Optimism continues to reign as the tech-heavy Nasdaq led stocks in a broad-based rally. Let’s recap what you missed during today’s session. 👀
Today’s issue covers “Big Egg’s” massive profits, Conn’s stock regaining some air, and why RH is predicting harder times ahead. 📰
Check out today’s heat map:
Every sector closed green. Real estate (+2.38%) led, and health care (+0.27%) lagged. 💚
In economic news, pending home sales rose for the third straight month, rising 0.8% from January to February. However, sales were still down 21.1% YoY. Global central banks continue to hike, with Thailand raising rates by 25 bps for the fifth time, bringing its policy rate to 1.75%. 🏘️
Several executive shakeups hit the tape today. Macy’s CEO Jeff Gennette is retiring next year and will be replaced by Tony Spring, CEO of Bloomingdale’s. Meanwhile, Sergio Ermotti is returning to UBS as CEO to lead the Credit Suisse takeover. 🧑💼
Intel shares rallied 8% after saying its power-efficient Sierra Forest chip will be delivered earlier than expected in the first half of 2024. 📆
Electric Vehicle startup Lucid Motors is cutting 18% of its workforce amid signs of waning demand. ⚡
In crypto news, Binance’s troubles continue to compound as investors pull $2 billion from the platform. The U.S. Federal Deposit Insurance Corporation (FDIC) told Signature Bank’s crypto clients to close their accounts by April 5 and plan to sell the bank’s crypto payment network. ₿
Other symbols active on the streams included: $TRKA (+49.50%), $BRDS (+27.91%), $LULU (+12.72%), $MYO (+5.81%), $PYXS (+17.92%), $ENVX (+21.44%), $EBS (+5.06%), and $XRP.X (+3.34%). 🔥
Here are the closing prices:
Remember those crazy egg prices? Well, Cal-Maine Foods are getting a nice reminder today, as the U.S.’s largest egg producer topped third-quarter estimates. 🥚
The company reported its sixth straight quarter of accelerating earnings growth. Its earnings soared 717% YoY to $6.62 per share, and sales grew 109% to $997.5 million. Analysts had expected $5.47 in earnings per share on revenues of $888 million. 🐣
Driving the strong results was an increase in average selling prices and strong customer demand. The average selling price for conventional eggs during the quarter was $3.678 per dozen, up 152% YoY. Specialty egg prices rose 36% YoY to $2.616 per dozen, with higher prices for conventional eggs pushing consumer demand to this segment.
As for the future, retail egg prices are expected to remain high due to the ongoing impacts of the bird flu outbreak. The company says costs and supply chain disruptions have occurred but that there have been no positive tests for avian flu at any of its production facilities. 🐤
Should that continue to be the case, the company will benefit from the elevated egg prices. However, investors should note that the impact of these record-high prices will eventually come home to roost. Either supply will increase and come back in line with demand. Or the high prices will impact demand and bring it back closer to supply. Or both, to some extent, as the market finds a new equilibrium. ⚖️
For now, though, investors are taking a sunny-side-up view. $CALM shares were up nearly 7% on the day. 📈
Conn’s Gains Some Air
Home furnishing retailers Conn’s and RH reported today, with one popping and the other dropping. 🏬
First, let’s start with Texas-based retailer Conn’s.
The company reported a $1.53 loss per share on revenues of $334.9 million. That loss was wider than the $0.86 loss per share expected by analysts, with revenue marginally missing forecasts as well.
The company’s core customers remain credit constrained and face significant macroeconomic headwinds. That, plus consumers’ shift from discretionary goods to necessities and services, is along the same lines as we’ve heard from every major retailer. ⚠️
Same-store sales declined by 21.8% YoY, driven by home office and consumer electronics weakness. Retail gross margins also contracted amid higher costs and promotional activity. Executives anticipate this fiscal year to be challenging but are focused on long-term growth through e-commerce (DTC) investments and opening 11 new standalone locations. 🛒
$CONN shares were volatile today. They initially fell sharply but regained altitude to close by +16% on the day. 🤷
Higher-end home furnishing company RH reported a similar slowdown, but for different reasons.
The company’s $2.88 earnings per share missed estimates by $0.48. And revenues declined 14.4% YoY to $772.5 million, also missing Wall Street estimates. 👎
Driving this weakness was a slowdown in spending from the company’s higher-income consumer base. Slumping luxury home sales, a weak stock market, and the recent banking crisis are all weighing on the confidence of those higher-end consumers. And on top of that, the company is still dealing with record-high pandemic-era comps, where many sales were potentially pulled forward.
Essentially, its consumer base’s willingness to spend is tied to how wealthy they feel. Since asset prices across the board have come down and there remains a lot of uncertainty about the economy, they’re likely to remain cautious. ⚠️
That’s reflected in RH executives’ cautious outlook. They now expect fiscal 2023 revenues of $2.9 to $3.1 billion, well below the $3.46 billion analysts expected. And an adjusted operating margin of 15% to 17% also left much to be desired. And its first-quarter forecast for revenues and adjusted operating margin were also well below consensus estimates.
As a result, the company is remaining cost disciplined. Its recent organizational redesign eliminated about 440 roles and should save about $50 million. And executives continue to focus on reducing inventories, generating cash, and strengthening the company’s overall financial position to weather the slowdown. 💰
$RH shares were down about 5% after hours, sitting near a 1-year low. 🔻
Bullets From The Day:
🙈 “Monkey see, Monkey view.” Just weeks after YouTube TV and Sling TV released “multiview” features for their sports programming, Apple TV is reportedly following suit. Although the streaming device already supports a picture-in-picture mode, new code discovered in the latest iOS beta points to a possible four-up multiview feature. The recent resurgence of sports popularity has caused streaming platforms to pay up for content and invest heavily in an experience that will keep viewers coming back rather than explore other options. TechCrunch has more.
🤒 Seattle’s new law will give gig workers paid sick time off. The new law will make a temporary covid measure permanent as part of the city’s legislation to protect gig workers. The law will require app-based delivery companies to provide paid sick time off to workers, getting one day of paid sick time for every 30 days with at least one work-related stop in Seattle. It also allows up to nine paid sick days to roll over to the following calendar year. However, how much they’ll be paid for that sick day will depend on their average daily earnings during the previous 12 months. While advocates feel this is a good first step, they say there’s still much work to expand coverage and benefits for gig workers. More from The Verge.
🪖 Congress looks to reassert its power over military force abroad. Roughly 20 years after the invasion of Iraq, the U.S. Senate voted to repeal the Iraq War authorization by a count of 66-30, removing authorizations for using force in the country. Previous efforts to repeal this have not been successful. Still, many lawmakers argued the open-ended authorization is outdated and could be used to justify more far-reaching military actions without congressional approval. Hopes are this move can help reset the use of international force and return the power to Congress. Axios has more.
💊 FDA approves over-the-counter sales of opioid overdose treatment. The U.S. Food and Drug Administration (FDA) approved Narcan, which reverses fatal overdoses by blocking the effect that opioids have on the nervous system, for over-the-counter sale. The decision will allow people to buy the 4-milligram nasal spray in supermarkets, vending machines, and many other places shortly. And according to the drug’s manufacturer, Emergent BioSolutions, it should be available everywhere without a prescription by late summer 2023. With more than 71,000 people dying from synthetic opioids in 2021, this is welcome news for the many stakeholders of the current U.S. drug epidemic. More from the CNBC.
📦 Amazon takes steps to reduce returns as shipping costs sit near record highs. Last week there were headlines about Amazon and other retailers looking at ways to reduce the costs of their “free shipping” and other customer benefits as costs soared. This week, Amazon may be indirectly targeting that problem with a new feature that flags product listings as a “frequently returned item” and encourages consumers to do more research before buying. It hopes the new feature will reduce the number of “free returns” it processes and also reduces customer frustration when they receive items that aren’t up to par in some way, shape, or form. The Verge has more.
Links That Don’t Suck:
🚫 New marketing code will prohibit college betting partnerships
⏸️ Elon Musk and other tech leaders call for pause in ‘out of control’ AI race
🦺 Dollar General in settlement talks over workplace safety violations, federal agency says
🏎️ Lamborghini’s first plug-in hypercar is the Aventador – replacing Revuelto with 1,001 horsepower
🍜 Ramen for breakfast? Cup Noodles’ new flavor tastes like egg, sausage, and maple syrup pancakes
⚠️ Credit Suisse whistleblowers say Swiss bank has been helping wealthy Americans dodge U.S. taxes for years