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Sunday September 15, 2019



Salesforce Reports Strong Earnings, Inc. (CRM) released its earnings for the second quarter on Wednesday, August 29. The customer relationship management company posted increases in revenue and profits.

The company reported revenue of $3.28 billion for the quarter. This was a 27% increase from $2.58 billion during the same quarter last year.

"Salesforce revenue grew 27% to almost $3.3 billion in the second quarter, with excellent performance across our clouds, industry segments and geographies," said Salesforce co-CEO Keith Block. "With this strong quarter, we're well on our way to our next milestone of $23 billion in revenue in FY22."

Salesforce reported net income of $299 million, up from $46 million at this time last year. On an earnings per share basis, Salesforce reported $0.39 per share, up from earnings of $0.06 per share during the prior year's quarter.

Despite posting strong earnings, Salesforce stock fell nearly 4% following Wednesday's release. The drop in share prices was due to revised guidance that came in lower than analysts expected. Salesforce expects revenue between $13.13 billion and $13.18 billion for the fiscal year., Inc. (CRM) shares ended the week at $152.61, down 1.4% for the week.

Build-A-Bear Reports Earnings

Build-A-Bear Workshop Inc. (BBW) reported its latest quarterly earnings on Thursday, August 30. The toy company posted a net loss despite higher quarterly sales.

Revenue for the second quarter came in at $83.2 million. This is up from revenue of $79.2 million for the same quarter last year.

"To truly understand our second quarter results, it is important to realize that sales in the first nine weeks of the period were below expectations, negatively impacting profit, while the final four weeks, with the introduction of the 'Pay Your Age' events, including our 'Count Your Candles' birthday program, far surpassed our expectations," said Build-A-Bear President and CEO Sharon Price John. "The surge of interest from the events delivered a meaningful profit, although it was not enough to offset the start of the quarter."

Build-A-Bear posted a net loss for the quarter of $1.8 million. During the same quarter last year, the company reported net income of $44,000.

Build-A-Bear made headlines this summer with its "Pay Your Age" promotion, offering stuffed animals for as little as one dollar for its youngest customers. Lines at the company's stores were closed within hours of opening, due to high demand. Customers who made the cut reported wait times as long as five hours.

Build-A-Bear Workshop Inc. (BBW) shares ended the week at $10.67, relatively unchanged for the week.

Tiffany's Sales Shine

Tiffany & Co. (TIF) released its second quarter results on Tuesday, August 28. The jewelry retailer posted increased sales and earnings.

The company reported net sales of $1.1 billion. This was a 12% increase from $959.7 million in net sales during the same time last year.

"While in the early stages of addressing our six key strategic priorities, we are pleased with initial customer reactions to our new communication, product and in-store initiatives," said Tiffany CEO Alessandro Bogliolo. "The launch of Paper Flowers, a floral collection in platinum and diamonds, is moving toward full global distribution and we believe our evolved brand message is gaining momentum."

Tiffany reported net earnings of $145 million, or $1.17 per share. This is up 26% from earnings of $115 million, or $0.92 per share at this time last year.

The New York City-based jewelry brand reported an 8% increase in comparable store sales for the quarter and a 9% overall increase for the first half of the year. Tiffany's Asia-Pacific stores led the way with a 12% increase in quarterly comparable sales, while its European locations saw a 1% decline. The company's American stores tracked with overall comparable sales at 8% for the quarter.

Tiffany & Co. (TIF) shares ended the week at $122.64, down 7.3% for the week.

The Dow started the week of 8/27 at 25,883 and closed at 25,965. The S&P 500 started the week at 2,885 and closed at 2,902. The NASDAQ started the week at 7,990 and closed at 8,110.

Trade Deal Jitters Depress Yields

Yields on U.S. Treasurys dipped on Friday in response to international trade pressure. Domestic factors also affected yields this week, as inflation reached the Fed's 2% target.

This week, negotiators for the U.S. and Canada worked toward revising the North American Free Trade Agreement (NAFTA) by Friday's deadline. The negotiations followed a preliminary agreement reached between the U.S. and Mexico on Monday.

"Markets would really, really like a deal," said James Pethokoukis, the Dewitt Wallace Fellow at the American Enterprise Institute. "They would quit trying to play scenarios about withdrawing [from NAFTA] and what that would mean. They want certainty."

The yield on the benchmark 10-year Treasury note was at 2.84% during early trading on Friday, down from Thursday's high of 2.89%. The 30-year Treasury bond yield was at 2.99% on Friday, down from a high of 3.03% on the previous day.

On Thursday, the Commerce Department released the latest personal consumption expenditures (PCE) price index. The core PCE rose 0.2% from June to July, a 2% increase year-over-year.

"Inflation pressures should intensify in coming quarters," said Moody's Analytics Senior Economist Ryan Sweet. "Therefore, the Fed is going to continue to raise rates once per quarter through the remainder of this year and into next."

The 10-year Treasury note yield closed at 2.85% on 8/31 while the 30-year Treasury bond yield was 3.01%.

Mortgage Rates Move Slightly

Freddie Mac released the results of its latest Primary Mortgage Market Survey on Thursday, August 30. The report showed a small increase in 30-year mortgage rates.

The 30-year fixed rate mortgage averaged 4.52% this week, up from 4.51% at this time last week. Last year at this time, the 30-year fixed rate mortgage averaged 3.82%.

This week, the 15-year fixed rate mortgage averaged 3.97%, down from last week's average of 3.98%. The 15-year fixed rate mortgage averaged 3.12% at this time last year.

"The 30-year fixed-rate mortgage barely inched up this week, continuing the summer trend of essentially being flat," said Sam Khater, Chief Economist at Freddie Mac. "While sales and price growth have softened these last few months, this leveling of rates may be helping more buyers reach the market. Purchase mortgage applications this week were once again modestly above year ago levels."

Based on published national averages, the money market account closed at 1.17% on 8/31. The 1-year CD finished at 2.51%.

Published August 31, 2018
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