Finances

Nike, Inc (NKE) reported its fiscal second quarter results on Thursday, December 19. Despite the company reporting better-than-expected earnings, shares fell approximately 4% following release of the report.

Nike posted second quarter net revenue of $12.35 billion. This is down 8% from $13.39 billion reported in the same quarter last year and surpassed the $12.13 billion in revenue that analysts expected.

"After an energizing 60 days of being back with my NIKE teammates, our clear priority is to return sport to the center of everything we do," said Nike CEO, Elliott Hill. "We are taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I am confident you will see more moments of NIKE being NIKE again."

The company reported net income of $1.16 billion or $0.78 per adjusted share for the quarter. This was down 26% from net income of $1.58 billion or $1.03 per adjusted share reported last year.

Nike appointed Elliott Hill as new CEO during the quarter as the company seeks to return to stronger sales performance. Nike Brand revenue was $12.0 billion during the quarter, down 7% from this time last year. Nike Direct segment sales reached $5.0 billion, down 13% for the quarter. Nike Brand Digital sales were down 21%. Nike’s inventories were $8.0 billion in the quarter, relatively unchanged compared to a year ago. Wholesale revenues were down 3% to $6.9 billion.

Nike, Inc. (NKE) shares ended the week at $76.42, remaining relatively unchanged for the week.

FedEx Delivers Earnings

FedEx Corp. (FDX) released its second quarter earnings report on Thursday, December 19. The company’s stock remained relatively unchanged even with reporting stronger-than-expected earnings.

Revenue came in at $21.97 billion for the quarter, down from $22.17 billion at this time last year. This was below analysts expected quarterly revenue of $22.14 billion.

“Our second quarter results demonstrate that our efforts to transform our operations are working,” said FedEx CEO, Raj Subramaniam. “The Federal Express segment delivered operating profit growth despite several headwinds, including the continued weak U.S. domestic demand environment as well as the expiration of our U.S. Postal Service contract. I am proud of the team for continuing to deliver solid service to our customers throughout the Peak season, as we create a more flexible, efficient, and intelligent network.”

The company posted net income of $741 million or $3.03 per adjusted share for the quarter. This was down from $900 million or $3.55 per adjusted share one year ago.

FedEx announced that its Board of Directors voted in favor of separating FedEx Freight and creating a new separate publicly traded company within the next 18 months. Operating income decreased 18% during the quarter to $1.05 billion from a year ago. For fiscal 2025, FedEx expects earnings per adjusted share to be between $19.00 and $20.00 compared to previous estimates of between $20.00 and $21.00 per adjusted share.

FedEx (FDX) shares ended the week at $280.36, up 2% for the week.

CarMax Rolls Out Earnings

CarMax, Inc. (KMX) released its third quarter earnings report on Thursday, December 19. The automobile retailer’s stock climbed almost 4% after the company exceeded earnings and revenue estimates.

CarMax reported net sales of $6.22 billion during the quarter, up 1.2% from $6.15 billion in net sales at this time last year and surpassed the expected quarterly revenue of $5.99 billion.

“I am pleased with the positive momentum that we are driving across our diversified business model,” said CarMax CEO, Bill Nash. “Our solid execution and a more stable environment for vehicle valuations enabled us to deliver robust EPS growth driven by increases in unit sales and buys, solid margins, growth in CAF income, and ongoing management of SG&A. Our associates and our best-in-class omni-channel experiences are key differentiators that enable our success. We are excited to leverage the capabilities we have built to drive growth as we access the largest total addressable market within our industry.”

The company reported quarterly net income of $125.4 million or $0.81 per adjusted share. This was up from $82.0 million or $0.52 per adjusted share one year ago.

CarMax sold 320,256 vehicles in the quarter, an increase of 5.8% from the same time last year. CarMax’s wholesale vehicle sales rose by 6.3% to 136,013 vehicles. The company’s comparable store used sales increased 4.3%. CarMax’s finance segment reported income grew by 7.6% for the quarter to reach $159.9 million. The company expanded to over 245 locations by adding a new site in Alliance, Texas during the quarter.

CarMax, Inc. (KMX) shares ended the week at $83.77, remaining relatively unchanged for the week.

The Dow started the holiday week of 12/23 at 42,800 and closed at 42,992 on 12/27. The S&P 500 started the week at 5,940 and closed at 5,971. The NASDAQ started the week at 19,641 and closed at 19,722.

U.S. Treasury yields rose earlier in the holiday-shortened week as investors reacted to the latest economic data. Yields continued to increase towards the end of the week after jobless claims fell more than expected.

On Monday, the U.S. Department of Commerce reported that durable goods orders, which measures the change in the total value of new orders for long-lasting manufactured goods, fell 1.1% in November after experiencing an increase by 0.8% in October. The report also revealed that orders for non-defense capital goods, a marker of business spending, rose by 0.7% in November after experiencing a decrease of 0.1% in October. 

"The rebound in core capital goods orders and shipments could reflect some relief from policy uncertainty now that the election is behind us," said Deputy Chief U.S. Economist at Oxford Economics, Michael Pearce. "We expect equipment spending growth to be above 4% next year, in part thanks to spillovers from the boom in new factory construction and the build out of AI."

The benchmark 10-year Treasury note yield opened the week of December 23 at 4.52% and traded as high as 4.65% on Thursday. The 30-year Treasury bond opened the week at 4.72% and traded as high as 4.82% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 1,000 to 219,000 for the week ending December 21. This was less than the 223,000 claims that analysts anticipated. Continuing claims increased by 46,000 to 1.91 million.

"The rate of hiring has clearly slowed, based on evidence from a variety of economic data releases, driving the trend in continuing claims higher," wrote Jefferies U.S. economist, Thomas Simons. "However, the data also shows that the rate of firing/lay-offs has not accelerated accordingly. This is unusual as there is typically an inverse correlation between the rates of hiring and firing, but current conditions reflect an acknowledgement that labor supply is scarce, likely to become more scarce, and thus more valuable to retain than it was in the past."

The 10-year Treasury note yield finished the week of 12/23 at 4.63%, while the 30-year Treasury note yield finished the week at 4.82%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 26. The survey showed mortgage rates continuing to rise for the second consecutive week.

This week, the 30-year fixed rate mortgage averaged 6.85%, up from last week’s average of 6.72%. Last year at this time, the 30-year fixed rate mortgage averaged 6.61%.

The 15-year fixed rate mortgage averaged 6.0% this week, up from last week’s 5.92%. During the same week last year, the 15-year fixed rate mortgage averaged 5.93%.

“Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month,” said Freddie Mac’s Chief Economist, Sam Khater. “While a slight improvement in new and existing home sales is encouraging, the market remains plagued by an overwhelming undersupply of homes. A strong economy can help build momentum heading into the new year and potentially boost purchase activity.”

Based on published national averages, the savings rate was 0.42% as of 12/16. The one-year CD averaged 1.83%.

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