Monday January 30, 2023
Levi Strauss Reports Earnings
Levi reported revenue of $1.59 billion for the fourth quarter, which was down 6% from revenue of $1.68 billion in the same quarter last year. Analysts expected revenue of $1.57 billion during the quarter. Revenue for the full year came in at $6.17 billion.
"In 2022, we delivered strong, profitable growth as well as significant market share expansion, demonstrating the enduring strength of our brands, the diversity of our business and our team's focused execution of our strategic plan," said Chip Bergh, CEO of Levi Strauss. "We continue to make progress against our strategic priorities, positioning us for further success in 2023."
The company reported a fourth quarter net income of $150.6 million or $0.34 per adjusted share. This was down from net income of $153.0 million or $0.41 per adjusted share reported during the same quarter last year. Full-year net income reached $569.1 million.
Levi's earnings report underlined slight drop offs across some of its major business segments. The company's global direct-to-consumer revenue decreased 2%, reflecting the company's decision to close most of its stores in Russia. Levi's digital channels revenue declined 7% which the company attributed to customers returning to in-store shopping. Digital sales accounted for 20% of total fourth quarter revenues, up 4% from the prior year. Levi updated its guidance for fiscal 2023 and expects revenues between $6.3 billion and $6.4 billion.
Levi Strauss & Co. (LEVI) shares ended at $17.79, up 10.6% for the week.
3M Posts Quarterly Earnings
3M (MMM) released its fourth quarter and full-year earnings report on Wednesday, January 25. 3M posted decreased sales and income for the quarter, resulting in its shares dropping over 6%.
Net sales for the quarter came in at $8.08 billion. This was down 6% from $8.61 billion during the same quarter last year but exceeded analysts' estimated quarterly sales of $8.04 billion. Sales for the full year returned at $34.23 billion.
"3M continues to focus on delivering for customers and shareholders in a challenging economic environment," said Mike Roman, 3M Chairman and CEO. "The slower-than-expected growth was due to rapid declines in consumer-facing markets – a dynamic that accelerated in December – along with significant slowing in China due to COVID-related disruptions. As demand weakened, we adjusted manufacturing output and controlled costs, which enabled us to improve inventory levels."
3M posted net income of $541 million or $0.98 per adjusted share for the quarter. Last year at this time, the company posted net income of $1.34 billion or $2.31 per adjusted share. Full-year net income was $5.78 billion.
The company's Safety and Industrial segment reported sales of $2.74 billion during the quarter. This was down from $2.85 billion during the same period the year prior. Sales in the Transportation and Electronics segment reached $2.06 billion, down from $2.18 billion one year ago. 3M's Health Care segment posted sales of $2.04 billon, a decrease from sales of $2.19 billion in 2021. The Consumer segment posted sales of $1.25 billion, a drop off from $1.39 billion last year. 3M expects income between $4.2 billion and $5 billion or $8.50 to $9.00 per adjusted share for fiscal 2023.
3M (MMM) shares ended the week at $115.25, down 4.4% for the week.
Tesla Drives Up Earnings
Tesla, Inc. (TSLA) released its fourth quarter and full-year earnings report on Wednesday, January 25. The electric automotive company reported record revenue and exceeded earnings expectations, resulting in its shares rising 7% after the report's release.
Revenue came in at $24.32 billion for the quarter, up from $17.72 billion during the same quarter last year. This beat analysts' expected quarterly revenue of $24.16 billion. Revenue for the full year came in at $81.46 billion.
"Q4-2022 was another record-breaking quarter and 2022 was another record-breaking year," the company stated in its earnings release. "In the last quarter we achieved the highest-ever quarterly revenue, operating income and net income in our history. In 2022, total revenue grew 51% year-over-year to $81.5 billion and net income more than doubled year-over-year to $12.6 billion."
The company posted net income of $3.71 billion or $1.07 per adjusted share for the quarter. This was up from $2.34 billion or $0.68 per adjusted share at this time last year. Tesla reported full-year income at $14.12 billion.
Tesla produced 439,701 vehicles and delivered 405,278 in the last three months of 2022. During the fourth quarter, vehicle deliveries increased 40% from last year to 1.31 million vehicles and production of vehicles expanded 47% to 1.37 million vehicles. As a result of increased production, automotive revenue increased 33% to $21.3 billion during the fourth quarter. Tesla anticipates production of 1.8 million vehicles in 2023, including the addition of the highly anticipated Cybertruck.
Tesla, Inc. (TSLA) shares ended the week at $177.90, up 30.9% for the week.
The Dow started the week at 33,440 and closed a 33,978 on 1/27. The S&P 500 started the week at 3,978 and closed at 4,071. The NASDAQ started the week at 11,172 and closed at 11,622.
Treasury Yields Vary
On Friday, the Commerce Department announced that the Personal Consumption Expenditure (PCE), which measures the cost of goods and services purchased by U.S. households, rose 4.4% annually in December. Core PCE, which excludes food and energy, saw a slowdown from the annual rate of 4.7% in November. This represents the lowest PCE level since October 2021.
"It's clear, continued progress on the inflation front — which is something we expected, but good to see," said Vanguard's global chief economist, Joe Davis. "I think you're seeing continued softening across the entire report."
The benchmark 10-year Treasury note yield opened the week of January 23 at 3.48% and traded as low as 3.42% on Wednesday. The 30-year Treasury bond opened the week at 3.65% and traded as low as 3.58% on Wednesday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 6,000 to 186,000 for the week ending January 21. Continuing unemployment claims increased 20,000, reaching 1.68 million.
"Announcements of layoffs, particular in the tech sector, continue, but those job losses haven't translated into a notable rise in claims," said lead U.S. economist at Oxford Economics, Nancy Vanden Houten. "That suggests that these workers are finding it relatively easy to find other jobs or are confident they will be able to do so."
The 10-year Treasury note yield finished the week of 1/23 at 3.51%, while the 30-year Treasury note yield finished the week at 3.62%.
Mortgage Rates Continue to Fall
This week, the 30-year fixed rate mortgage averaged 6.13%, down from last week's average of 6.15%. Last year at this time, the 30-year fixed rate mortgage averaged 3.55%.
The 15-year fixed rate mortgage averaged 5.17% this week, down from 5.28% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.80%.
"Mortgage rates continue to tick down and, as a result, home purchase demand is thawing from the months-long freeze that gripped the housing market," said Freddie Mac's Chief Economist, Sam Khater. "Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time homebuyers."
Based on published national averages, the savings rate was 0.33% as of 1/17. The one-year CD averaged 1.28%.
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