Saturday September 30, 2023
American Eagle Outfitters Releases Quarterly Report
Revenue for the second quarter came in at $1.20 billion. This was relatively unchanged from revenue reported this time last year and in line with analysts' expectations.
"I am pleased to report second quarter revenue and operating profit that exceeded our expectations," said American Eagle's CEO, Jay Schottenstein. "Demand picked up in June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. Looking to the second half, we are excited about future product arrivals, leveraging the positive response to early fall goods and delivering innovative customer connections."
The company posted a net income of $48.57 million or $0.25 per adjusted share. This was up from a net loss of $42.47 million or $0.24 per adjusted share reported during the same quarter last year.
American Eagle, the company's namesake brand, saw a slight decline in revenue of 1% to $767 million. American Eagle's sub-brand, Aerie, accounted for $380 million of the company's revenue, 2% higher than the previous year. Overall company inventory declined to $637 million, a 7% decline compared to the same time last year. The company revised its 2023 outlook and expects operating income to be in the range of $325 to $350 million, up from its previous outlook of $250 to $270 million. For the next quarter, the company projects its operating income to be in the range of $115 to $125 million.
American Eagle Outfitters, Inc. (AEO) shares closed at $15.99, down 7% for the week.
Dave and Buster's Reports Earnings
Dave and Buster's Entertainment, Inc. (PLAY) announced its second quarter earnings on Wednesday, September 6. The arcade company's stock fell 3% after reporting lower-than-expected revenue.
Revenue reached $542.1 million for the second quarter. This was a 15.7% increase from revenue of $468.4 million reported in the same quarter last year, but below analysts' expectations of $558.4 million.
"During the quarter, we are pleased that we continued to open new stores at highly attractive returns on invested capital, that we have diligently managed our cost structure and continued to expand our Adjusted EBITDA margins, and that our exceptional team has done a phenomenal job navigating our highly profitable and resilient business model through a dynamic period in our economy and against strong top line comparisons versus 2022," said Dave and Buster's CEO, Chris Morris. "As we enter the second half of 2023, we remain as confident as ever in our ability to execute against the numerous and sizeable growth initiatives that we laid out in our recent investor day presentation and which we have already begun implementing."
Dave and Buster's reported quarterly net income of $25.9 million or $0.60 per adjusted share. Last year at this time, the company reported net income of $29.1 million or $0.59 per adjusted share.
Dave and Buster's combined comparable store sales decreased approximately 6.3% compared to the same time last year but this was an increase of 5.8% compared to the same quarter in 2019. The company's entertainment segment reported revenue of $360.8 million and food and beverage revenues came in at $181.3 million for the quarter, an increase in both categories. The company opened three new stores, two Dave & Buster's and one Main Event brand store, with a total of 213 total locations. The company increased its share repurchase program to up to $200 million of its common stock.
Dave and Buster's Entertainment, Inc. (PLAY) shares closed at $34.70, down 12% for the week.
DocuSign Releases Earnings Report
DocuSign, Inc. (DOCU) released its second quarter earnings report on Thursday, September 7. The digital signature software company reported revenue that beat analysts' expectations causing its shares to climb nearly 4% following the release of the report.
DocuSign reported $687.7 million in quarterly revenue. This was up 11% from revenue of $622.2 million at the same time last year and exceeded analysts' estimates of $677.1 million.
"Our results for the first half were solid and reflect strong progress on our business transformation," said DocuSign CEO, Allan Thygesen. "We increased our pace of innovation by delivering key new features, while strengthening our self-service and partner distribution channels, and we have received tremendous enthusiasm on our product roadmap, particularly from our enterprise customers."
DocuSign posted net income of $7.4 million or $0.04 per adjusted share for the second quarter. This was an increase from a net loss of $45.1 million or $0.22 per adjusted share reported at this time last year.
DocuSign experienced strong growth for the second quarter with an increase in revenue for all of its segments. Subscription revenue saw an 11% increase year-over-year to $669.4 million. Professional services and other revenue rose by 8% to $18.3 million. The company announced new product capabilities with the incorporation of AI-enabled biometric checks to confirm the identity of signers and other features that will streamline operations with DocuSign Contract Lifecycle Management (CLM). DocuSign anticipates its total revenue for the fiscal year to be in the range of $2.73 to $2.74 billion.
DocuSign, Inc. (DOCU) shares ended the week at $50.21, down 2% for the week.
The Dow started the week of 9/5 at 34,843 and closed at 34,577 on 9/8. The S&P 500 started the week at 4,510 and closed at 4,457. The NASDAQ started the week at 13,995 and closed at 13,762.
Treasury Yields Fluctuate
On Wednesday, the Institute for Supply Management (ISM) released its purchasing managers' index (PMI) for August indicating growth in the service industry. The PMI measures the change in production levels across the U.S. and is used as an indicator of U.S. economic activity. The PMI for August was 54.5, up from a PMI of 52.7 in July and above economists' estimates of 53.9.
"There has been an increase in the rate of growth for the services sector, reflected by increases in all four subindexes that directly factor into the composite Services PMI and faster supplier deliveries," said Chair of the ISM Services Business Survey Committee, Anthony Nieves. "Sentiment among Business Survey Committee respondents varies by industry; however, the majority of panelists are positive about business and economic conditions."
The benchmark 10-year Treasury note yield opened the week of September 5 at 4.19% and traded as high as 4.32% on Thursday. The 30-year Treasury bond opened the week at 4.30% and traded as high as 4.40% on Wednesday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 13,000 to 216,000 for the week ended September 2. This marked the fourth consecutive week of declines. Continuing unemployment claims fell by 40,000 to 1.68 million.
"All signs seemed to point to higher claims, and yet they fell to the lowest level in nearly seven months," said Economist at Jefferies, Tom Simons. "The claims data do not show any real evidence of a pickup in layoff activity. There have been brief periods of elevated counts during 2023, specifically in June, but these periods have been short-lived and often explainable by special factors."
The 10-year Treasury note yield finished the week of 9/5 at 4.27%, while the 30-year Treasury note yield finished the week at 4.34%.
Mortgage Rates Decline
This week, the 30-year fixed rate mortgage averaged 7.12%, down from last week's average of 7.18%. Last year at this time, the 30-year fixed rate mortgage averaged 5.89%.
The 15-year fixed rate mortgage averaged 6.52% this week, down from 6.55% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.16%.
"For the fourth consecutive week, the 30-year fixed-rate mortgage hovered above 7%," said Freddie Mac's Chief Economist, Sam Khater. "The economy remains buoyant, which is encouraging for consumers. Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers."
Based on published national averages, the savings rate was 0.43% as of 8/21. The one-year CD averaged 1.76%.
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