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Monday October 18, 2021



Target Hits the Mark

Target Corporation (TGT) released its fourth quarter and full-year earnings report on Tuesday, March 2. The retailer delivered better-than-expected revenue and sales in the fourth quarter due to the holiday season.

Target reported quarterly revenue of $28.3 billion, up 21.1% from revenue of $23.4 billion in the same quarter last year. For the year, the company reported $93.6 billion in revenue, up 19.8% year over year.

"Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic," said Target CEO Brian Cornell. "With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is more than the 11 prior years combined."

The company announced earnings of $1.4 billion for the quarter or $2.76 per share, which is up 65.6% from earnings of $834.0 million or $1.65 per share in the same quarter last year. For the year, the company reported earnings of $4.4 billion or $8.72 per share.

Target's total comparable sales grew 20.5% in the quarter, buoyed by comparable store sales growth of 6.9% and digital sales growth of 118.0%. The 21.1% total revenue growth in the quarter was largely due to sales growth of 21.0% and a 28.7% increase in other revenue, including profit-sharing income generated from its credit card program. The company reported total sales received a boost due to the holiday season. Increased spending was attributed to many Americans receiving the $600 stimulus check and increased store traffic in January. Target continues to withhold guidance for fiscal year 2021 due to the uncertainty surrounding the COVID-19 pandemic.

Target Corporation (TGT) shares ended the week at $172.61, down 7.2% for the week.

AutoZone Posts Earnings Report

AutoZone, Inc. (AZO) released its second quarter earnings report on Tuesday, March 2. The auto parts company reported increased year-over-year net sales and income.

The company reported net sales of $2.9 billion during the quarter, exceeding Wall Street analysts' expectations. This was up 15.8% from $2.5 billion in sales during the same quarter last year.

"This quarter, we were again able to deliver exceptionally strong same store sales and earnings growth, and many performance metrics remained at historically high levels," said AutoZone CEO Bill Rhodes. "Our outstanding performance is also driven by the exceptional and heroic efforts of our AutoZoners, particularly those in our stores and distribution centers who have been there every day for our customers during these extraordinary times."

AutoZone reported net income of $345.9 million for the quarter, up 15.6% from $299.3 million in the same quarter last year. On a diluted earnings per share basis the company reported earnings of $14.93, up 20.5% from $12.39 reported in the same quarter last year.

During the quarter, AutoZone opened 27 new stores in the U.S., one in Brazil and seven in Mexico. Currently, the company has 6,625 total stores in those three countries. AutoZone spent approximately $40 million in the quarter on additional emergency time-off benefits and other pandemic related expenses. The company recently announced a financial incentive for its employees to receive a COVID-19 vaccination as they continue to invest in the safety of their employees' work environment.

AutoZone, Inc. (AZO) shares ended the week at $1,220.25, up 4.0% for the week.

Urban Outfitters Posts Earnings Report

Urban Outfitters, Inc. (URBN) released fourth quarter and full year earnings on Tuesday, March 2. The lifestyle product and service company reported better-than-expected net income, but decreased net sales in the quarter.

The company reported quarterly net sales of $1.09 billion, down 6.9% from $1.17 billion in net sales in the same quarter last year. For the year, Urban Outfitters reported $3.45 billion of net sales, down 13.4% from $3.98 billion reported in 2020.

"As we begin our new fiscal year, we are encouraged by the positive sales results all three brands delivered in North America quarter-to-date," said Richard A. Hayne CEO of Urban Outfitters. "We're particularly excited by the recent uptick in demand for 'going-out' type apparel and believe this bodes well for our spring and summer seasons."

Urban Outfitters reported net income of $28.57 million for the quarter, up from $19.54 million reported in the same quarter last year. The company reported net income of $1.24 million for the full year, down from $168.10 million reported last year.

Urban Outfitters' portfolio of brands includes Anthropologie, Free People, Nuuly and others. The company's total net sales were heavily supported by the Anthropologie and Urban Outfitters brands. Anthropologie accounted for $431.38 million in net sales, while Urban Outfitters brought in $428.10 million in net sales. Free People brought in the third highest sales at $219.28 million. During the year, the company opened 20 new retail locations, but 10 stores and six franchisee-owned stores were closed.

Urban Outfitters, Inc. (URBN) shares ended the week at $37.51, up 7.1% for the week.

The Dow started the week at 31,066 and closed at 31,496 on 3/5. The S&P 500 started the week at 3,843 and closed at 3,842. The NASDAQ started the week at 13,406 and closed at 12,920.

Treasury Yields Reach Highest Levels of 2021

The 10-year U.S. Treasury yield increased to its highest level this year in part due to positive unemployment data. Earlier in the week, yields rose with positive news of the COVID-19 vaccine rollout.

On Tuesday, President Biden announced that by the end of May the U.S. will have produced enough COVID-19 vaccines for every American adult. This is two months earlier than the Biden administration had previously estimated. The news came shortly after Johnson & Johnson and Merck announced a joint effort to produce the Johnson & Johnson vaccine.

"Two of the largest pharmaceutical companies in the world who are usually competitors are working together on the vaccine," said President Biden. "This is the type of collaboration between companies we saw in World War II."

Following the vaccine announcement, the benchmark 10-year Treasury note rose to 1.47% during trading on Wednesday. The 30-year Treasury bond yield increased to 2.271%.

On Thursday, the Department of Labor released its weekly jobless claims report. The report showed 745,000 new claims for the week ending February 27, up from 736,000 new claims in the previous week. The Labor Department reported that the U.S. added 379,000 jobs in February, which was more than the expected addition of 210,000 jobs. The unemployment rate declined from 6.3% to 6.2%.

"There's still a long way to go," said Julia Pollak, an economist at ZipRecruiter. "But thank goodness it's moving in the right direction and not continuing to hemorrhage jobs. The [hospitality] industry is a first rung on the ladder and employs so many young people."

The 10-year Treasury note yield closed at 1.57% on 3/5, while the 30-year Treasury bond yield was 2.30%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, March 4. The report showed rising interest rates for the 30-year fixed rate mortgage rates.

This week, the 30-year fixed rate mortgage averaged 3.02%, up from last week's average of 2.97%. Last year at this time, the 30-year fixed rate mortgage averaged 3.29%.

The 15-year fixed rate mortgage averaged 2.34% this week, unchanged from last week. At this time last year, the 15-year fixed rate mortgage averaged 2.79%.

"Since reaching a low point in January, mortgage rates have risen by more than 30 basis points, and the impact on purchase demand has been noticeable," said Sam Khater, Freddie Mac's Chief Economist. "While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March, prior to the pandemic. However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season."

Based on published national averages for the week of 3/1, the national savings rate was 0.04%. The one-year CD finished at 0.14%.

Published March 5, 2021
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