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Sunday July 5, 2020



Walgreens Reports Mixed Results

Walgreens Boots Alliance, Inc. (WBA) released its latest quarterly earnings on Thursday, June 27. The company posted increased sales and decreased earnings for the quarter.

The company reported sales of $34.59 billion for the quarter. This was up from $34.33 billion during the same quarter last year.

"Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set, and are pleased to report an improvement in our U.S. comparable growth compared with the first half of the year," said Walgreens CEO Stefano Pessina. "We will continue our aggressive response to rapidly shifting trends, and have already seen improved U.S. retail sales and prescription growth and are making good progress in implementing our Transformational Cost Management Program."

Walgreens reported net earnings of $1.03 billion for the quarter. This was down from $1.34 billion in net earnings at this time last year.

Walgreens Boots Alliance operates Walgreens and Boots pharmacies in the United States and United Kingdom. The company recently announced that it will be closing 200 Boots locations over the next year and a half as part of its Transformational Cost Management Program. Pessina described the program's goal as helping "drive a structural change in the company, making us a more efficient, more agile and more responsive organization."

Walgreens Boots Alliance, Inc. (WBA) shares ended the week at $55.12, relatively unchanged for the week.

Herman Miller Reports Earnings

Herman Miller, Inc. (MLHR) released its latest quarterly earnings on Wednesday, June 26. The office furniture company reported increased earnings for the quarter.

Net sales for the quarter reached $671.0 million. This was up from $618.0 million in sales at the same time last year.

"Strong demand was a clear highlight of our results as we finished the quarter setting all-time records for quarterly and annual net sales for our Company," said Andi Owen, CEO of Herman Miller. "We leveraged this demand to deliver meaningful operating margin expansion over the same quarter last year. These results for the year are a tribute to the talent and effort of our people."

The company reported net earnings of $46.0 million for the quarter. This was a 6.9% increase from net earnings of $31.8 million at this time last year.

Herman Miller specializes in office furniture, including office chairs and workstations. The company announced in its earnings release that it would be increasing its quarterly cash dividend to $0.21 per share. This represents a 6% increase over the previous dividend.

Herman Miller, Inc. (MLHR) shares ended the week at $44.69, relatively unchanged for the week.

Acuity Brands Reports Earnings

Acuity Brands Inc. (AYI) posted its latest quarterly earnings on Tuesday, July 2. The lighting company reported increased quarterly sales from the previous year.

Net sales for the quarter reached $947.6 million. This was up 0.4% from $944.0 million in net sales for the prior year's quarter.

"We are pleased to report solid third quarter financial performance in what continues to be a challenging market environment, particularly with ongoing angst generated by trade policy issues," said Acuity Brands CEO Vernon J. Nagel. "Third quarter reported diluted EPS of $2.22 rose over 23% compared with the year-ago period, while adjusted diluted EPS of $2.53 rose approximately 7% compared with the prior period, both records for our third quarter."

The company posted net income of $234.3 million for the quarter. This was down from $241.4 million in net income at this time last year.

Acuity Brands announced that it expects a modest decrease in net sales in the upcoming fourth quarter from the same quarter last year. For the full year, however, the company does not expect a change in outlook. The company is currently in the process of implementing changes that it expects will improve profit margins moving forward.

Acuity Brands, Inc. (AYI) shares ended the week at $23.18, up 2.1% for the week.

The Dow started the week at 26,806 and closed at 26,922 on 7/5. The S&P 500 started the week at 2,971 and closed at 2,991. The NASDAQ started the week at 8,146 and closed at 8,162.

Strong Jobs Report, Easing Trade Tension Buoy Yields

Treasury yields rose this week as the economy added more jobs than expected and the U.S. and China continued to work toward a trade agreement. The stronger-than-expected report calls into question whether the Federal Reserve will cut interest rates in the near future.

On Friday, the U.S. Department of Labor released its latest jobs report. The report showed 224,000 jobs added in June, far exceeding analysts' expectation of 170,000 new jobs for the month. Unemployment ticked upward to 3.7% from the prior month's reading of 3.6%.

During early trading on Friday, the 10-year Treasury note was at 2.06%, up from Wednesday's low of 1.94%. The 30-year Treasury bond was at 2.56% during trading on Friday, up from a low of 2.47% on Wednesday.

"The bounce back in the June jobs number may splash cold water on the notion of an imminent Fed rate cut," said Tony Bedikian, Managing Director and Head of Global Markets at Citizens Bank. "We'll have to see whether the equity markets can shrug that off when balanced against other macroeconomic factors, such as the hope of a China trade truce."

President Donald Trump met with China's President Xi Jinping on Friday, June 28, while the two were in Japan for the G-20 summit. Following the meeting between the leaders, each acknowledged that there would be no new tariffs in the short term.

"At the request of our High Tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy product from them which will not impact our National Security," stated President Trump in a Twitter post on Friday. "Importantly, we have opened up negotiations again with China as our relationship with them continues to be a very good one. The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good!"

The 10-year Treasury note yield closed at 2.05% on 7/5, while the 30-year Treasury bond yield was 2.55%.

Mortgage Rates Rise Slightly

Freddie Mac released its latest Primary Mortgage Market Survey on Wednesday, July 3. The report showed a small increase in 15 and 30-year fixed rate mortgage rates.

This week, the 30-year fixed rate mortgage averaged 3.75%, up from 3.73% last week. Last year at this time, the 30-year fixed rate mortgage averaged 4.52%.

The 15-year fixed rate mortgage averaged 3.18% this week, up from last week's average of 3.16%. At this time last year, the 15-year fixed rate mortgage averaged 3.99%.

"We're seeing a tug of war happen as the fixed income market flashes warning signs while the equities market continues to march higher with optimism," said Freddie Mac Chief Economist Sam Khater. "The data suggests the economy is weakening but is still on very solid ground with high consumer confidence and a strong labor market."

Based on published national averages, the money market account closed at 1.22%. The 1-year CD finished at 2.57% on 7/5.

Published July 5, 2019

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