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Monday June 24, 2024



La-Z-Boy Delivers Earnings Report

La-Z-Boy, Inc. (LZB) announced its fourth quarter and full-year earnings on Monday, June 17. The residential furniture retailer surpassed revenue estimates, causing the company's stock to rise over 9% following the report's release.

The company posted quarterly sales of $553.5 million. This was down 1% from $561.3 million reported during the same quarter last year but exceeded analysts' expectations of $516.4 million in sales. For the full year, revenue came in at $2.0 billion, a 13% decrease from $2.3 billion one year ago.

"We are pleased with our strong finish to the fiscal year as fourth quarter results exceeded expectations," said La-Z-Boy CEO, Melinda D. Whittington. "We expect industry fundamentals to remain volatile for the near term, but remain confident in our ability to outperform the market and gain share longer term. Our first quarter is off to a good start and we are encouraged by our solid Memorial Day results as we believe our assortment and best-in-class motion offerings are resonating with consumers in the marketplace."

For the quarter, La-Z-Boy reported net income of $39.3 million or $0.91 per adjusted share. This was an increase from net income of $34.4 million or $0.79 per adjusted share in the same quarter last year. For the full year, the company's net income was $122.6 million.

The Michigan-based furniture manufacturer, known for its recliners, sofas and chairs, experienced a decline in delivered sales for the company-owned Furniture Galleries stores, falling 6% to $228 million in the quarter. Wholesale sales also decreased 1% to $392 million. The company generated $53 million in free cash flow for the fourth quarter, a decline from $78 million in the same quarter the prior year, which had received a boost from delivery of pandemic-related backlogs. The company expects revenue for the first quarter of fiscal 2025 to be between $475 million to $495 million.

La-Z-Boy, Inc. (LZB) shares ended the week at $37.89, up 13% for the week.

KB Home Reports Second Quarter Results

KB Home (KBH) reported its second quarter earnings on Tuesday, June 18. The homebuilder's shares were up more than 4% following the report's better-than-expected revenue for the quarter.

KB Home reported quarterly revenue of $1.71 billion. This was down over 3% from revenue of $1.77 billion during the same quarter last year but above analysts' expectations of $1.65 billion in revenue.

"We produced solid results in our 2024 second quarter, with our key metrics above the high end of our guidance ranges," said KB Home CEO, Jeffrey Mezger. "Buyers remained resilient in their desire for homeownership despite the volatility in mortgage interest rates. Our pace of monthly net orders per community was one of our highest second quarter levels in many years, which we believe reflected the compelling personalized choice that our Built to Order model offers to meet each buyer's lifestyle and budget."

For the quarter, KB reported net income of $168.4 million or $2.15 per adjusted share. This was an increase from net income of $164.4 million or $1.94 per adjusted share in the same quarter last year.

KB reported homebuilding operating income totaled $188.2 million for the quarter, down from $202.1 million. The company's financial services segment revenue increased 11% to reach $8.3 million. KB Home delivered 3,523 homes in the quarter, a decrease of 4% from the same time last year. The company reported the average selling price per home was $483,000, a slight increase from $479,500 the prior year. The number of homes in the company's ending backlog totaled 6,270, down 14%. KB adjusted its full-year 2024 guidance and expects fiscal year 2024 revenue between $6.7 billion to $6.9 billion, an increase on the lower end from its initial forecast of $6.5 billion to $6.9 billion.

KB Home (KBH) shares ended the week at $70.54, up 3% for the week.

Darden Restaurants Serves Up Earnings

Darden Restaurants, Inc. (DRI) posted its fourth quarter and full-year earnings on Thursday, June 20. The parent company of restaurants such as Olive Garden, LongHorn Steakhouse and The Capital Grille saw its stock remain relatively unchanged in early morning trading despite the report in increased sales.

Revenue came in at $2.96 billion for the fourth quarter. This was up almost 7% from $2.77 billion recorded during the same quarter last year but missed expectations of $2.97 billion. Full-year revenue reached $11.39 billion, up from $10.49 billion one year ago.

"We had a strong year by staying disciplined, being brilliant with the basics, and controlling what we could control," said Darden CEO, Rick Cardenas. "This enabled us to exceed the high end of the EPS range we provided at the beginning of the fiscal year despite weakening conditions that emerged in the back half of the year."

The company reported net income of $308.1 million or $2.57 per adjusted share. Last year at this time, Darden posted net income of $315.1 million or $2.58 per adjusted share. Full-year net income increased to $1.0 billion, up from $981.9 million one year earlier.

Darden's same store sales decreased across most of its brands in the quarter. Olive Garden saw a drop in same-store sales of 1.5%, and the fine dining segment, which includes restaurants such as The Capital Grille, saw same-store sales decline 2.6%. LongHorn Steakhouse, a strong breadwinner for Darden, experienced a 4% increase in same-store sales. Darden declared a dividend of $1.40 per share of common stock, payable on August 1, 2024, to the stockholders of record on July 10, 2024.

Darden Restaurants, Inc. (DRI) shares ended the week at $153.28, up 3% for the week.

The Dow started the week of 6/17 at 38,565 and closed at 39,150 on 6/21. The S&P 500 started the week at 5,431 and ended at 5,465. The NASDAQ started the week at 17,697 and finished at 17,689.


Treasury Yields Fluctuate

U.S. Treasury Yields increased early in the week as investors digested the Fed's latest commentary and waited for retail and housing data. Yields fluctuated toward the end of the holiday-shortened week as the latest housing data showed signs of a weakening housing market.

On Thursday, the U.S. Census Bureau announced that the housing start data, which measures the amount of new home construction, fell 5.5% in May, the lowest level in four years. There were 1.28 million housing starts in May which fell short of the expected 1.38 million. New building permits came in at 1.39 million, a decrease of 3.8%.

"Restrictive monetary policy clearly continues to weigh on housing activity," said senior economist at CIBC Economics, Ali Jaffery. "Housing supply is partly being crimped by higher rates, and the housing market in the U.S. could look very strong when the Fed is confident inflation is headed for 2%."

The benchmark 10-year Treasury note yield opened the week of June 17 at 4.23% and traded as high as 4.30% on Thursday. The 30-year Treasury bond opened the week at 4.35% and traded as high as 4.43% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased 5,000 to 238,000 for the week ending June 15. Continuing unemployment claims increased 15,000, reaching over 1.83 million.

"Layoffs are still low overall suggesting businesses remain reluctant to reduce headcount in large numbers," said chief U.S. economist at High Frequency Economics, Rubeela Farooqi. "However, there has been a gradual increase in recent weeks that merits watching for signals about a more material weaking in demand for workers going forward."

The 10-year Treasury note yield finished the week of 6/17 at 4.26%, while the 30-year Treasury note yield finished the week at 4.40%.


Mortgage Rates Continue Lower

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 20. The survey showed mortgage rates continue to decrease for both the 30-year and 15-year fixed rates.

This week, the 30-year fixed rate mortgage averaged 6.87%, down from last week's average of 6.95%. Last year at this time, the 30-year fixed rate mortgage averaged 6.67%.

The 15-year fixed rate mortgage averaged 6.13% this week, down from 6.17% last week. During the same week last year, the 15-year fixed rate mortgage averaged 6.03%.

"Mortgage rates fell for the third straight week following signs of cooling inflation and market expectations of a future Fed rate cut," said Freddie Mac's Chief Economist, Sam Khater. "These lower mortgage rates coupled with the gradually improving housing supply bodes well for the housing market. Aspiring homeowners should remember it is important to shop around for the best mortgage rate as they can vary widely between lenders."

Based on published national averages, the savings rate was 0.45% as of 6/17. The one-year CD averaged 1.86%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published June 21, 2024
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