Finances

The Pep Boys (PBY) automotive parts retailer posted its first quarter earnings last week. The Philadelphia-based company touts itself as one of the nation's leading after-market automotive parts service and retail chains.

For the quarter, the company reported that sales increased by $11.1 million, or 2.2%. Sales totaled $524.6 million for the quarter.

The company saw its net earnings decline to $1.1 million, down from $12.4 compared to the same period last year. On an earnings per share basis, Pep Boys earned $0.02 per share in the most recent quarter compared to $0.23 in the same period last year.

Pep Boys President and Chief Executive Officer, Mike Odell, stated "It has been a challenging start to the year, due to the mild winter weather, restrained customer spending and not clicking on all cylinders in our performance. But we have made the necessary changes and expect to return to year-over-year profit growth in the third and fourth quarters, as we had done for 11 consecutive quarters through the third quarter of 2011."

For the week, shares of The Pep Boys (PBY) closed at $9.11.

Vail Resorts Survives Harsh Winter

Vail Resorts, Inc. (MTN) reported its third quarter results last week. Despite an unseasonably warm winter, the company's revenue stayed flat compared to the same period last year.

For the quarter, the company reported a decrease in revenue. Revenue fell to $408.6 million, down from $408.9 million. Net income, however, increased by 3.5%, rising to $79.6 million. On an earnings per share basis, Vail reported earnings of $2.17.

For the quarter, Vail saw increased revenue from lift ticket sales, ski school fees and from its retail and rental operations compared to the same period last year. The company saw a slight decline in revenue from its dining operations from the comparable quarter last year.

Rob Katz, Vail's Chief Executive Officer, commented on the results saying, "We are pleased with our third quarter results as they evidenced our ability to successfully navigate the most challenging winter in the history of the United States ski industry. Cumulative snowfall levels for the 2011/2012 ski season were down more than 50% across our resorts, compared with the prior year and snowfall at our Colorado resorts was down more than 70% in March. The lack of snow, combined with unseasonable temperatures, affected visitation levels during the key spring break and Easter vacation periods. Yet, despite these unprecedented conditions, we delivered an approximate 1% increase in Mountain Reported EBITDA in the third quarter compared with the prior year."

Vail Resorts, Inc. (MTN) shares ended the week at $46.50.

Sport Chalet Reports Annual Earnings

Los Angeles-based Sport Chalet, Inc. (SPCHA) announced its earnings for the fourth quarter and for the full fiscal year last week. The company's fiscal year just ended was 52 weeks compared to a 53-week fiscal year in the year prior.

For the quarter, Sport Chalet's sales decreased to $81.9 million, down from $98.2 million in the same period last year. The company attributed much of the difference to the additional week in the same period last year. The company reported a net loss for the quarter of $3.8 million or $0.27 per share. In the same period last year the company reported losses of $300,000 or $0.02 per share.

On an annual basis, Sport Chalet reported that sales decreased by 2.5%, falling from $362.5 million last year to $349.9 million in the year just ended. The company reported an annual loss of $5.1 million or $0.36 per share, up from losses of $3.0 million or $0.31 per share last year.

"The nearly unprecedented warm and dry winter weather we experienced in the third quarter continued into the fourth quarter and significantly affected our sales and profitability," stated Craig Levra, the company's Chairman and Chief Executive Officer. "We are encouraged, however, that our efforts to realign our business model in light of the economic slowdown and our commitment to be first to market with performance, technology and lifestyle merchandise, to expand our specialty brands and to emphasize the expertise of our team, has strengthened our underlying core business."

Shares of Sport Chalet, Inc. (SPCHA) closed the week at $1.28 per share.

The Dow started the week at 12,119 and closed at 12,554. The NASDAQ started the week at 2,747 and finished at 2,858. The S&P 500 started the week at 1,278 and ended at 1,326.

Last week, Fitch Rating's downgraded Spain's debt rating by three grades. The rating level fell to BBB which now stands two levels above the junk bond grade.

Spain's Prime Minister, Mariano Rajoy, spoke with his counterparts from other EU nations about shoring up his nation's ailing banks. Rajoy noted that his country was seeking capital needs estimates for the banks from international consultants and, with that figure in hand, would be able to determine "the formula for the financing of the capitalization of the banking sector."

Rajoy pledged that he will make the decision that "best defends the interests of Spaniards." Another member of the EU, Germany, appears to be looking out for their own best interests. Germany remains opposed to efforts that would shift the burdens of shoring up other nation's debt in ways that would undermine Germany's own fiscal health.

The 10-year Treasury note yield finished the week at 1.64% while the 30-year Treasury note yield finished the week at 2.76%.

On June 7, 2012, Freddie Mac released the latest issue of its Primary Mortgage Market Survey (PMMS). The weekly survey reports the nationwide average for 30-year and 15-year fixed rate mortgages (FRM).

For the week, the 30-year FRM averaged 3.67% – a new all-time record low. Last week at this time, the 30-year mortgage averaged 3.75%. At the same time last year, it averaged 4.49%

The 15-year FRM also reached a new record low, averaging 2.94%. Last week, the 15-year mortgage averaged 2.97% and last year at this time it averaged 3.68%.

Freddie Mac's Vice President and Chief Economist, Frank Nothaft, responded to the PMMS, saying "Fixed mortgage rates reached new record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data." He continued, "Gross domestic product rose 1.9% in the first quarter, after originally being reported as 2.2%, led by gains in inventories, more government cutbacks and the slowest increase in corporate profits in over three years." He also noted that the economy added 69,000 jobs in May, less than half of what was expected, and that the unemployment rate ticked up to 8.2% in May as well.

The money market finished this week at 0.5%. The 1-year CD finished at 0.7%.