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Thursday July 19, 2018



Herman Miller Reports Earnings

Herman Miller, Inc. (MLHR) released its quarterly earnings report on Wednesday, July 5. The furniture company reported sales and profits declined from last year.

Net sales for the quarter were $577.2 million. This is down nearly 1% from $582.6 million during the same quarter last year.

"While order levels across our contract businesses remained mixed this quarter, we were pleased to see continued net sales and order acceleration within our Consumer business segment," said Herman Miller CEO Brian Walker. "This growth reflects improved momentum in all areas of this segment and highlights the opportunity we see to leverage growth through our multi-channel business strategy."

The company reported net earnings of $33.4 million in the fourth quarter, down from $40.7 million during the previous year's quarter. Net earnings were down 9.4% for the full year.

Herman Miller, Inc. is widely credited for the invention of the office cubicle in the 1960s. The company now offers a wide selection of office furniture, including office chairs, tables and desks. The company recently introduced its Live OS software, which works with sensors integrated into the company's sit-to-stand desks. Live OS can track users' time spent sitting or standing and remind users to change positions on occasion.

Herman Miller, Inc. (MLHR) shares ended the week at $34.10, up 11.8% for the week.

Cherokee Global Brands Posts Net Loss

Cherokee, Inc. (CHKE) reported its latest earnings on Thursday, July 6. Despite increased revenue over last year, the company reported a net loss for the quarter.

The report showed $11.1 million in revenue for the quarter. This is up from $10.7 million at this time last year.

"Operationally, fiscal 2018 is off to a solid start," said Cherokee CEO Henry Stupp. "During the first quarter, we continued to make progress in diversifying our global points of distribution and building upon the relevance of our high-equity brands through category expansion and new format initiatives."

Cherokee reported a net loss of $3.3 million during the quarter. At this time last year, the company report a profit of $2.6 million.

Cherokee, Inc., headquartered in Sherman Oaks, California, markets and manages a variety of apparel and footwear brands. In addition to its namesake Cherokee apparel brand, the company's portfolio includes Hi-Tec Sports, Tony Hawk Signature Apparel, Flip Flop Shops and 50 Peaks. The company maintains licensing agreements with retailers across the globe.

Cherokee, Inc. (CHKE) shares ended the week at $4.95, down 28.3% for the week.

Rite Aid Reports Net Loss

Rite Aid Corporation (RAD) released its latest quarterly earnings on Thursday, June 29. The drugstore chain reported decreased revenue and profits as well as a re-worked acquisition agreement with competitor Walgreens.

The company reported $7.8 billion in revenue for the quarter. During the same quarter last year, Rite Aid reported revenue of $8.2 billion.

"While we believe that pursuing the merger with [Walgreens Boots Alliance] was the right thing to do for our investors and customers, this new agreement provides a clear path forward and positions Rite Aid as a strong, independent, multi-regional drugstore chain and pharmacy benefits manager with a compelling footprint in key markets," said Rite Aid CEO John Standley. "The transaction offers clear solutions to assist us in addressing our pharmacy margin challenges and allows us to significantly reduce debt, resulting in a strong balance sheet and improved financial flexibility moving forward."

Rite Aid reported a net loss of $75.3 million for the quarter. Last year at this time, the company reported a net loss of $4.5 million.

The retail pharmacy company entered into a merger agreement with Walgreens Boots Alliance in 2015, but the deal has hit several regulatory road blocks over the last couple years. Thursday's earnings release was accompanied by an announcement that the merger has been called off in favor of a different arrangement between the companies. According to the terms of the new deal, Walgreens will purchase 2,186 Rite Aid stores for $5.175 billion. Walgreens will also pay $325 million to Rite Aid related to the termination of their original agreement.

Rite Aid Corp. (RAD) shares ended the week at $2.37, down 18.9% for the week.

The Dow started the week of 7/3 at 21,392 and closed at 21,414 on 7/7. The S&P 500 started the week at 2,431 and closed at 2,425. The NASDAQ started the week at 6,173 and closed at 6,153.

Treasury Yields Rise on Strong Job Gains

Yields on U.S. Treasury bonds rose on Friday following the release of the Labor Department's latest jobs report. Growth in nonfarm payrolls exceeded analysts' expectations.

According to the report, the U.S. economy gained 222,000 jobs in June, far more than the 179,000 that was forecast. Labor-force participation was up slightly to 62.8% from 62.7%.

The benchmark 10-year Treasury yield rose to 2.38% on Friday, up from Monday's opening rate of 2.32%. The yield on the 30-year was at 2.92% during trading on Friday, up from 2.85% on Monday.

Despite strong job gains, unemployment rose from 4.3% to 4.4%. Wage growth was also stagnant, remaining at 0.2%.

"This was certainly a step in the right direction, but from the Fed's perspective there's little to hang their hat on," said Lindsey Peigza, chief economist at Stifel Fixed Income. "It's mediocre enough to support the Fed's notion for an additional rate hike this year, but there's no evidence that the economy can support a second layer of policy adjustment like a balance-sheet reduction."

On Friday, the Federal Reserve released its semiannual report to Congress, indicating that it remains on track for another interest rate hike this year. The Fed also expects to begin selling off some of its bond holdings later this year.

The 10-year Treasury note yield finished the week of 7/3 at 2.39%, while the 30-year Treasury note yield was 2.94%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, July 6. After weeks of slow decline, mortgage rates rose sharply this week.

This week, the 30-year fixed rate mortgage averaged 3.96%, up from last week's average of 3.88%. During this time last year, the 30-year fixed rate mortgage averaged 3.41%.

The 15-year fixed rate mortgage averaged 3.22% this week. This is up from 3.17% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.74%.

"Global interest rates turned up sharply over the last week," said Freddie Mac chief economist Sean Becketti. "The 10-year Treasury yield was no exception, increasing 10 basis points in a holiday-shortened week. The 30-year mortgage rate followed suit, rising 8 basis points to 3.96%."

Based on published national averages, the money market account finished the week of 7/3 at 0.78%. The 1-year CD finished at 1.42%.

Published July 7, 2017
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