Finances

Walgreens Boots Alliance, Inc. (WBA) released its third quarter earnings on Tuesday, June 27. While the pharmacy chain reported revenue that beat analysts' expectations, it missed earnings estimates and shares fell more than 9% after the earnings release.

The company reported sales of $35.42 billion for the third quarter. This was up from $32.60 billion reported during the same quarter last year but above analysts' expectations of $34.24 billion.

"WBA achieved 8.9% constant currency sales growth in the third quarter despite a challenging operating environment," said Walgreens CEO, Rosalind Brewer. "Consumers continue to appreciate the value, convenience, and range of services provided by Walgreens and Boots. However, significantly lower demand for COVID-related services, a more cautious and value-driven consumer, and a recently weaker respiratory season created margin pressures in the quarter."

Walgreens posted net income of $118 million for the quarter or $0.14 per adjusted share. This was a 59% decrease from net earnings of $289 million or $0.33 per adjusted share one year ago.

Walgreens reported an increase in sales of 8.6% to $35.4 billion driven by growth across all major segments. The company's U.S. Retail Pharmacy segment saw an increase in third quarter sales of more than 4% to $27.9 billion. The U.S. Healthcare segment reported sales of $2.0 billion, an increase from the $1.4 billion in sales one year ago. Internationally, the company saw an increase of 5% from the same time last year to $5.6 billion in sales. Boots UK pharmacy sales increased 5.7% compared to last year. Walgreens lowered its 2023 full-year sales guidance and expects earnings of $4.00 to $4.05 per share.

Walgreens Boots Alliance, Inc. (WBA) shares ended the week at $28.49, down 9.0% for the week.

General Mills Posts Quarterly Earnings

General Mills, Inc. (GIS) posted its fourth quarter and full-year earnings on Wednesday, June 28. The company's stock dropped more than 5% following the release of the report.

Net sales totaled $5.0 billion for the quarter, up 3% from $4.9 billion one year ago and below analysts' estimates of $5.2 billion. Full-year net sales returned at $20.1 billion, a 6% increase from $19.0 billion in fiscal 2022.

"Led by our Accelerate strategy, our team successfully navigated a highly dynamic operating environment with agility, focus, and resilience," said General Mills CEO, Jeff Harmening. "We delivered excellent results in fiscal 2023, including generating double-digit growth in organic net sales and constant-currency adjusted diluted EPS and exceeding $20 billion in annual net sales for the first time in our company's history."

The company reported net income of $614.9 million or $1.03 per adjusted share for the quarter. This was down 25% from $822.8 million or $1.35 per adjusted share during the same quarter last year. The company reported net income of $2.6 billion or $4.31 per adjusted share for the full year. This was down 4% from $2.7 billion or $4.42 per adjusted share in fiscal 2022.

General Mills reported that operating profit decreased 19% to $818 million for the quarter, due to higher selling, general and administrative expenses, higher restructuring charges and lower gross profit dollars. In the fourth quarter, General Mills saw a 2% increase to $3.1 billion in net sales for its North America Retail segment. The Pet segment increased net sales by 7% to reach $655 million, during the quarter. The company's International segment was down 1% to $745 million in net sales. General Mills announced an increased quarterly dividend of $0.59 per share, payable on August 1, 2023 to shareholders of record on July 10, 2023.

General Mills, Inc. (GIS) shares ended the week at $76.60, down 5.6% for the week.

Carnival Cruises to Earnings

Carnival Corporation & plc (CCL) released its second quarter results on Monday, June 26. Despite posting record earnings, the cruise ship operator's shares fell more than 10% following the earnings release.

Revenue for the second quarter totaled $4.91 billion and exceeds the $4.77 billion that analysts predicted. This is up from the $2.40 billion reported in the same quarter last year.

"We reached a meaningful inflection point for revenue this quarter, with net yields surpassing 2019's strong levels, and we achieved positive operating income, cash from operations and adjusted free cash flow," said Carnival CEO, Josh Weinstein. "Based on continued strength in pricing, we delivered outperformance in the second quarter and raised our expectation for revenue in the second half."

The company reported a net loss of $407 million or $0.32 per diluted share for the quarter. This was an improvement from a net loss of $1.83 billion or $1.61 per diluted share during the same quarter last year.

During the quarter, Carnival's passenger ticket revenue reached $3.14 billion with onboard and other revenues at $1.77 billion for the quarter. The company's occupancy rate increased to 98% and expects full-year 2023 occupancy of 100% or higher. Total customer deposits in the quarter reached a record $7.2 billion, beating the record from the same quarter in 2019 by more than 26%. Adjusted cruise costs, excluding fuel, were up over 13% due, in part, to higher dry-dock expenses, advertising investments and incentive compensation. The company also introduced its SEA Change Program, a set of sustainability and financial targets the company expects to reach by year end 2026.

Carnival Corporation & plc (CCL) shares ended the week at $18.83, up 25.7% for the week.

The Dow started the week at 33,731 and closed at 34,408 on 6/30. The S&P 500 started the week at 4,345 and closed at 4,450. The NASDAQ started the week at 13,469 and closed at 13,788.

U.S. Treasury Yields were lower on Monday as markets pondered the latest economic data and waited for the Fed's latest comments that could signal further interest rate hikes. Yields rose at the end of the week and stayed steady as the economy showed signs of easing inflation and a continued strong labor market.

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 0.3% in May, matching economists' expectations. Core PCE, which excludes food and energy, saw an annual increase of 4.6%.

"The recent stalling of consumer spending and somewhat better inflation news validate the Fed's decision to skip a meeting this month, though continued stickiness in core prices likely warrant another tap on the brakes in July," said a Senior Economist at BMO Capital Markets in Toronto, Sal Guatieri.

The benchmark 10-year Treasury note yield opened the week of June 26 at 3.74% and traded as high as 3.87% on Thursday. The 30-year Treasury bond opened the week at 3.82% and traded as high as 3.93% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased 26,000 to 239,000 for the week ending June 24. This was below analysts' expectations of 265,000. Continuing unemployment claims fell by 19,000 to 1.74 million.

"The economy is currently displaying genuine signs of resilience," said Chief Economist at EY-Parthenon in New York, Gregory Daco. "This is leading many to rightly question whether the long-forecast recession is truly inevitable, or whether a soft landing of the economy is possible."

The 10-year Treasury note yield finished the week of 6/30 at 3.82%, while the 30-year Treasury note yield finished the week at 3.86%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 29. Mortgage rates increased for the first time after three consecutive drops, but demand for new homes remained strong.

This week, the 30-year fixed rate mortgage averaged 6.71%, up from last week's average of 6.67%. Last year at this time, the 30-year fixed rate mortgage averaged 5.70 %.

The 15-year fixed rate mortgage averaged 6.06% this week, up from 6.03% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.83%.

"Mortgage rates have hovered in the 6 to 7% range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year," said Freddie Mac's Chief Economist, Sam Khater. "New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row."

Based on published national averages, the savings rate was 0.42% as of 6/20. The one-year CD averaged 1.63%.

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