NABE report shows increase in hiring and sales for second quarter, Yum! Brands (YUM) face safety scare and Hasbro (HAS) reports strong second-quarter

Bourbon & Bayonets / Monday, July 21st, 2014

Markets were heading slightly lower on Monday morning after U.S. companies reported an increase in employment and sales during the second-quarter, a report released by the National Association for Business Economics showed. The report said that of the 85 companies that took the survey, 57% of them said that sales were up during the quarter running from April through June. This is up 53% from the first quarter and up over 35% during this time last year. The report also showed that 59% of the companies surveyed are expecting a steady third-quarter. There was also a strong response in the hiring section of the survey with 36% saying they hired more workers in the second-quarter. This is up from 28% in the first-quarter and up 29% from this time last year. Outlook for the third-quarter was also strong with 37% of the companies surveyed saying they expect hiring to grow.

Shares of Yum! Brands, Inc. (YUM) were falling after a new safety scare surfaced in China. The parent company of both McDonald’s and KFC had apologized to their customers after Chinese regulators shut down a local meat supplier. There was a television report that showed workers at the factory picking up meat from the floor and mixing meat past its expiration date with fresh meat. Yum! said that they would cease business with the supplier. This is not the first safety scare that the company has faced. Back in 2012 the company had an issue in one of their largest markets, China. Benjamin Cavender, Shanghai-based principal at China Market Research Group, said, “I think this is going to be really challenging for both these firms. I don’t know that this is something an apology can fix so easily, because at this point people don’t have a whole lot of trust that they have good systems in place.”

Hasbro Inc. (HAS) shares were trading lower after the company announced an increase in sales. The second-largest toy marker in the U.S. said they had an 8.2% rise in quarterly sales that was partially attributed to a growing demand for action figure toys that are based on the action movie “Transformers.” There was also a jump of 17% in international sales, which helped boost Hasbro’s revenue. Sales of boys’ toys showed a gain of 32%, while sales of girls toys were up 10%. Revenue increased to $829.3 million, which was up from $766.32 million last year. Income for the quarter came in at $33.47 million, or 26 cents per share. This was down from the $36.48 million, or 28 cents per share from this time last year.

That’s all for today,

Warren Gates, Normandy Research

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