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Wednesday December 13, 2017



Dave & Buster's Enjoys Increased Sales

Dave & Buster's Entertainment, Inc. (PLAY) released its quarterly earnings on Tuesday, December 6. The report showed a rise in both sales and profits.

Revenue for the quarter was $228.7 million, beating analysts' expected figure of $217 million. The company's revenue was up from $192.7 million during the same quarter last year.

"Dave & Buster's delivered exceptional quarterly results and we are pleased to be increasing our annual guidance," said Dave & Buster's CEO Steve King. "Our strength was broad-based as we experienced momentum across the country and throughout the quarter. We generated a 5.9% increase in comparable store sales during the third quarter, lapping an 8.8% increase from the prior year, and 14.7% on a two-year stacked basis."

The company reported net income of $10.8 million or $0.25 per share. Net income at this time last year was $4.6 million or $0.11 per share.

The restaurant and entertainment company's successful quarter was aided by strong sales at existing locations. Although same store sales are down from the same quarter last year, the 5.9% increase is a welcome rebound from the mere 1% increase reported in the company's September earnings release. In addition, the company expects to open 11-12 new stores in the upcoming year.

Dave & Buster's Entertainment, Inc. (PLAY) shares ended the week at $57.18, up 18.6%.

Ollie's Reports Strong Quarter

Ollie's Bargain Outlet Holdings, Inc. (OLLI) reported its quarterly earnings on Wednesday, December 7. Revenue and profits both showed strong increases during the quarter.

The company reported revenue of $202 million for the quarter, up 15.7%. During the same period last year, revenue was $175 million.

"We are pleased with our strong third quarter results and the continued momentum of our business," said Ollie's President and CEO Mark Butler. "It's been over a year since we laid out our long-term growth targets with our initial public offering, and we continue to deliver against those objectives. We are opening stores in the mid-teens rate, growing comparable store sales, leveraging expenses, growing net income greater than 20%, building deeper vendor relationships, and gaining greater access to product."

Net income was $10.5 million during the quarter, an increase of 54.7%. The company's net income during the prior year's quarter was $6.8 million.

Ollie's Bargain Outlet, which made its initial public offering in July of last year, reported a 1.8% increase in same store sales for the quarter. The company expects same store sales to grow 2.5% to 3% for the full year. In addition, the company opened 16 new stores during the quarter, bringing the total number of stores to 232.

Ollie's Bargain Outlet Holdings, Inc. (OLLI) shares ended the week at $30.85, down 0.8% for the week.

HD Supply's Revenue Rises, Profits Drop

HD Supply Holdings, Inc. (HDS) released its quarterly earnings Tuesday, December 6. The results were mixed, as revenue increased while profits dropped.

The company reported net sales of $2.0 billion for the quarter. This is up 3.4% from net sales of $1.94 billion during the same quarter last year.

"We delivered growth and solid cash conversion in the third quarter and are focused on building momentum for the 2017 selling season," said Joe DeAngelo, Chairman and CEO of HD Supply.

Net income for the quarter was down 76% to $60 million. Last year at this time, the company reported net income of $250 million.

HD Supply, formerly owned by The Home Depot, is a supplier of building maintenance and construction products across North America. CEO Joe DeAngelo noted during the company's earnings call on Tuesday that the company's Facilities Maintenance division struggled in 2016 due to "under ordering of inventory." According to DeAngelo, the company's inventory issues were worked out over the course of the year and have returned to balance.

HD Supply Holdings, Inc. (HDS) shares ended the week at $41.54, up 5% for the week.

The Dow started the week of 12/5 at 19,244 and closed at 19,757 on 12/9. The S&P 500 started the week at 2,201 and closed at 2,260. The NASDAQ started the week at 5,284 and closed at 5,445.

Treasury Yields Rise Ahead of Fed Meeting

Treasury yields rose this week on continued investor optimism that the economy is poised for growth in 2017. The recent presidential election combined with next week's highly anticipated Federal Open Market Committee (FOMC) meeting have investors ready to move from the safety of Treasury bonds to the more volatile world of stocks.

The benchmark 10-year note closed at 2.41% on Thursday, December 8. This is up from 1.86% just over one month ago. Treasury yields rise as prices fall.

As President-elect Donald Trump prepares to take the oath of office on January 20, investors have gotten a head-start, betting on a Trump presidency bringing an economic boost. In addition to the bond selloff, the Dow Jones Industrial Average has jumped by over 1,200 points since Election Day.

Meanwhile the Fed, which has been teasing a rate hike since it last increased rates in December 2015, appears poised to announce another increase at next week's policy meeting. Fed Fund futures currently expect a 97% chance of a rate hike when the FOMC holds its December 13-14 meetings.

"Were the FOMC to delay increases in the federal funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee's longer-run policy goals," said Federal Reserve Chairwoman Janet Yellen.

The 10-year Treasury note yield finished the week of December 5 at 2.46%, while the 30-year Treasury note yield was 3.15%.

Mortgage Rates Continue Rise

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday December 8. For the sixth consecutive week, mortgage rates are up.

The 30-year fixed rate mortgage averaged 4.13% for the week, up from 4.08% last week. During this time last year, the 30-year fixed rate mortgage averaged 3.95%.

The 15-year fixed rate mortgage averaged 3.36% this week. This is up from an average of 3.34% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.19%

"The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey. The 30-year mortgage rate rose another 5 basis points to 4.13%, starting the month 18 basis points higher than this time last year," said Freddie Mac Chief Economist Sean Becketti. "As rates continue to climb and the year comes to a close, next week's FOMC meeting will be the talk of the town with the markets 94% certain of a quarter-point-rate hike."

Based on published national averages, the money market account finished the week of 12/5 at 0.55%. The 1-year CD finished at 1.18%.

Published December 9, 2016

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