DICK’S Sporting Goods Inc. (DKS) announced its second quarter earnings on Wednesday, September 4. The Pittsburgh-based sporting goods chain’s shares fell 6% after the report was released.

The retailer reported quarterly net sales of $3.47 billion. This was up almost 8% from $3.22 billion at the same time last year and more than analysts' expectations of $3.44 billion.

“We delivered a very strong second quarter,” said DICK’S Sporting Goods CEO, Lauren Hobart. “Powered by our compelling omni-channel athlete experience, differentiated product assortment, best-in-class teammate experience and our ability to create deep engagement with the DICK'S brand, we are driving sustained top-line momentum and gaining market share. Because of our strong Q2 performance and the confidence we have in our business, we are again raising our full year outlook.”

For the second quarter, DICK’S reported net income of $362.23 million or $4.37 per diluted share. This was up from $244.33 million or $2.82 per diluted share reported at this time last year.

The company’s comparable store sales increased 4.5% in the second quarter, primarily attributed to an increase in average ticket size and a growth in transactions. DICK’s opened seven new stores in the quarter for a total of 861 locations, including 14 House of Sport stores. The company raised its full-year guidance and now expects comparable store sales between 2.5% and 3.5% and earnings per diluted share between $13.55 to $13.90. The company announced that it authorized a quarterly dividend of $1.10 per share of common stock and Class B common stock payable on October 4, 2024, to shareholders of record on September 20, 2024.

DICK’S Sporting Goods Inc. (DKS) shares closed at $208.04, down 12% for the week.

Dollar Tree Quarterly Report

Dollar Tree, Inc. (DLTR) reported its second quarter earnings on Wednesday, September 4. Despite reporting increased net sales for the quarter, the discount retailer lowered its full-year guidance, causing its shares to fall 20%.

Net sales reached $7.38 billion during the quarter. This was up less than 1% from $7.33 billion in net sales last year at this time but fell short of analysts’ estimates of $7.49 billion.

“We are encouraged by the continuous progress we are making in the transformation underway at Dollar Tree and Family Dollar, despite immense pressures from a challenging macro environment,” said Dollar Tree CEO, Rick Dreiling. “Customers are responding favorably to initiatives like our expanded multi-price offering and we are already seeing a meaningful sales lift at the 1,600 Dollar Tree stores that have been converted to our newest in-line multi-price format.”

The company posted net income of $132.4 million or $0.62 per adjusted share. This was down from $200.4 million or $0.91 per adjusted share during the same quarter last year.

The company opened 127 new Dollar Tree stores and 28 new Family Dollar stores during the quarter, ending the quarter with a total of 16,388 stores throughout North America. Dollar Tree’s gross margin rate increased 80 basis points to 30.0% compared to 27.9% during the second quarter of last year. The increase was attributed to lower freight costs partially offset by higher cost consumables and occupancy costs. The company updated its full-year guidance for fiscal 2024 and expects net sales to be in the range of $30.6 to $30.9 billion, down from previous guidance of $31 to $32 billion.

Dollar Tree, Inc. (DLTR) shares ended the week at $66.50, down 21% for the week.

Hewlett Packard Enterprise Releases Results

Hewlett Packard Enterprise Co. (HPE) released its third quarter earnings report on Wednesday, September 4. The company’s stock dropped 3% following the release of the report.

Hewlett Packard Enterprise reported quarterly revenue of $7.71 billion. This is up 10% from revenue of $7.00 billion during the same quarter last year but below analysts’ expectations of $7.67 billion.

“We delivered a strong third quarter, with impressive revenue growth, especially from our AI system conversion, and we improved profitability,” said Hewlett Packard Enterprise CEO, Antonio Neri. “These results reflect our momentum in delivering on our edge-to-cloud strategy across networking, hybrid cloud, and AI. We have driven meaningful innovation throughout our portfolio, which increases our relevancy with customers and positions us to continue to deliver profitable growth for shareholders.”

The company announced net income of $512 million or $0.38 per adjusted share for the quarter. This was an increase from $464 million or $0.35 per adjusted share during the third quarter last year.

Hewlett Packard Enterprise’s Server segment revenue saw a 35% year-over-year increase in revenue to $4.3 billion. The company’s Intelligent Edge segment was down 23% from the prior year, falling to $1.1 billion. The Financial Services segment revenue totaled $879 million, a 1% increase from the same period last year. The company announced a regular cash dividend of $0.13 per share on the company’s common stock, payable on October 18, 2024, to stockholders of record on September 19, 2024. Hewlett Packard raised its guidance for 2024 and expects earnings between $1.68 and $1.73 per adjusted share.

Hewlett Packard Enterprise Co. (HPE) shares closed at $19.06, down 1% for the week.

The Dow started the week of 9/3 at 41,490 and closed at 40,346 on 9/6. The S&P 500 started the week at 5,624 and ended at 5,409. The NASDAQ started the week at 17,585 and finished at 16,691.

U.S. Treasury yields dropped early in the week as investors weighed the latest manufacturing data suggesting a possible economic slowdown. Yields continued to fall during the holiday-shortened week as investors weighed the latest employment numbers and expectations that the Federal Reserve will begin cutting interest rates.

On Tuesday, the Institute for Supply Management (ISM) released its purchasing managers’ index (PMI) for August indicating growth in the manufacturing industry. The PMI measures the change in production levels across the U.S. and is used as an indicator of U.S. economic activity. The PMI for August was 47.2%, up from a PMI of 46.8% in July but below economists’ estimates of 47.9%.

“While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month,” said Chair of the ISM Manufacturing Business Survey Committee, Timothy R. Fiore. “Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty. Production execution was down compared to July, putting additional pressure on profitability.”

The benchmark 10-year Treasury note yield opened the week of September 3 at 3.91% and traded as low as 3.72% on Thursday. The 30-year Treasury bond opened the week at 4.20% and traded as low as 4.02% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 5,000 to 227,000 for the week ended August 31. Continuing unemployment claims decreased by 22,000, reaching 1.84 million. On Friday, the Bureau of Labor Statistics released its monthly jobs report for August which showed an increase of 142,000 jobs, significantly lower than economists’ estimates of 161,000.

“For the Fed, the decision comes down to deciding which is the bigger risk: reigniting inflation pressures if they cut by 50 [basis points] or threatening recession if they only cut by 25 [basis points],” said chief global strategist at Principal Asset Management, Seema Shah. “On balance, with inflation pressures subdued, there is no reason for the Fed not to err on the side of caution and frontload rate cuts.”

The 10-year Treasury note yield finished the week of 9/3 at 3.71%, while the 30-year Treasury note yield finished the week at 4.02%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 5. The survey showed mortgage rates leveled off following a steady decline over the summer months.

This week, the 30-year fixed rate mortgage averaged 6.35%, unchanged from last week’s average of 6.35%. Last year at this time, the 30-year fixed rate mortgage averaged 7.12%.

The 15-year fixed rate mortgage averaged 5.47% this week, down from last week’s 5.51%. During the same week last year, the 15-year fixed rate mortgage averaged 6.52%.

“Mortgage rates remained flat this week as markets await the release of the highly anticipated August jobs report,” said Freddie Mac’s Chief Economist, Sam Khater. “Even though rates have come down over the summer, home sales have been lackluster. On the refinance side however, homeowners who bought in recent years are taking advantage of declining mortgage rates in order to lower their monthly payments.”

Based on published national averages, the savings rate was 0.46% as of 8/19. The one-year CD averaged 1.85%.

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