Walgreens Boots Alliance, Inc. (WBA) released its first quarter earnings on Thursday, January 4. Despite meeting earnings estimates, the company’s stock fell over 12% after the earnings release.

The company reported sales of $36.71 billion for the quarter, up 10% from $33.38 billion reported during the same quarter last year. Revenue came in above analysts’ expectations of $34.86 billion.

"WBA delivered fiscal first quarter results in line with overall expectations, reflecting disciplined execution in a challenging consumer backdrop,” said Walgreens CEO, Tim Wentworth. “We are evaluating all strategic options to drive sustainable long-term shareholder value, focusing on swift actions to right-size costs and increase cash flow, with a balanced approach to capital allocation priorities. And, we will leverage our local, convenient presence to engage with patients and help payors, providers, and pharma companies also achieve better health outcomes at an affordable cost.”

Walgreens posted a net loss of $67 million for the quarter or $0.08 per adjusted share. This was an improvement from a net loss of $3.72 billion or $4.31 per adjusted share one year ago.

Walgreens attributed their increased sales for the first quarter to growth across all major segments. The company’s U.S. Retail Pharmacy segment saw an increase in first quarter sales of 6% to $28.94 billion. The U.S. Healthcare segment reported sales of $1.93 billion, an increase from the $989 million in sales one year ago. Internationally, the company saw an increase of 12% to $5.83 billion in sales, up from $5.19 billion at the same time last year. Walgreens announced a quarterly dividend of $0.25 per share, a reduction of 48% from the previous quarter, payable on March 12, 2024, to stockholders of record as of February 20, 2024.

Walgreens Boots Alliance, Inc. (WBA) shares ended the week at $25.01, down 4% for the week.

Conagra Brands Reports Quarterly Revenue

Conagra Brands, Inc. (CAG) announced its second quarter earnings on Thursday, January 4. The Chicago-based company reported a decline in earnings, causing its shares to fall by more than 2% following the release.

The company reported revenue of $3.21 billion during the second quarter. This was a decrease from revenue of $3.31 billion in the same quarter last year and just below analysts’ estimates of $3.24 billion.

“Despite an ongoing challenging macro environment, we saw several positive signs in Q2. In particular, volume trends in our domestic retail business improved substantially, as inflation-driven volume declines were cut in half compared to Q1,” said Conagra CEO, Sean Connolly. “Most importantly, our targeted investments in our frozen business generated strong lifts and market share gains. These developments reinforced our confidence in investing to build momentum in the second half and set up a strong FY25.”

For the quarter, Conagra reported adjusted net income of $286.2 million. This is a 25% decline from net income of $381.9 million at the same time last year.

The packaged foods company, which holds popular brands such as Duncan Hines, Healthy Choice and Slim Jim, reported organic net sales decreased 3.4% due to, among other things, strategic investment. The 2.9% decrease in volume was attributed to a slowdown in consumption trends. The company’s Grocery and Snacks segment accounted for $1.3 billion, a 4.1% decrease in net sales during the quarter. Conagra’s Refrigerated and Frozen segment decreased 5.8% to $1.3 billion in the quarter while Foodservice increased 4.3% to $295 million. The company revised its fiscal 2024 outlook and now expects adjusted earnings per share to be between $2.60 to $2.65, a reduction from the previous forecast.

Conagra Brands, Inc. (CAG) shares ended the week at $28.21, down 1% for the week.

Lamb Weston Releases Quarterly Results

Lamb Weston Holdings, Inc. (LW) announced its second quarter earnings on Thursday, January 4. The Idaho-based company reported better-than-expected revenue and earnings, causing its shares to increase by almost 6% following the report.

The company reported revenue of $1.73 billion during the second quarter. This was up 36% from revenue of $1.28 billion in the same quarter last year and above analysts’ estimates of $1.70 billion.

“We delivered solid financial results in the quarter by executing well across our customer channels in North America and in our key international markets,” said Lamb Weston CEO, Tom Werner. “We continued to benefit from inflation-driven pricing actions primarily initiated last year, improvements in customer and product mix, and supply chain productivity cost savings. As expected, our volume performance in the quarter improved sequentially versus our fiscal first quarter, reflecting resilient global demand and the gradual addition of new business to replace lower-margin volume that we chose to exit in the prior fiscal year.”

For the quarter, Lamb Weston reported adjusted net income of $215.0 million or $1.48 per adjusted share. This is an improvement from net income of $103.1 million or $0.71 per adjusted share at the same time last year.

The frozen food supplier reported increased net sales across all its segments. The net sales for the North American segment increased by 10% to $1.17 billion. The company’s International segment reported net sales of $565 million, a 164% increase from the $214 million reported at the same time last year. Lamb Weston announced that it increased its quarterly dividend by 29% to $0.36 per share, payable on March 1, 2024 to stockholders of record on February 2, 2024. For Fiscal 2024, the company reaffirmed its net sales target and expects net sales to be in the range of $6.8 billion to $7.0 billion.

Lamb Weston Holdings, Inc. (LW) shares ended the week at $106.02, down 2% for the week.

The Dow started the week at 37,566 and closed at 37,466 on 1/5/2024. The S&P 500 started the week at 4,745 and closed at 4,697. The NASDAQ started the week at 14,874 and closed at 14,524.

U.S. Treasury yields fluctuated throughout the week as markets digested the latest minutes from the Federal Reserve’s December policy meeting. Yields increased at the end of the week as the latest jobs report showed for a strong labor market.

On Wednesday, the Federal Reserve released the minutes from the Federal Open Market Committee (FOMC) meeting on December 12 and 13, 2023. At the meeting, policy makers agreed to hold its benchmark rate steady between 5.25% and 5.5%. While Fed officials agreed to hold rates steady, the minutes indicated a three rate cuts, with assumed quarter-percentage point increments, by the end of 2024. However, the summary of the meeting highlighted significant uncertainty as to the manner and possibility of the possible rate cuts.

According to the minutes, "In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves.”

The benchmark 10-year Treasury note yield opened the week of January 2 at 3.88% and traded as high as 4.10% on Friday. The 30-year Treasury bond opened the week at 4.04% and traded as high as 4.24% on Friday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 18,000 to 202,000 for the week ended December 30. Continuing unemployment claims dropped by 31,000, reaching 1.85 million. The December jobs report released on Friday reflected 216,000 jobs added, significantly higher than economists’ estimates of 160,000. The unemployment rate remained at 3.7%, which was below analysts’ estimates of 3.8%.

“The pace of job creation is strong but not overwhelming, unemployment is low and stable, and job openings are plentiful,” said director of economic research at Indeed Hiring Lab, Nick Bunker. “While labor demand may still be high, labor supply may be struggling to keep pace. If there is any surprise emerging in this report, it is that the labor market might have more momentum than previously thought,”

The 10-year Treasury note yield finished the week of 1/5 at 4.05%, while the 30-year Treasury note yield finished the week at 4.20%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 4. The survey showed the 30-year fixed rate inching up after dropping for nine consecutive weeks.

This week, the 30-year fixed rate mortgage averaged 6.62%, up from last week’s average of 6.61%. Last year at this time, the 30-year fixed rate mortgage averaged 6.48%.

The 15-year fixed rate mortgage averaged 5.89% this week, down from last week’s 5.93%. During the same week last year, the 15-year fixed rate mortgage averaged 5.73%.

“Between late October and mid-December, the 30-year fixed-rate mortgage plummeted more than a percentage point,” said Freddie Mac’s Chief Economist, Sam Khater. “However, since then rates have moved sideways as the market digests incoming economic data. Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds. While lower mortgage rates are welcome news, potential homebuyers are still dealing with the dual challenges of low inventory and high home prices that continue to rise.”

Based on published national averages, the savings rate was 0.46% as of 12/18. The one-year CD averaged 1.86%.

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