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Monday August 10, 2020

Finances

Finances
 

Beyond Meat Reports Quarterly Earnings

Beyond Meat, Inc. (BYND) released its second quarter earnings report on Tuesday, August 4. The plant-based meat company's shares fell as much as 7% following the report's release.

Beyond Meat's net revenue for the second quarter rose to $113.3 million, a 69% increase from revenue of $67.3 million in the same quarter last year. Net revenue exceeded Wall Street's expectation of $99.7 million and eclipsed the $100 million mark for the first time.

"I am proud of our record net revenues and growth during a very challenging period," said Ethan Brown, President and CEO of Beyond Meat. "As the toll of the COVID-19 pandemic took hold across the foodservice industry, we repurposed assets and repacked and rerouted products to meet increased consumer activity in retail aisles. Throughout the quarter, our brand experienced an enviable combination of consumer trends—increasing household penetration; increasing buying levels per household; and strong repeat purchase rates of nearly 50%, well above the success threshold for consumer packaged goods."

Despite sales tripling, Beyond Meat reported a net loss of $10.2 million or $0.16 per common share. During the same quarter last year, the company reported a net loss of $9.4 million or $0.24 per share.

The large increase in net revenue was attributed to strong growth in sales volume. Beyond Meat set a lower price per pound to increase first-time tastings by consumers. The company experienced some disruption in its channels of sales, such as sales to restaurants, which were limited because of the COVID-19 pandemic. Beyond Meat donated 1 million meatless burgers to foodbanks and frontline workers, valued at $1.6 million of product. Given the uncertainty of the COVID-19 pandemic, Beyond Meat continues to withhold any future guidance.

Beyond Meat, Inc. (BYND) shares ended the week at $131.51, up 2.2% for the week.

Ralph Lauren Reports Quarterly Earnings


Ralph Lauren Corp. (RL) released its quarterly earnings report on Tuesday, August 4. The American fashion company's shares dropped as much as 7.5% following the report's release.

Ralph Lauren posted first quarter revenue of $487.5 million, a 66% drop from revenue of $1.4 billion reported during the same quarter last year. Revenue fell below analysts' estimates of $661.0 million.

"The past few months have marked a period of extraordinary challenge, but also agility and resilience," said Patrice Louvet, President and CEO of Ralph Lauren. "Our financial performance this quarter reflects an unprecedented three months of COVID-19 related impact around the world. We are taking the opportunity to leverage this period of disruption to accelerate our strategic focus areas, drive new areas of growth, and realign our resources accordingly."

The company reported a net loss for the quarter of $127.7 million or $1.75 per share. During the same quarter last year, the company reported net income of $117.1 million or $1.47 per share.

Ralph Lauren experienced a decline in revenue in all regions due to the COVID-19 pandemic. Revenue in North America decreased 77% to $165.1 million, compared to $719.4 million in the same quarter last year. Revenue in Europe decreased 67% to $120.7 million, compared to $360.8 million in the same quarter last year. Revenue in Asia decreased 34% to $171.9 million, compared to $258.6 million in the same quarter last year. In general, Ralph Lauren's digital sales failed to offset retail and wholesale sales. Due to the uncertainty of the COVID-19 pandemic, Ralph Lauren has suspended any future guidance.

Ralph Lauren Corp. (RL) shares ended the week at $65.96, down 7.5% for the week.

Warner Music Group Reports Quarterly Earnings


Warner Music Group Corp. (WMG) released its quarterly earnings report on Tuesday, August 4. The American entertainment and record label conglomerate's shares fell 3.3% following the report's release.

Warner Music reported $1.01 billion in revenue for the third quarter, a 5% drop from revenue of $1.06 billion reported in the same quarter last year. This exceeded Wall Street's expectation of $980 million in revenue and a loss of $0.02 per share.

"We're very pleased with our performance this quarter, especially in light of the global pandemic," said Steve Cooper, CEO of Warner Music Group. "Our results highlight the underlying strength and resilience of our business. Streaming revenue grew double digits and our digital transformation continues."

The company reported a net loss of $519 million or $1.03 per share. During the same quarter last year, the company reported net income of $13 million or $0.03 per share.

Warner attributed the decline in revenue to COVID-related business disruptions and foreign exchange rates, but the decline was partially offset by continued growth in music streaming. Digital revenue grew 11.1% to $720 million, representing 71.3% of the company's total revenue. Warner's physical music sales segment revenue was $51 million, down from $95 million in the same quarter last year. The recorded music licensing segment revenue fell to $20 million compared to $56 million in the same quarter last year. Warner Music Group is not offering future guidance due to the COVID-19 pandemic.

Warner Music Group Corp. (WMG) shares ended the week at $28.51, down 5.8% for the week.

The Dow started the week at 26,542 and closed at 27,433 on 8/7. The S&P started the week at 3,288 and closed at 3,351. The NASDAQ started the week at 10,848 and closed at 11,011.
 

Treasury Yields Slightly Increase

Yields on U.S. Treasurys jumped on Friday after holding at low levels throughout the week. The increase followed the release of a better than expected July jobs report, but optimism remains tempered as investors await a decision on an additional stimulus package.

On Friday, the U.S. Department of Labor released the jobs report for July. The report revealed more than 1.8 million jobs were added in July. The unemployment rate improved to 10.2%, down from 11.1% in June. Both exceeded analysts' expectations of an addition of 1.48 million jobs and a 10.6% unemployment rate.

"We added more jobs than most people expected, but the gains really were disproportionately part-time workers," said Kate Bahn, economist and director of labor market policy at the Washington Center for Equitable Growth. "To me that means even if workers are coming back it is to jobs that pay less, and families will be worse off."

The benchmark 10-year Treasury note yield hit a low of 0.502% late Tuesday and rose to 0.565% during trading on Friday. The 30-year Treasury bond yield dropped to 1.169% on Thursday, but increased to 1.239% as of Friday.

Despite the optimism of the July jobs report, the focus remains on whether the federal government can agree to an additional stimulus package to further reduce unemployment and aid the millions still unemployed. Although a deal had been anticipated Friday, both sides seem far from agreement as of Friday morning.

"I think there is a lot of issues we are close to a compromise position on, but I think there a handful of very big issues that we are still very far apart," said Treasury Secretary Steven Mnuchin. "I think we always said our objective is to try to reach an overall understanding tomorrow [Friday]. If the Democrats are willing to compromise and do something, I think we'll get something done."

The 10-year Treasury note yield closed at 0.56% on 8/7, while the 30-year Treasury bond yield was 1.23%.
 

Lowest Mortgage Rates Since 1971

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, August 6. According to the report, mortgage rates are at the lowest rate since 1971.

This week, the 30-year fixed rate mortgage averaged 2.88%, down from last week's average of 2.99%. Last year at this time, the 30-year fixed rate mortgage averaged 3.60%.

The 15-year fixed rate mortgage averaged 2.44% this week, down from an average of 2.51% last week. During the same time last year, the 15-year fixed rate mortgage averaged 3.05%.

"The resilience of the housing market continues as mortgage rates hit another all-time low, giving potential buyers more purchasing power and strengthening demand," said Sam Khater, Freddie Mac's Chief Economist. "We expect rates to stay low and continue to propel the purchase market forward. However, the main barrier to rising demand remains the lack of inventory, especially for entry-level homes."

Based on published national averages, the savings rate was 0.06% for the week of August 3. The one-year CD averaged 0.21%.

Published August 7, 2020
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