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Sunday December 15, 2019



Bed Bath & Beyond Shares Jump

Bed Bath & Beyond (BBBY) released its third quarter earnings on Wednesday, January 9. Thanks to better-than-expected 2019 earnings projections, the company's stock prices soared following the report's release.

Net sales for the quarter totaled $3.03 billion. This was up from $2.95 billion during the same quarter last year.

"Next year, we believe that to a greater degree, we'll be able to leverage a lot of the investments that we've been making both in technology and in people to be able to enhance the profitability," said Bed Bath & Beyond CEO Steven Temares in a conference call with investors. "It's not a cost cutting exercise for us . . . this is a natural evolution for us."

Bed Bath & Beyond posted net earnings of $24.35 million during the quarter. This was down from $61.30 million during the same quarter last year.

Despite decreased profits and a decline in comparable store sales, Bed Bath & Beyond forecasted strong earnings for 2019. Comparable store sales fell 1.8% for the quarter. The company expects comparable store sales to decrease at a low single-digit rate in 2019. Given the rosier-than-expected outlook, the company's shares jumped 16% during trading on Thursday.

Bed Bath & Beyond (BBBY) shares ended the week at $15.23, up 27.8% for the week.

WD-40 Reports Sales Uptick

WD-40 Company (WDFC) announced its latest quarterly earnings on Wednesday, January 9. The company reported increased sales and profits for the quarter.

The company's total net sales for the quarter totaled $101.28 million, up 4% from sales of $97.60 million during the same quarter last year. This beat analysts' estimated quarterly sales of $99 million.

"We are happy that fiscal year 2019 is off to a solid start," said WD-40 Company president and CEO Garry Ridge. "Sales of our 2025 brands — the brands we see taking us to our long-term revenue objective of $700 million by the end of fiscal year 2025 — are up 5% globally compared to the first quarter of last year."

WD-40 reported net income of $13.28 million for the quarter. This was an increase from last year's earnings of $12.63 million.

The company's Americas segment led the way with $47.79 million in net sales for the quarter, up 4% from sales of $46.16 million during the prior year's quarter. The EMEA segment, which consists of Europe, the Middle East, Africa and India, posted net sales of $38.75 million, an 11% increase year-over-year. Sales in the Asia-Pacific segment fell 10% from the same quarter last year to $14.75 million.

WD-40 Company (WDFC) shares ended the week at $169.99, down 6.5% for the week.

Acuity Brands Reports Earnings

Acuity Brands, Inc. (AYI) reported its latest quarterly earnings on Wednesday, January 9. The lighting company's earnings and revenue increased year-over-year.

The company posted net sales of $932.6 million for the quarter. This was up from revenue of $842.8 million at this time last year.

"Our first quarter performance was solid despite continuing inflationary cost pressures," said Vernon J. Nagel, Chairman, President and CEO of Acuity Brands. "We have taken several actions to address these cost issues, including price increases and productivity improvements. Further, our top line growth this quarter continued our long trend of outpacing the overall growth rates of the markets we serve, and diluted earnings per share rose nearly 17% while adjusted diluted earnings per share increased approximately 20%."

Acuity Brands reported net income of $79.6 million, or $1.98 per share. This was up from $71.5 million in net income, or $1.70 per share, during the same quarter last year.

The company, which produces and markets lighting solutions, also manufactures smart home products. Acuity recently announced that its Juno AI lighting would be featured by Amazon at the upcoming Consumer Electronics Show. The recessed lighting product includes built-in speakers and is compatible with Amazon's Alexa system.

Acuity Brands, Inc. (AYI) shares ended the week at $121.73, up 3.3% for the week.

The Dow started the week at 23,474 and closed at 23,996 on 1/11. The S&P started the week at 2,568 and closed at 2,596. The NASDAQ started the week at 6,758 and closed at 6,971.

Treasury Bonds Dip Following CPI Release

Yields on U.S. Treasurys fell late in the week in response to the release of new economic data. An expected decrease in the Consumer Price Index, combined with remarks by the Federal Reserve chairman, pushed yields downward.

On Friday, the Labor Department released the latest Consumer Price Index (CPI). The index fell 0.1% in December. This was the first decrease in the CPI since March. The decrease brought the year-over-year CPI down to 1.9%.

"Overall, inflation risks remain well in check and are well down the list of potential concerns for both the capital markets and the economy," said Jim Baird of Plante Moran Financial Advisors. "That bodes well for 2019 if the Fed can slow the pace of rate hikes or pause outright."

The benchmark 10-year Treasury note reached 2.694% during trading on Friday, down from Wednesday's high of 2.750%. The 30-year Treasury bond fell to 3.025%, down from a high of 3.071% on Thursday.

On Thursday, Federal Reserve Chairman Jerome Powell spoke to the Economic Club of Washington. Powell indicated that the Fed is prepared to reduce the size of its balance sheet in the year ahead.

"We wanted to have the balance sheet return to a more normal level, which is a level no larger than it needs to be for us to conduct monetary policy," said Chairman Powell. "[We] don't know the exact level. That will depend on the public's appetite for our liabilities."

The 10-year Treasury note yield closed at 2.70% on 1/11, while the 30-year Treasury bond yield was 3.04%.

Mortgage Rate Decline Continues

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 10. The report showed interest rates falling once again.

This week, the 30-year fixed rate mortgage averaged 4.45%, down from last week's average of 4.51%. At this time last year, the 30-year fixed rate mortgage averaged 3.99%.

The 15-year fixed rate mortgage averaged 3.89% this week, down from 3.99% at this time last week. During the same time last year, the 15-year fixed rate mortgage averaged 3.44%.

"Mortgage rates fell to the lowest level in nine months, and in response, mortgage applications jumped more than 20%," said Sam Khater, Chief Economist at Freddie Mac. "Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales."

Based on published national averages, the money market account closed at 1.22% on 1/11. The one-year CD finished at 2.57%.

Published January 11, 2019

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