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Tuesday October 27, 2020



Dave & Buster's Reports Earnings

Dave & Buster's Entertainment, Inc. (PLAY) released its latest quarterly earnings on Tuesday, December 10. The restaurant and entertainment company reported increased earnings for the quarter.

The company reported revenue of $299.4 million for the third quarter. This was up 6.1% from revenue of $282.1 million at this time last year.

"We delivered 6% revenue growth in the third quarter driven by strong new store performance, and are encouraged by our progress advancing our near-term priorities to drive improved performance and sustainable shareholder value," said Dave & Buster's CEO Brian Jenkins. "We are successfully executing our plan to drive growth and position the company for long-term success despite comp sales headwinds from increased competition."

Dave & Buster's reported quarterly net income of $500,000, or $0.02 per share. Last year at this time, the company reported net income of $11.19 million, or $0.30 per share, for the quarter.

The company increased its locations from 118 to 134 and is on track to open 16 additional locations in fiscal 2019. Dave & Buster's comparable store sales decreased 4.1%. The company attributed the drop in same-store sales to lower walk-in sales. During the quarter, the company repurchased 2.4 million shares in the quarter for approximately $97 million. Dave & Buster's quarterly cash dividend was increased 7% to $0.16 per share.

Dave & Buster's Entertainment Inc. (PLAY) shares ended the week at $39.41, down 2.2%.

GameStop Updates Fiscal Guidance

GameStop Corp. (GME) reported its third quarter earnings on Tuesday, December 10. The company reported a 25.7% drop in global sales causing its stock to drop more than 15% following the report's release.

Revenue for the quarter came in at $1.44 billion. This is down from $1.94 billion in revenue at the same time last year.

"Our third quarter results continue to reflect the prevailing industry trends, most notably the unprecedented decline in new hardware sales seen across the market as the current generation of gaming consoles reach the end of their lifecycle and consumers delay their spending in anticipation of new hardware releases," said GameStop CEO George Sherman. "With console makers set to introduce new and innovative gaming consoles late next year, we anticipate this trend to continue until the fourth quarter of 2020."

The company posted a net loss of $83.4 million, or $1.02 per share, for the quarter. This was an improvement from a net loss of $488.6 million, or $4.78 per share, during the same quarter last year.

GameStop reported a decrease of 23.2% in comparable store sales for the quarter. The company pointed to a 45.8% decrease in new hardware sales as a result of new consoles that will be launched by leading gaming companies in 2020. GameStop forecasts its adjusted earnings per share to a range of $0.10 and $0.20 for the fiscal year. This is a steep decline from its previous expectation range of between $1.15 and $1.30 per share.

GameStop Corp. (GME) shares ended the week at $5.45, down 18%.

Stitch Fix Delivers Earnings

Stitch Fix, Inc. (SFIX) announced quarterly earnings on Monday, December 9. The subscription clothing service's revenue surpassed analysts' predictions and shares jumped more than 9% following its earnings release.

Revenue for the first quarter reached $444.8 million. This is up 21% from revenue of $366.2 million reported during the same quarter last year and above the $441 million in revenue that analysts expected.

"We had another quarter of great momentum in Q1, delivering net revenue of $445 million, exceeding guidance and representing 21% year-over-year growth," said Stitch Fix Founder and CEO Katrina Lake. "We grew our active clients to 3.4 million, an increase of 17% year over year."

Stitch Fix reported quarterly net loss of $200,000. This fell short of last year's first quarter earnings of $10.7 million.

Stitch Fix uses computer algorithms and personal style experts to create personalized shopping choices for its clients. In the quarter, the company's number of active clients grew 17% year-over-year to 3.4 million. Stitch Fix revenue per active client grew 9.5% in the quarter, which was the sixth consecutive quarter of growth in this area.

Stitch Fix, Inc. (SFIX) shares closed at $25.87, up 7.5% for the week.

The Dow started the week at 27,987 and closed at 28,135 on 12/13. The S&P 500 started the week at 3,142 and closed at 3,169. The NASDAQ started the week at 8,651 and closed at 8,735.

Treasury Yields React to U.S.-China Trade Agreement

U.S. Treasury yields fell Friday after reports that a phase one trade agreement with China was brokered. Treasury bonds slid at the beginning of the week as well in anticipation of the last Federal Reserve meeting of 2019.

On Friday, President Trump confirmed via Twitter that a trade agreement with China had been reached. The agreement halted the December 15 scheduled increases on tariffs on Chinese goods. Chinese officials held a press conference announcing a tentative trade agreement while also emphasizing that the agreement has not yet been signed.

"The Chinese side believes that as the top two economies of the world, China and the United States should bear in mind the larger interests in managing their economic and trade relations," said China's Vice Minister of Commerce, Wang Shouwen. "Reaching the economic and trade agreement services the fundamental interests of our two peoples and people all over the world."

The benchmark 10-year Treasury note yield was at 1.879% during early trading on Friday. The 30-year Treasury bond yield dipped to 2.307% on Friday.

On Wednesday, the Federal Open Market Committee announced that the federal funds rate would be maintained at its current range of between 1.50% and 1.75%. The Fed signaled that no rate increases were forecast for 2020, stating significant and persistent inflation would be necessary to support rate increases.

"The Fed forward guidance is crystallizing around a very high threshold for moving rates higher, keeping rates anchored at the front-end," said Ed Al-Hussainy, senior interest rate and currencies analyst at Columbia Threadneedle. "That's definitely a positive for Treasurys."

The 10-year Treasury note yield closed at 1.82% on 12/13, while the 30-year Treasury bond yield was 2.25%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 12. Mortgage rates increased for the week.

The 30-year fixed rate mortgage averaged 3.73%, up from an average of 3.68% last week. Last year at this time, the 30-year fixed rate mortgage averaged 4.63%.

The 15-year fixed rate mortgage averaged 3.19% this week, up from last week's average of 3.14%. During the same time last year, the 15-year fixed rate mortgage averaged 4.07%.

"With Federal Reserve policy on cruise control and the economy continuing to grow at a steady pace, mortgage rates have stabilized as the market searches for direction," said Freddie Mac's Chief Economist Sam Khater. "The risk of an economic downturn has receded and, combined with the very strong job market, it should lead to a slightly higher rate environment."

Based on published national averages, the savings rate was 0.09% for the week of December 9. The one-year CD finished at 0.49%.

Published December 13, 2019

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