookies and Goldfish crackers, also reported a 15% increase in revenue to $1.12 billion. While both segments experienced slight decreases in volume, higher prices and sales allowances offset potential declines in net revenue. Campbell Soup raised its full-year fiscal 2023 guidance to an increase of net sales of 7% to 9% and an increase in adjusted share earnings of 2% to 5%.

Campbell Soup Company (CPB) shares ended the week at $55.66, up 4.0% for the week.

The Dow started the week at 34,336 and closed at 33,476 on 12/09. The S&P 500 started the week at 4,052 and closed at 3,934. The NASDAQ started the week at 11,381 and closed at 11,005.
 

Treasury Yields Vary

Yields varied throughout the week as investors assessed economic data and considered possible moves from the Federal Reserve. Yields rose at the end of the week as markets reacted to increased unemployment numbers and the latest producer price index.

On Friday, the Labor Bureau released the producer price index. For the month of November, the index rose 0.3%, slightly above the 0.2% increase economists expected. Year-over-year, the index jumped 7.4%, the lowest 12-month change since May 2021.

"The monthly increase in producer prices illustrates the need for continued tightening, albeit at a slower pace," said chief economist at LPL Financial, Jeffrey Roach. "The inflation pipeline is clearing and consumer prices will slowly move closer to the Fed's long run target."

The benchmark 10-year Treasury note yield opened the week of December 5 at 3.49% and traded as low as 3.41% on Wednesday. The 30-year Treasury bond opened the week at 3.55% and traded as low as 3.41% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 4,000 to 230,000 for the week ending December 3. Continuing unemployment claims increased 62,000, reaching over 1.6 million.

"It is too early to interpret higher continuing claims as a signal of a loosening labor market," said Citigroup New York economist, Isfar Munir. "The holiday time is generally not attractive to workers to start a new job, compounded by many firms temporarily closing during the holiday period."

The 10-year Treasury note yield finished the week of 12/9 at 3.57%, while the 30-year Treasury note yield finished the week at 3.55 %.
 

Mortgage Rates Continue Down

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 8. The survey showed mortgage rates continuing to decline.

This week, the 30-year fixed rate mortgage averaged 6.33%, down from last week's average of 6.49%. Last year at this time, the 30-year fixed rate mortgage averaged 3.10%.

The 15-year fixed rate mortgage averaged 5.67% this week, down from 5.76% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.38%.

"Mortgage rates decreased for the fourth consecutive week, due to increasing concerns over lackluster economic growth," said Freddie Mac's Chief Economist, Sam Khater. "Over the last four weeks, mortgage rates have declined three quarters of a point, the largest decline since 2008. While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates."

Based on published national averages, the savings rate was 0.24% as of 11/21. The one-year CD averaged 0.91%.

Published December 9, 2022
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