Walmart Earnings Exceed Estimates

Walmart Earnings Exceed Estimates

Walmart reported second-quarter earnings exceeding analysts' estimates this week. The Arkansas-based retailer reported earnings per share of $0.88, at the top of the company's projections of $0.83 to $0.88. Despite the economy, Walmart's earnings were comparable to that of its second quarter of last year.

Walmart's profits rose to $100 billion for the quarter, only a slight decrease of 1.4% from $101 billion in the second quarter of last year. Without the negative impact of unfavorable currency exchange rates, profits for the quarter would have increased by 2.7%.

"Our earnings exceeded consensus estimates and were at the top of our guidance," said Mike Duke, Walmart President and Chief Executive Officer. "We are pleased with the performance of our operations around the world. We believe that our comparable store sales continued to outperform the retail sector almost everywhere we do business."

In a difficult sales environment, Walmart attributes its success to disciplined management of its operations. Walmart appeals to consumers who are looking to save money as they grapple with their spending during a recession. The company says that its stores are attracting new customers who recognize value while maintaining the loyalty of those who already shop at Walmart.

Walmart (WMT) closed the week down at $51.79.

JC Penny Disappoints with a Loss

JC Penny Co. disappointed market analysts this week by falling to a second-quarter loss. The department store retail chain reported quarterly losses of $1 million versus income of $117 million last year. Earnings were breakeven at $0.00 per share compared to $0.52 per share in last year's second quarter.

The retailer noted that it is engaged in a continued plan to improve its cash flow and performance in the midst of the recession. "JCPenney's financial performance in the second-quarter shows that our strategy to navigate the current, very difficult consumer climate is working and will continue to position us well over the near and longer term," said Myron E. (Mike) Ullman, III, Chairman and Chief Executive Officer of JCPenney.

JC Penny believes that it is positioned well for future growth due to the quality and value that customers see as "synonymous" with the JCPenny brand. Also, analysts point out that the JCPenny brand competes as one of the strongest anchors in malls nationwide, which gives the store an edge among consumers who frequent malls.

JCPenny has also expanded in the past year by opening new stores in key markets such as Manhattan. Adding Sephora shops has helped broaden JCPenny's appeal to an entirely new customer base looking for makeup brands and personal products not otherwise found in many department stores. JC Penny hopes to get ahead by focusing on winning customers and maintaining the company's financial strength in the long-term.

JC Penny Co. (JCP) closed the week up at $31.29.

Dole Foods is Going Public

Dole Food Co. announced this week a planned $500-million stock offering. The California-based food giant, owned solely by billionaire David Murdock, plans to use some of the funds from the public offering to pay down accumulated debt.

Dole, which claims to be the world's largest producer of fresh food and vegetables, did not say how many shares of stock would be sold in the public offering. The company has accumulated about $1.9 billion in debt and has been on an aggressive debt-reduction program.

Dole is known for holding the largest market for bananas and pineapples. Dole products such as pineapple juice and fresh canned pineapples are supermarket staples. Company sales have not fared well in the recession and Murdoch reportedly sees the public offering as a way to pay down debt and shore-up capital.

Dole has been battling lawsuits by workers claiming medical problems as a result of the pesticide used on Dole farms. Dole lost a 2007 lawsuit filed by workers in Nicaragua but that verdict was later reduced. A recent case in the Los Angeles Superior Court brought that verdict into question, suggesting that some of the claims against Dole have been fraudulent.

Dole Foods Co. is a privately owned corporation.

The Dow started the week at 9,370 and ended at 9,322. The S&P 500 started the week at 1,010 and ended at 1,004. The Nasdaq started the week at 2,000 and finished at 1,986.

Treasury Yields Rise on Jobs Numbers

Treasury Yields Rise on Jobs Numbers

Treasury yields rose to a two-month high this week, following the Labor Department's report of fewer job losses than anticipated and a decline in the unemployment rate. Unemployment dropped from 9.5% to 9.4% in July.

Approximately 247,000 jobs were lost, which marked the smallest loss since August 2008, the Labor Department noted in its weekly jobless report. In addition, revisions to the jobless numbers resulted in 43,000 more employees added to payrolls in May and June.

Also impacting the bond market this week was the Federal Reserve's decision to keep the federal funds rate near zero again. In the minutes from the Fed's June meeting, officials gave an upbeat assessment of the economy stating that conditions in the markets have "improved further."

The Fed also noted that it would slow the pace of its Treasury purchase program. The Fed's plan to buy $300 billion of Treasury securities was created to help lower rates on consumer debt and stimulating consumer spending. Analysts are mixed on whether or not the program has effectively encouraged consumers to enter the marketplace.

The 10-year Treasury note yield began at 3.85% and ended at 3.56%. The 30-year Treasury note yield began at 4.60% and finished at 4.41%.

Labor Market Improvement Raises Rates

Labor Market Improvement Raises Rates

Freddie Mac reported mortgage rates inching up higher this week following the Labor Department's report of improving conditions in the U.S. labor market. The 30-year fixed-rate mortgage (FRM) averaged 5.29%, up from last week when it averaged 5.22%. Last year at this time, the 30-year FRM averaged 6.52%.

The 15-year FRM this week averaged 4.68%, up from last week when it averaged 4.63%. One year ago at this time, the 15-year FRM averaged 6.07%.

"Long-term fixed-rate mortgage rates rose slightly over the past week while initial rates on adjustable-rate mortgages (ARMs) were little changed," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. Nothaft noted that unemployment dropped down to 9.4% in July and fewer jobs were lost than anticipated.

Housing market declines may also be nearing an end with median home prices rising among 17% of metro areas according to the National Association of Realtors. This represents the greatest growth in the housing market since the third quarter of 2008. Nothaft noted further that 81% of major cities had house prices rise between the first quarter and second quarter of this year.

The money market fund finished this week at 1.16%. The 1-year CD finished at 1.61%.

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