Stitch Fix, Inc. (SFIX) released its second quarter earnings on Monday, March 4. The clothing company’s shares declined by 15% following release of the report.

Net revenue for the quarter came in at $330.4 million, down 18% from $400.6 million in net revenue at this time last year. This missed analysts’ expectations of $330.9 million in net sales.

“The original Stitch Fix vision, to create an easier and more enjoyable way for people to shop for clothing and accessories, remains both relevant and compelling,” said Stitch Fix CEO, Matt Baer. “Our transformation efforts are grounded in fully realizing that vision and include both strengthening the foundation of our company and reimagining our client experience. I am encouraged by the progress we continue to make and am confident we have the right strategic priorities in place to set us up to drive sustainable, profitable growth.”

The company posted net losses of $35.5 million for the quarter or $0.30 per share. This was an improvement from net losses of $65.6 million or $0.58 per share during the same quarter last year.

Stitch Fix reported a decrease of 17% in active clients to 2,805,000 compared to the prior year. Net revenue per active client also declined 3% year-over-year to $515 per client. The company generated negative free cash flow of $26.1 million and ended the second quarter with $229.8 million in cash, investments and no debt. For the third quarter of fiscal 2024, Stitch Fix expects net revenue between $300 million and $310 million.

Stitch Fix, Inc. (SFIX) shares ended the week at $2.51, down 23% for the week.

Target Hits Earnings Mark

Target Corporation (TGT) announced its fourth quarter and full-year earnings report on Tuesday, March 5. The retailer beat revenue expectations for the quarter, causing shares to rise 12% following the report’s release.

Target reported quarterly revenue of $31.92 billion. This was up 2% from revenue of $31.40 billion in the same quarter last year and above analysts’ expectations of $31.83 billion. Full-year revenue came in at $107.41 billion, down 2% from $109.12 billion the previous year.

“Our team's efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” said Target CEO, Brian Cornell. “Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we will continue to invest in the strengths and differentiators that have delivered strong financial performance over time.”

The company reported net income of $1.38 billion for the quarter or $2.98 per share. This is an increase from net income of $876 million or $1.89 per share in the same quarter last year. For the full year, Target reported net income of $4.14 billion.

Target’s total comparable sales decreased 4.4% in the quarter, stemming from declines in comparable store sales and digital sales. Same-day services increased 13.6% in the quarter due to growth in the Drive-Up service. During 2023, Target opened 21 new stores and remodeled and enhanced 170 stores. Target’s gross margin rate increased to 25.6% compared to 22.7% in the fourth quarter of last year. The increase was attributed to lower markdowns and other inventory-related costs, lower freight costs and a favorable category mix. Target expects to earn between $8.60 to $9.60 per adjusted share in fiscal year 2024.

Target Corporation (TGT) shares ended the week at $169.72, up 11% for the week.

Campbell Soup Posts Earnings

Campbell Soup Company (CPB) released its second quarter earnings report on Wednesday, March 6. The company’s shares dipped 1% following the release despite beating second-quarter projections.

Net sales came in at $2.46 billion for the quarter, down 1% from $2.49 billion in net sales during the same quarter last year. This exceeded analysts’ expectations of $2.42 billion.

“We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our Meals & Beverages and Snacks divisions,” said Campbell’s CEO, Mark Clouse. “We are excited about the anticipated completion of the acquisition of Sovos Brands which will bring incremental growth to our Meals & Beverages division and continue the transformation of our highly advantaged portfolio.”

For the quarter, Campbell Soup reported net income of $203 million or $0.68 per adjusted share. This was a decrease from $232 million in net income or $0.77 per adjusted share at this time last year.

The company’s Meals & Beverages segment, which includes its line of soups and beverages such as Swanson, Prego, Pace, V8 and Pacific Foods, posted revenues of $1.38 billion. This is a 2% decrease which the company attributed to a decline in U.S. soup, beverages and Pace sauces and partially offset by gains in Canada and foodservice. The Snacks segment, which includes Pepperidge Farm cookies and Goldfish crackers, reported a 1% increase in organic net sales with revenue reaching $1.07 billion. Campbell Soup reaffirmed its full-year fiscal 2024 guidance and expects net sales from a decrease of 0.5% to an increase of 1.5% and an increase in adjusted share earnings of 3.0% to 5.0%.

Campbell Soup Company (CPB) shares ended the week at $42.25 down 1% for the week for the week.

The Dow started the week of 3/4 at 38,969 and closed at 38,723 on 3/8. The S&P 500 started the week at 5,131 and closed at 5,124. The NASDAQ opened the week at 16,264 and closed at 16,085.

U.S. Treasury yields dipped early in the week after remarks from Federal Reserve Chair Jerome Powell suggesting that imminent rate cuts were unlikely. Yields pared back further at the end of the week following jobless claims data showing an uptick in unemployment filings.

On Wednesday, Federal Reserve Chair Jerome Powell testified before the House Financial Services Committee in Washington D.C. In his remarks, Powell indicated that the Federal Reserve needs additional data that inflation pressures are easing before the Fed cuts its benchmark interest rate.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” said Powell. “Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require tighter policy to get inflation back to 2%. At the same time reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

The benchmark 10-year Treasury note yield opened the week of March 4 at 4.20% and traded as low as 4.06% on Thursday. The 30-year Treasury bond opened the week at 4.34% and traded as low as 4.19% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment remained at 217,000 for the week ending March 8, unchanged from the prior week’s revised level and above analysts’ expectation of 215,000. Continuing unemployment claims increased by 8,000 to 1.91 million. On Friday, the Jobs report was released showing the unemployment rate increased to 3.9% in February, from 3.7% in January. Nonfarm jobs increased by 275,000 for February, coming higher than the 200,000 economists expected.

“New layoffs are relatively modest and signal that no immediate deterioration of labor market conditions is headed our way,” said Chief Economist at FWDBONDS in New York, Christopher Rupkey. “The trade winds are not blowing as favorably in the economy’s direction at the start of the year, but the consumer is in good shape and their spending is expected to add more to growth later in the first quarter.”

The 10-year Treasury note yield finished the week of 3/4 at 4.08%, while the 30-year Treasury note yield finished the week at 4.26%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, March 7. The survey showed a decline in the 30-year mortgage rate after four consecutive weeks of increases.

This week, the 30-year fixed rate mortgage averaged 6.88%, down from last week’s average of 6.94%. Last year at this time, the 30-year fixed rate mortgage averaged 6.73%.

The 15-year fixed rate mortgage averaged 6.22% this week, down from last week’s 6.26%. During the same week last year, the 15-year fixed rate mortgage averaged 5.95%.

“Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates,” said Freddie Mac’s Chief Economist, Sam Khater. “Mortgage rates continue to be one of the biggest hurdles for potential homebuyers looking to enter the market. It is important to remember that rates can vary widely between mortgage lenders so shopping around is essential.”

Based on published national averages, the savings rate was 0.46% as of 2/20. The one-year CD averaged 1.83%.

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