Finances

Stitch Fix, Inc. (SFIX) released its third quarter earnings on Tuesday, June 6. The company's shares rose 4.4% in after-hours trade following the release of the report.

Net revenue for the quarter came in at $394.9 million, down 20% from $492.9 million in net revenue at this time last year. This was above analysts' expectations of $389 million in net sales.

"This quarter we delivered adjusted EBITDA of $10.1 million, exceeding our guidance range and significantly expanding our free cash flow," said Stitch Fix Interim CEO, Katrina Lake. "We continue to focus on ways to drive efficiencies across our business, while at the same time invest in the core capabilities that have set Stitch Fix apart from the beginning – personalization powered by our industry-leading data science and AI. Looking forward, we are confident that we have the right strategy in place to return us to profitable growth while realizing our mission to help our clients look and feel their best."

The company posted a net loss of $21.8 million for the quarter or $0.19 per share. This was an improvement from a net loss of $78.0 million or $0.72 per share during the same quarter last year.

In comparison to the previous year, Stitch Fix reported a decrease in active clients of 431,000 to 3,476,000. Net revenue per active client also declined 9% to $502 per client. The company generated $21.9 million in free cash flow for the third quarter and ended the quarter with $244 million of cash and investments. The company aims to achieve profitability and cash flow by moving to a three distribution center network from a five distribution center network. The move would allow the company to have greater depth and breadth of inventory for its clients. For the fourth quarter of fiscal 2023, Stitch Fix expects net revenue between $365 million and $375 million.

Stitch Fix, Inc. (SFIX) shares ended the week at $4.48, up 14.6% for the week.

Dave and Buster's Reports Earnings

Dave and Buster's Entertainment, Inc. (PLAY) announced its first quarter earnings on Tuesday, June 6. The arcade company's stock rose over 4% after reporting record revenue and net income.

Revenue reached $597.3 million for the first quarter. This was a 32.4% increase from revenue of $451.1 million reported in the same quarter last year but below analysts' expectations of $603.9 million.

"We are pleased to report strong results for our first quarter of fiscal 2023," said Dave and Buster's CEO, Chris Morris. "As a testament to the conviction we have in the long-term success of our business and the value we see in our shares, we have repurchased $200 million of common stock thus far in fiscal 2023, reducing our shares outstanding by nearly 12%. We see tremendous upside as we continue to drive value creation for our stakeholders and we look forward to keeping you updated on our progress."

Dave and Buster's reported quarterly net income of $70.1 million or $1.45 per adjusted share. Last year at this time, the company reported a net income of $67.0 million or $1.35 per adjusted share.

Dave and Buster's combined comparable store sales decreased approximately 4% compared to the same quarter last year, but was an increase of 10% from the same period in 2019. The company opened four new stores, one Dave & Buster's in Puerto Rico and three Main Event brand stores in Arkansas, Arizona and Kentucky. Dave & Buster's also entered into two international franchise agreements for up to five stores in Australia and 15 stores in India. The company ended the quarter with $581.7 million in liquidity consisting of cash and revolving credit.

Dave and Buster's Entertainment, Inc. (PLAY) shares closed at $37.97, up 14.6% for the week.

Campbell Soup Posts Earnings

Campbell Soup Company (CPB) released its third quarter earnings report on Wednesday, June 7. The company's shares dropped 9% following the release.

Net sales came in at $2.2 billion for the quarter, up 5% from $2.1 billion in net sales during the same quarter last year. This was consistent with analysts' expectations.

"Our third-quarter results were in line with our expectations and were driven by in-market momentum, continued best-in-class supply chain execution and favorable inflation-driven net price realization, all despite the anticipated challenging comparison from the prior year's retailer inventory rebuild," said Campbell's CEO, Mark Clouse. "Our year-to-date results and execution give us continued confidence in our ability to deliver our full-year guidance, with adjusted EPS currently tracking to the upper end of our guidance range."

For the quarter, Campbell Soup reported net income of $160 million or $0.53 per adjusted share. This was a decrease from $188 million in net income or $0.62 per adjusted share at this time last year.

The company's Meals & Beverages segment, which includes its line of soups and beverages such as Swanson, Prego, Pace, V8 and Pacific Foods, posted revenues of $1.1 billion. This is a 2% decrease which the company attributes to a decline in U.S. soup, partially offset by foodservice gains. The Snacks segment, which includes Pepperidge Farm cookies and Goldfish crackers, reported a 12% increase in organic net sales and net revenue, reaching $3.3 billion. Campbell Soup reaffirmed its full-year fiscal 2023 guidance and expects an increase in net sales of 8.5% to 10.0% and an increase in adjusted share earnings of 3.5% to 5.0%.

Campbell Soup Company (CPB) shares ended the week at $46.05 down 10.6% for the week.

The Dow started the week of 6/5 at 33,771 and closed at 33,877 on 6/9. The S&P 500 started the week at 4,283 and closed at 4,299. The NASDAQ started the week at 13,238 and closed at 13,259.

U.S. Treasury Yields rose mid-week as investors considered the potential trajectory of the Federal Reserve's monetary policy ahead of next week's Federal Reserve meeting. Yields pared back towards the end of the week as weekly jobless claims spiked.

On Monday, the Institute for Supply Management (ISM) released its purchasing managers' index (PMI) for May 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 May was 50.3, down from a PMI of 51.9 in April and below economists' estimates of 52.2.

"There has been a pullback in the rate of growth for the services sector," said Chair of the ISM, Anthony Nieves. "This is due mostly to the decrease in employment and continued improvements in delivery times (resulting in a decrease in the Supplier Deliveries Index) and capacity, which are in many ways a product of sluggish demand. The majority of respondents indicate that business conditions are currently stable; however, there are concerns relative to the slowing economy."

The benchmark 10-year Treasury note yield opened the week of June 5 at 3.70% and traded as high as 3.83% on Thursday. The 30-year Treasury bond opened the week at 3.89% and traded as low as 3.98% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 28,000 to 261,000 for the week ending June 3, marking it the highest level since October 2021. Continuing unemployment claims fell by 37,000 to 1.76 million.

"The sustained increase in weekly jobless claims from last year's cyclical low is meaningful, clearly illustrating a softening in conditions," said the Chief Information Officer of Plante Moran Financial Advisors, Jim Baird. "That is encouraging news for Fed policymakers who have been looking for evidence that the aggressive rate hikes of the past year are having an impact."

The 10-year Treasury note yield finished the week of 6/9 at 3.74%, while the 30-year Treasury note yield finished the week at 3.89%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 8. Mortgage rates decreased after rising for three consecutive weeks.

This week, the 30-year fixed rate mortgage averaged 6.71%, down from last week's average of 6.79%. Last year at this time, the 30-year fixed rate mortgage averaged 5.23%.

The 15-year fixed rate mortgage averaged 6.07% this week, down from 6.18% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.38%.

"Mortgage rates decreased after a three-week climb," said Freddie Mac's Chief Economist, Sam Khater. "While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers."

Based on published national averages, the savings rate was 0.40% as of 5/15. The one-year CD averaged 1.59%.

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