Finances

The Kroger Company (KR) reported a 5.8% sales increase this week for the first quarter of the company's fiscal year 2012. The grocery store chain reported higher total sales on fuel and food staples driven in part by a change in behavior from consumers seeking to tighten their belts and cut costs by eating more meals at home.

The earnings report marks 34 consecutive quarters of positive supermarket sales for Kroger. Kroger says that the company stands out among competitors because of its focus on customers. Separately, the company announced this week that its Board of Directors authorized a new $1 billion share repurchase program for shareholders.

"Kroger's solid first-quarter performance demonstrates that our 'Customer 1st' strategy continues to resonate with customers," said David B. Dillon, Kroger's Chairman and Chief Executive Officer. "Our core business is growing and we are rewarding shareholders through earnings growth, increasing dividends over time and share buybacks."

Kroger continues to expect supermarket sales growth in 2012 and beyond. As one of the world's largest retailers, the grocer conglomerate owns 2,425 supermarkets and multi-department stores in 31 states in addition to convenience stores and supermarket fuel centers.

Shares of Kroger Co. (KR) finished the week at $22.89.

Pier 1 Imports Reports Earnings

Pier 1 Imports, Inc. (PIR) reported that its sales increased 7.2% for the first quarter of 2012. In recent years, Pier 1 has expanded beyond imported furniture to become a full service home and entertainment retailer. The company's move to offer a wider range of products has proven positive for consumers who want to buy everything for the home in one place.

Alex W. Smith, President and Chief Executive Officer, commented, "We're pleased with the strong sales and earnings performance we achieved this quarter. The company attributes the results to the effectiveness of its merchandising strategies as well as strong sales of items at full-price this quarter."

Pier 1 is preparing for the launch of its eCommerce site, which the company believes will enable it to capture more market share as it continues to grow as a multi-channel retailer. Analysts note that the company will face competition from Cost Plus World Market and Bed Bath & Beyond, both offer similar products and already have an effective online presence.

The company says that it remains committed to its customers and core values and pointed to its new line of colorful summer dining ware as distinct from the offerings of other big box retailers. Pier 1 also says that it is committed to increasing shareholder value. During the quarter, the company returned $53 million to its shareholders in the form of share repurchases and cash dividends.

Pier 1 Imports, Inc. (PIR) ended the week trading at $16.10 per share.

Winnebago's Earnings Triple

Winnebago Industries, Inc. (WGO) reported the company's third-quarter results this past week. The report noted Winnebago's earnings had tripled for the quarter.

In the third quarter, Winnebago reported revenue of $155.7 million, an increase of 14.9% from the comparable period last year. In the company's previous third quarter, Winnebago reported revenue of $135.6 million.

Winnebago also reported an operating profit of $3.5 million for the quarter, versus $538,000 in the same period last year. Net income for the quarter came in at $3.9 million versus $1.2 million in Q3 2011. On an earnings per share basis, the company earned net income of $0.13.

"Our business was sequentially much stronger during the third fiscal quarter and as a result, our margins have improved," said Winnebago Industries' Chairman, Chief Executive Officer and President Randy Potts. "Our RV inventory on dealers' lots is fresh but at a conservative level, which combined with our higher order position leads us to be optimistic about the remainder of the fiscal year."

Winnebago Industries, Inc., bills itself as "The Most Recognized Name in Motor Homes." The company manufactures recreational vehicles used primarily in leisure, travel and outdoor recreation activities including brand names such as Winnebago, Itasca, Era and SunnyBrook.

Winnebago Industries, Inc. (WGO) shares closed the week at $9.44.

The Dow started the week at 12,554 and closed at 12,767. The NASDAQ started the week at 2,858 and finished at 2,872. The S&P 500 started the week at 1,326 and ended at 1,343.

Two weeks ago, Fitch Ratings reduced Spain's sovereign debt rating to BBB. This week saw Moody's Investors Service reducing Spain's credit rating by three steps to Baa3.

As with Fitch Ratings, Moody's downgrade was brought about by the Iberian nation's increasing debt burden, weakening economy and diminishing access to capital markets. The European Union is still developing a response to Greek's sovereign debt issues that may necessitate the Mediterranean nation's withdrawal from the EU.

In testimony before lawmakers on Capitol Hill, Federal Reserve Chairman Ben S. Bernanke stated, "The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely." Bernanke also testified, "As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate."

The 10-year Treasury note yield finished the week at 1.59% while the 30-year Treasury note yield finished the week at 2.69%.

On June 14, 2012, Freddie Mac released the results of its most recent Primary Mortgage Market Survey (PMMS). In each of the six weeks prior to this latest release, the PMMS reported that mortgage rates had reached an all-time low. In the latest PMMS, mortgage rates edged upward slightly.

Freddie Mac reported that the 30-year fixed rate mortgage (FRM) averaged 3.71% during the course of the previous week. This is up from 3.67% the week before but down 4.50% from the same period last year.

The 15-year FRM also rose from its record low of 2.94% in the week prior. The 15-year FRM averaged 2.98% according to the most recent PMMS. Last year at this time, the 15-year mortgage averaged 3.67%.

Freddie Mac's Vice President and Chief Economist commented on the latest PMMS. He stated, "Fixed mortgage rates edged up slightly from record lows during a mild week of economic data releases. The Federal Reserve Board reported that household net worth rose by $2 trillion to $62.9 trillion over the first three months of 2012 primarily due to increases in stock markets. However, this is still well below the peak of $67.5 trillion set in the third quarter of 2007. Nonetheless, homeowners saw an aggregate $372 billion rise in property values over the first three months of this year."

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