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Sunday July 14, 2024



McCormick Reports Earnings

McCormick & Co Inc. (MKC) announced its second quarter results on Thursday, June 29. While the company reported increased revenue, shares dipped following the release of the earnings report.

Revenue came in at $1.66 billion for the second quarter, up 8% from $1.54 billion during the same quarter last year. This was below analysts' estimates of $1.67 billion.

"We delivered strong second quarter results reflecting sustained demand across our business and the effective execution of our growth strategies," said McCormick & Co Inc. CEO, Lawrence E. Kurzius, "As we look ahead to the back half of the year, we will continue to focus on capitalizing on strong demand, optimizing our cost structure, and positioning McCormick to deliver sustainable growth and long-term shareholder value."

For the quarter, the company reported net income of $152.10 million or $0.56 per share. This is up from $118.50 million or $0.44 per share the year prior.

The Hunt Valley-based spice company reported increases across all segments. In the consumer segment, sales in the Americas grew 3% in the quarter, sales in its Europe, Middle East and Africa segment increased by 7% and sales in the Asia and Pacific region grew by 19%. The company's Flavor Solutions segment also saw year-over-year growth with a 12% increase in sales which McCormick attributed to a 14% increase in pricing. The company raised its fiscal 2023 outlook and expects adjusted operating income to increase 10% to 12%.

McCormick & Co Inc. (MKC) shares ended the week at $84.67, down 3% for the week.

Levi Strauss Releases Earnings Report

Levi Strauss & Co. (LEVI) announced its second quarter financial results on Thursday, July 6. The denim powerhouse reported a decrease in revenues causing its shares to drop more than 6% following the earnings release.

Levi reported revenue of $1.3 billion for the second quarter, which was down 9% from revenue of $1.5 billion in the same quarter last year. This was in line with analysts' expectations.

"Our strong Q2 DTC and international results in a challenging environment demonstrate the resilience of our business model and the health of the Levi's brand globally," said Levi Strauss & Co. CEO, Chip Bergh. "While U.S. wholesale remains pressured, we are pursuing initiatives to stabilize this business and drive market share gains. We are confident in our ability to navigate near-term headwinds and remain as optimistic as ever about the company's future."

The company reported a net loss of $1.6 million or $0.00 per adjusted share. This is down from net income of $49.7 million or $0.12 per adjusted share reported during the same quarter last year.

The company's global direct-to-consumer (DTC) revenue and E-commerce segments saw significant growth, increasing 13% and 20% respectively. Wholesale revenues decreased by 22%, which the company attributed to wholesale declines in North America and Europe. Levi declared a dividend of $0.12 per share of common stock, payable on August 17, 2023, to the stockholders of record for Class A and Class B common stock on August 4, 2023. The company revised its fiscal 2023 guidance and anticipates net revenues to grow between 1.5% to 2.5% year-over-year and adjusted earnings per share to be between $1.10 to $1.20.

Levi Strauss & Co. (LEVI) shares ended at $13.13, down 9% for the week.

Goodfellow Posts Quarterly Results

Goodfellow, Inc. (GDL) reported its second quarter earnings on Thursday, July 6. The company reported a drop off in revenue year-over-year but shares rose 3% after the release of its earnings report.

Net sales came in at $142.3 million during the quarter. This was a decrease of 23% down from $184.9 million during the same quarter last year.

"Given the softening economy and general market uncertainty, reduced seasonal demand was in line with expectations," said Goodfellow, Inc. CEO, Patrick Goodfellow. "Goodfellow's experienced team continued to provide excellent service to customers from coast to coast, while diligently managing rising overhead costs in order to realize strong results. While these results are lower than last year, they represent a solid performance for the second quarter."

Goodfellow reported quarterly net income of $6.6 million or $0.77 per adjusted share. This was down from $12.5 million or $1.46 per adjusted share during the same period last year.

The Canadian manufacturer of lumber products reported a decrease in sales across all regions which the company attributed to a downturn in sales of all product categories. Sales in Canada declined by 21% and sales in the U.S. declined by 35% compared to last year. The company's floorings segment saw a decrease of 37% in sales. Sales for lumber were down 17%, while the segments for building material and specialty and commodity panel were down by 26%.

Goodfellow, Inc. (GDL) shares ended the week at $13.48, up 10%from last week.

The Dow started the week of 7/3 at 34,370 and closed at 33,735 on 7/7. The S&P 500 started the week at 4,449 and closed at 4,399. The NASDAQ started the week at 13,799 and closed at 13,661.

Treasury Yields Spike

U.S. Treasury Yields rose midweek as markets digested the latest notes from the Federal Reserve's June policy meeting. Yields jumped at the end of the week as the latest employment data showed signs of a strong labor market.

On Wednesday, the Federal Reserve released the minutes from the Federal Open Market Committee (FOMC). At the meeting, policy makers unanimously decided against an interest rate increase despite hesitation from some members. While Fed officials agreed to hold off on rises, the minutes indicated support for more interest hikes in the future.

According to the minutes, "The participants favoring a 25-basis point increase noted that the labor market remained very tight, momentum in economic activity had been stronger than earlier anticipated, and there were few clear signs that inflation was on a path to return to the Committee's 2 percent objective over time."

The benchmark 10-year Treasury note yield opened the week of July 3 at 3.84% and traded as high as 4.09% on Thursday. The 30-year Treasury bond opened the week at 3.86% and traded as high as 4.03% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 12,000 to 248,000 for the week ending July 1. This was above analysts' expectations of 245,000. Continuing unemployment claims fell by 13,000 to 1.72 million. The ADP National Employment Report for June was also released on Thursday and reflected a 497,000 surge in private sector jobs, significantly higher than economists' estimates of 220,000 and the highest monthly rise in the last 12 months.

"An anticipated rise in layoffs on more restrictive monetary policy is not yet appearing in the data," said Chief U.S. Economist at High Frequency Economics, Rubeela Farooqi. "A tight labor market will keep the rate path on an upward trajectory, until policymakers see a material rebalancing in supply and demand."

The 10-year Treasury note yield finished the week of 7/3 at 4.05%, while the 30-year Treasury note yield finished the week at 4.03%.

Mortgage Rates Rise Again

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, July 6. Mortgage rates increased for both the 30-year and 15-year fixed rates for the second consecutive week.

This week, the 30-year fixed rate mortgage averaged 6.81%, up from last week's average of 6.71%. Last year at this time, the 30-year fixed rate mortgage averaged 5.30%.

The 15-year fixed rate mortgage averaged 6.24% this week, up from 6.06% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.45%.

"Mortgage rates continued their upward trajectory again this week, rising to the highest rate this year so far," said Freddie Mac's Chief Economist, Sam Khater. "This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve. These high rates combined with low inventory continue to price many potential homebuyers out of the market."

Based on published national averages, the savings rate was 0.42% as of 6/20. The one-year CD averaged 1.63%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published July 7, 2023

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