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Tuesday July 16, 2024



General Mills Posts Quarterly Earnings

General Mills, Inc. (GIS) posted its third quarter earnings on Wednesday, March 20. The company reported better-than-expected earnings and revenue, causing its shares to rise 3% following the release of the report.

Net sales totaled $5.10 billion for the quarter, down 1% from $5.13 billion one year ago. Quarterly revenue exceeded analysts' estimates of $4.95 billion.

"General Mills' strategic focus on brand building, innovation, and in-store execution contributed to improved volume and market share trends in the third quarter," said General Mills CEO, Jeff Harmening. "We continue to navigate today's evolving operating environment while generating industry-leading levels of cost savings. And we remain committed to investing further in our brands and capabilities to drive profitable growth over the long term."

The company reported net income of $670.1 million or $1.17 per adjusted share for the quarter. This was up from $553.1 million or $0.92 per adjusted share during the same quarter last year.

General Mills reported that operating profit increased 25% to $910.7 million for the quarter, due to lower compensation and benefits expenses, higher gross profit dollars and product recall recoveries. In the third quarter, the North America Retail segment was flat compared to the prior year at $3.2 billion in net sales. The Pet segment declined 3% to $624.5 million during the quarter. The company's International segment was down 3% to $680.1 million in net sales. For fiscal 2024, the company reaffirmed that it anticipates organic sales to be down 1% to flat year-over-year.

General Mills, Inc. (GIS) shares ended the week at $69.10, down 4% for the week.

Chewy Announces Earnings

Chewy, Inc. (CHWY) released its fourth quarter and full-year earnings report on Wednesday, March 20. Despite the online pet-products company reporting strong fourth quarter results, the company's stock fell 2.5% following the release.

The company reported net sales of $2.83 billion for the quarter. This was up 4% from $2.71 billion in the same quarter last year and exceeded analysts' expectations of $2.79 billion. For the full year, revenue came in at $11.15 billion, up 10% from $10.12 billion in the previous fiscal year.

"I am proud of the performance the team delivered to close out a strong fourth quarter and full year. In 2023, we gained market share while simultaneously expanding margins and accelerating free cash flow generation," said Chewy CEO, Sumit Singh. "As we embark on 2024, we remain committed to further expanding our margins and generating meaningful free cash flow for our shareholders. Furthermore, we are excited about the strategic opportunities ahead and our role in continuing to drive innovation across the pet category."

The company reported net income of $31.89 million this quarter or $0.07 per adjusted share. This was an improvement from $6.78 million or $0.02 per adjusted share at the same time last year. For the full year, the company reported net income of $39.58 million, a decrease from net income of $49.90 million reported last year.

Chewy reported 20.1 million active customers in the quarter, down 2% compared to this time last year. Chewy's net sales per active customer reached $555, a 12% increase for the quarter. Chewy's Autoship subscription program, which allows customers to automatically reorder and have products delivered, increased by 8% to $2.16 billion in sales for the quarter. For the first quarter of fiscal 2024, Chewy expects an increase in net sales ranging between $2.84 billion and $2.86 billion.

Chewy, Inc. (CHWY) shares ended the week at $16.62, down 6% for the week.

Darden Restaurants Reports Third Quarter Results

Darden Restaurants, Inc. (DRI) posted its third quarter earnings on Thursday, March 21. The parent company of restaurants such as Olive Garden, LongHorn Steakhouse and The Capital Grille reported mixed results and missed revenue estimates resulting in its shares slipping more than 4% following the release.

The company reported net sales of $2.97 billion for the third quarter. This was up 7% from the $2.79 billion in net sales reported last year but below analysts' expectations of $3.03 billion.

"Each one of our segments grew sales and profit in an operating environment that was tougher than we anticipated, and we continued to outperform industry same-restaurant sales and traffic," said Darden President and CEO, Rick Cardenas. "Looking ahead, our focus remains on controlling what we can control, leveraging and strengthening our competitive advantages, and executing our back-to-basics operating philosophy in order to effectively manage the business for the long-term."

The company reported net income of $312.9 million or $2.60 per diluted share. Last year at this time, Darden posted net income of $286.6 million or $2.34 per diluted share.

Darden's same-restaurant sales decreased by 1.0% across all its segments in the quarter. LongHorn Steakhouse experienced a 2.3% increase in same-store sales. Olive Garden saw a decrease in same-store sales of almost 2%. Darden's Fine Dining segment's same-store sales also declined, falling 2.3% year over year. During the quarter, Darden opened a net new 132 restaurants for a combined total of 2,022 continuing restaurants at the end of the quarter. The company updated its financial outlook for fiscal year 2024 and now expects total sales of approximately $11.4 billion and same-restaurant sales growth in the range of 1.5% to 2.0%. Darden declared a quarterly cash dividend of $1.31 per share of common stock. The cash dividend will be due to the stockholders of record on April 10, 2024, and is payable on May 1, 2024.

Darden Restaurants, Inc. (DRI) shares ended the week at $165.11, down 3% for the week.

The Dow started the week at 38,827 and closed at 39,476 on 3/22. The S&P 500 started the week at 5,155 and closed at 5,234. The NASDAQ started the week at 16,155 and closed at 16,429.

Treasury Yields Decline

U.S. Treasury yields fell early in the week as investors waited for reports on when the Federal Reserve will begin cutting interest rates in 2024. Yields remained low at the end of the week as the latest unemployment numbers showed the economy was still resilient.

On Wednesday, the Federal Reserve released its Federal Open Market Committee (FOMC) post-meeting statement maintaining the federal funds target range at current levels and indicating a potential for three quarter-point rates cuts by the end of 2024. Federal Reserve officials held the key federal funds rate between 5.25% and 5.5%. The release projected further cuts in 2025 and 2026 with the goal of bringing the target rate to 2.6%.

"We believe that our policy rate is likely at its peak for this type of cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," said Federal Reserve Chairman, Jerome Powell. "We are prepared to maintain the current target range for the federal funds rate for longer if appropriate."

The benchmark 10-year Treasury note yield opened the week of March 18 at 4.32% and traded as low as 4.22% on Thursday. The 30-year Treasury bond opened the week at 4.43% and traded as low as 4.41% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 2,000 to 210,000 for the week ending March 16. Continuing unemployment claims increased 4,000 to 1.81 million.

"Companies are not laying off workers and the labor market remains relatively strong," said Christopher Rupkey, chief economist at FWDBONDS in New York. "And now there are signs of life for existing home sales. This makes easing monetary policy at this juncture more problematic."

The 10-year Treasury note yield finished the week of 3/18 at 4.20%, while the 30-year Treasury note yield finished the week at 4.38.%.

Mortgage Rates Move Higher

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, March 21. The survey showed mortgage rates increased for both the 30-year and 15-year fixed rates.

This week, the 30-year fixed rate mortgage averaged 6.87%, up from last week's average of 6.74%. Last year at this time, the 30-year fixed rate mortgage averaged 6.42%.

The 15-year fixed rate mortgage averaged 6.21% this week, up from 6.16% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.68%.

"After decreasing for a couple of weeks, mortgage rates are once again on the upswing," said Freddie Mac's Chief Economist, Sam Khater. "As the spring homebuying season gets underway, existing home inventory has increased slightly and new home construction has picked up. Despite elevated rates, homebuilders are displaying renewed confidence in the housing market, focusing on the fact that there is a good amount of pent-up demand, an ongoing supply shortage and expectations that the Federal Reserve will cut rates later in the year."

Based on published national averages, the savings rate was 0.47% as of 03/18. The one-year CD averaged 1.81%.

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 March 22, 2024
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