Facts from the Week: 11/21/21
Highlights from $LOW $HD $WSM $LZB $WMT $TJX $SCVL $TGT $6098.T $DHX $ODP $BLDE $TSN $PANW $USX
Housing continues to be in a strong place with Home Depot and Lowe’s reporting accelerating results through the quarter, Builders Confidence increasing, and William Sonoma raising guidance
The consumer continues spending with TJ Maxx noting November-to-date up mid-teens and Shoe Carnival reporting the best quarter in the company’s 43 year history
Palo Alto notes that “cybersecurity funding was included in the recent infrastructure bill and executive orders are mandating focus from federal agencies”
Single Family Housing Starts - US Census
NAHB Builders Confidence Index
Homebuilder sentiment rose to 83 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Current sales conditions rose 3 points to 89. Buyer traffic also increased 3 points to 68. Sales expectations in the next six months were unchanged at 84.
Not only are builders still experiencing supply chain disruptions and a massive labor shortage, they also can’t find enough land on which to build.
“The solid market for home building continued in November despite ongoing supply-side challenges,” said NAHB Chairman Chuck Fowke, a homebuilder from Tampa, Florida. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.”
Lowes - $LOW
Home Depot - $HD
William Sonoma - $WSM
We are raising our 2021 outlook to reflect revenue growth from high teens to low 20s to now 22% to 23%, and operating margins from 16% to 17% to now 16.9% to 17.1%. This is our third consecutive raise this year. -CFO
The housing market continues to hold strong with purchases of larger first and second homes. Additionally, hybrid work arrangements continue to gain traction as a permanent work model. Both of these trends result in a stronger need and desire to outfit the home for working, entertaining and cooking. In addition, another large point of disruption is the shift of the consumers to make purchases online. Certain factors continue to bolster the shift in behavior, including the lasting impact of the stay-at-home dynamic of the pandemic and the entrance of the millennial generation into their home formation years, a customer segment who naturally gravitates towards digital purchasing. -CEO
La-Z-Boy - $LZB
Consolidated sales in the second quarter of fiscal 2022 increased 25% to $576 million versus the fiscal 2021 second quarter, reflecting ongoing capacity increases and pricing and surcharge actions. Consolidated sales for the fiscal 2022 second quarter were 29% higher than the pre-pandemic fiscal 2020 second quarter, for a compounded annual growth rate of 14% over the last two years.
"Demand trends remain strong, our backlog is high and we expect delivered sales to continue to strengthen, particularly in the fourth quarter as new production cells come online. At the same time, we expect continued supply chain disruptions, including a temporary, but significant, slowdown in our casegoods business due to COVID-related shutdowns in Vietnam. Quarterly trends will also be impacted by our third and fourth quarters containing 12 and 14 production weeks, respectively, compared to 13 production weeks in our second quarter. Taking all of these factors into consideration, we continue to expect sales and margin momentum to accelerate, particularly in the fourth quarter, and we continue to expect to deliver full-year consolidated operating margin at or near double digits." -CFO
Retail Sales - US Census
Walmart - $WMT
TJ Maxx - $TJX
Marmaxx's home business continued its outstanding performance, posting a comp increase in line with home goods and apparel comp sales were up mid-single digits.
We are extremely well-positioned for the holiday selling season, and overall open-only comp store sales to start the fourth quarter are up mid-teens.
Shoe Carnival - $SCVL
As today, we report the best quarter of our best year in our entire 43-year history. And when I say best, I mean best, as measured by every relevant metric. We created more shareholder value during this quarter than in any prior full year. EPS and operating income are both up over 3x versus any prior Q3 result. Our dividend is up 58%. We split the stock in the last quarter. And as I sit here today, sales are up over $300 million year-to-date or over 41% growth. -CEO
We are raising our full year 2021 guidance again and now expect diluted earnings per share in the range of $5 to $5.10 and net sales in the range of $1.285 billion to $1.290 billion from a previously expected diluted net income per share in the range of $4.35 to $4.50 and net sales in the range of $1.21 billion to $1.23 billion. Implicit in the upper range of our annual guidance is an expectation of record fourth quarter results with net sales of $273 million and diluted income per share of $0.41. Our previous highest fourth quarter was last year with net sales of $254 million and diluted net income per share of $0.26. -CFO
Target - $TGT
As Brian mentioned, our 12.7% comp in the third quarter came on top of a nearly 21% increase a year ago. As expected, within the quarter, we saw a shift in a portion of our back-to-school sales back into August, given that most schools across the country began the school year with in-person learning. As a result, our August comp was our strongest of the quarter, our September comp dipped down to about 10%, and we accelerated back into the low teens in October.
Indeed.com - Recruit Holdings - $6098.T
In the US, according to Indeed Hiring Lab job seeker surveys, fears of the Delta variant and uncertainty surrounding in person schooling and daycare seemingly contributed to the lack of any dramatic change in job seeker behavior during Q2 [note: 9/30/21 quarter end]. Additionally, unemployed job seekers expressed a lack of urgency in the need to find work because of a financial cushion including from spousal employment, savings, and government support. Last quarter, we had anticipated that the competition for talent in the US would ease at some point during the second half of FY2021 but at this time, it remains uncertain if there will be any particular catalysts that will result in job seeker interest and activity increasing to a level matching the increase in the number of available jobs. However, we do expect the imbalance in the labor market to lessen more gradually over the second half of FY2021 and beyond, as the factors which affect a recovery in job seeker activity become less impactful. As a result, US dollar based revenue for the second half of FY2021 is an expected increase of approximately 60-70% year over year.
Dice Holdings- $DHX
Job postings for tech-focused roles in the third quarter of 2021 were up 39% year-over-year, according to the Q3 Tech Job Report from tech career marketplace Dice. Postings were flat quarter-over-quarter (Q2 to Q3), and were also flat against the third quarter of 2019, near the recent tech job posting highwater mark.
Odds and Ends
$ODP write up from Tuesday:
Blade - $BLDE
“In recent weeks, Blade’s JFK passenger volumes have exceeded average pre-Covid levels,” said Will Heyburn, Blade’s Chief Financial Officer. “This great signal, coupled with the recent re-opening of international travel to the United States, drove our decision to expand airport service to Newark ahead of the holidays.”
Tyson - $TSN
In parallel to our actions to improve volume, we have also worked to recover inflation through pricing, achieving a 13% price improvement for the fiscal year and a 24% increase for the fourth quarter. In this dynamic environment, we will be aggressive in monitoring inflation and driving price recovery activities.
Palo Alto - $PANW
This quarter, you saw a fair amount of press out of Washington, D.C. as cybersecurity funding was included in the recent infrastructure bill and executive orders are mandating focus from federal agencies. In the private sector, corporate boards are forming cybersecurity committees and directing their teams to raise the bar in terms of cybersecurity posture. We at Palo Alto Networks instituted our Security Committee as well this quarter. Earlier in the year, Gartner updated its forecast for spending on information security and risk management technology and services calling for growth of 12% year-over-year in 2021. We see this backdrop as sustainable beyond this year as customers not only grapple with familiar events like ransomware and data breaches, but also new threats coming into light as they adopt cloud services and also try to hire enough qualified security professionals to keep their environment safe. All in all, I think demand is strong, attention to cybersecurity is high and there is a long-term positive secular trend in place, which gives us great comfort towards the 3-year plan we highlighted for you.
US Xpress Economic Forecast - $USX
1. The overall state of the economy and consumer demand.
Ample stimulus and unemployment benefits combined with low interest rates have buoyed consumer spending throughout the pandemic. As unemployment numbers continue to drop and stimulus dollars dry up, the question is if consumer purchasing power and sentiment will remain strong over the coming quarters. This holiday shopping season will inform the resilience of the American consumer and the continued durability of the supply chains.
2. Continued focus on truckload capacity amidst persistent driver scarcity.
The American Trucking Associations estimates the industry will be down 100,000 professional truck drivers by year-end. Industrywide, increases in driver pay per mile have not been enough to bring more professional truck drivers into the market. Supply chain bottlenecks and labor shortages across the country have contributed to increased wait times for drivers. Tasks such as pickup and drop-off that used to take less than an hour can now take three to four hours. Drivers are paid when freight is moving, and the increased wait times may help to explain why increases in per mile pay haven’t led to increased capacity as they have in previous cycles.
US Federal Reserve Balance Sheet
Thanks for reading and Happy Thanksgiving!