"In the pharmacy services segment, fourth quarter revenues of 39.3 billion increased by 8.2% year over year, driven by increased pharmacy claims volume, growth in specialty pharmacy, and brand inflation, partially offset by the impact of continued client price improvements"
AGM:
Management fees increased 14% year-over-year, which included more than 20% growth in our credit real assets businesses and transaction fees were up 19% year-over-year, while fee-related expenses grew 19%, reflecting our comp and non-comp-driven investment for growth.
Tyson Foods:
We're also making sure that our pricing incorporates inflationary cost pressures on our business. In the quarter, our cost of goods sold was up 18% relative to the same period last year. We are seeing higher costs across our supply chain, including higher input costs, such as feed and ingredients.
We're also managing the higher cost of labor, transportation due to strong demand and limited availability. With these higher costs, we work closely with our customers to achieve a fair value for our products. As a result, our average sales price for the quarter increased 19.6% relative to the same period last year. This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.
...
This performance was broad-based across segments where continued strong consumer demand and effective pricing to mitigate the impact of inflation drove higher earnings.
"The bottom line is that our underlying margin remains healthy, and we believe we still have pricing power to use as needed if inflation continues to rise going forward. "
Chipotle never struck me as a company that had amassed some kind of concentration to have huge pricing power over its market. Could it be that maybe consumers have changed their demand pricing preferences, and Chipotle is just responding?
Perhaps. But this is explicitly stating Chipotle has pricing power to increase prices even beyond their marginal costs. This is indicative of at least some kind of market power.
Sure.. definitely there's power there, but is this because of a too concentrated market or anti-competitive behavior? If I create a cool product that suddenly catches fire and allows me to increase prices beyond marginal cost.. what's wrong with that?
"Q1 consolidated operating margin contracted 30 basis points from the prior year to 15.1% due primarily to significant investments in store partner wages and benefits, as well as inflation, partially offset by sales leverage and pricing in North America"
...
"Our average ticket remained elevated even as group ordering continues to normalize, driven by pricing, record-breaking food attach, which had its seventh consecutive quarter at an all-time high and strong holiday performance."
Fedex:
"Thank you, Raj. Good afternoon, everyone. Q2 delivered our second consecutive quarter of 14% revenue growth, demonstrating the strong demand for our differentiated portfolio and our ability to drive revenue quality as a result. Constrained capacity has continued to support a favorable pricing environment. We are maintaining a brisk pace for repricing contracts, ensuring a high surcharge capture and yield improvements."
....
"Export demand in Europe and APAC has fully recovered to pre-pandemic levels and capacity on international lanes remains scarce. We anticipate a continued favorable pricing environment and an embargo on our deferred services out of Asia Pacific for the foreseeable future."
...
"Just want to kind of just double-click on the pricing environment in the back half. Yes, the comps are aggressive, but we still believe that there is upside from a revenue quality perspective. We're expecting a higher than normal capture of our general rate increase."
"Gross margin performance in the quarter was better than planned as high demand and lean inventory in the marketplace resulted in a highly favorable full-price selling environment. The combination of net sales growth, gross margin expansion, and SG&A leverage fueled an 18.7% operating margin in the quarter.
This was the highest fourth quarter operating margin performance since 2004. We exited the year with cash and short-term investments of $895 million and no bank borrowings. Our profitable growth trajectory and fortress balance sheet have given our board of directors the confidence to approve a 15% increase to our quarterly cash dividend. For the year, we generated 25% net sales growth, expanded operating margin by 890 basis points, and delivered 229% earnings-per-share growth compared to 2020.
...
Our 2022 gross margin outlook of 50% represents the second-highest gross margin performance in our company's history just behind our record 2021 performance...
...
As we look at renewing our ocean freight contracts, we expect some degree of normalization in the latter part of '22. Frankly, those as we look out further into '23 and beyond, we do believe that certain of the product costs, inflationary pressures that we've seen that they're transitory in nature.
You'd see that in the case of certain of the commodity and raw materials, those fluctuate from time to time and that they're at elevated levels currently. And as ocean freight goes down or normalizes more over time, we've taken advantage of the strength of our brands, the pricing power that we have. And that should -- as those events occur, that should put us in a stronger place from an overall gross margin and operating margin perspective."
...
I mean consumer trends, the full-price selling environment we've been in has continued. So we're continuing to see good healthy margins in the DTC space with not much in the way of promo and markdowns.
Boston Beer Company (from last fall): Analyst asks "what gives you guys the confidence that you have that kind of pricing power" to raise prices 3-6% next year given a decelerating market and potential "shakeout" in the industry. CFO says that the price increases are driven by inflation and observes that so far no one in the industry is cutting prices to capture market share.
But inflation is international and America exports so little, so the companies that are using their market power must also be foreign, no? How much have prices from China Inc, Japan Inc, Korea Inc, and Taiwan Inc increased?
And here I was thinking that here across the pond, where workers have traditionally had relatively strong rights, have been laid off en masse thus enabling the profits, but perhaps I was wrong.
It may be strange to the American reader but in several countries it has been very hard to get rid of employees who turn up and follow the rules but don't necessarily produce a lot of value. With a pandemic, anything goes, it seems.
Two other points: I am seeing a real pricing push on small subcontractors from the major players, e.g. forestry firms are making a killing with high lumber prices, curiously those running a man-and-machine woodcutting business are not seeing rate increases, on the contrary, while operating costs run up. Same with farming. Finally with record high energy prices a tipping point is being reached.
Last but not least. I see a lot less effort from companies into activities like quality, safety, even preventive maintenance too. It seems like everything not directly generating profit was massively scaled back at the start of the pandemic and then normal service just never resumed.
I can tell you, making a week long audit via Teams with 10 experts sitting at home sure costs a lot less than shipping 10 experts to a foreign country for a week. The downside is, you are not getting nearly the same effectiveness, and after all auditing is a sampling based approach. Also, the intervals are pushed to the maximum and everything seems postponed.
On more heavily affected travel industry you will find another example, as at airlines flights are resuming but people nearly starve as catering is severely cut back on.
Actually, a place where both saving on customer service and laying off people is definitely on cruise lines. A relative worked the same terminal since 1985. Finally he was let go along with every salaried employee, sans the managers. The replacement was a skeleton crew of poorly paid employees with varying amount of competence and bad terms of employment. Too bad that captains absolutely need to know every person that goes on their ship, and already there have been cases where ticketed passengers are refused entry due to some discrepancies in passenger manifests.
Probably the ship operator is making more money due to spending less, but the level of service is much worse and even unpredictable for the consumer. I guess this sums up what I am trying to say about the costs aspect of record profits. Thanks for reading.
"It may be strange to the American reader but in several countries it has been very hard to get rid of employees who turn up and follow the rules but don't necessarily produce a lot of value. With a pandemic, anything goes, it seems."
No, we understand it very well: we have many government jobs.
CVS:
"In the pharmacy services segment, fourth quarter revenues of 39.3 billion increased by 8.2% year over year, driven by increased pharmacy claims volume, growth in specialty pharmacy, and brand inflation, partially offset by the impact of continued client price improvements"
AGM:
Management fees increased 14% year-over-year, which included more than 20% growth in our credit real assets businesses and transaction fees were up 19% year-over-year, while fee-related expenses grew 19%, reflecting our comp and non-comp-driven investment for growth.
Tyson Foods:
We're also making sure that our pricing incorporates inflationary cost pressures on our business. In the quarter, our cost of goods sold was up 18% relative to the same period last year. We are seeing higher costs across our supply chain, including higher input costs, such as feed and ingredients.
We're also managing the higher cost of labor, transportation due to strong demand and limited availability. With these higher costs, we work closely with our customers to achieve a fair value for our products. As a result, our average sales price for the quarter increased 19.6% relative to the same period last year. This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.
...
This performance was broad-based across segments where continued strong consumer demand and effective pricing to mitigate the impact of inflation drove higher earnings.
Chipotle:
"The bottom line is that our underlying margin remains healthy, and we believe we still have pricing power to use as needed if inflation continues to rise going forward. "
Chipotle never struck me as a company that had amassed some kind of concentration to have huge pricing power over its market. Could it be that maybe consumers have changed their demand pricing preferences, and Chipotle is just responding?
Perhaps. But this is explicitly stating Chipotle has pricing power to increase prices even beyond their marginal costs. This is indicative of at least some kind of market power.
Sure.. definitely there's power there, but is this because of a too concentrated market or anti-competitive behavior? If I create a cool product that suddenly catches fire and allows me to increase prices beyond marginal cost.. what's wrong with that?
Starbucks:
"Q1 consolidated operating margin contracted 30 basis points from the prior year to 15.1% due primarily to significant investments in store partner wages and benefits, as well as inflation, partially offset by sales leverage and pricing in North America"
...
"Our average ticket remained elevated even as group ordering continues to normalize, driven by pricing, record-breaking food attach, which had its seventh consecutive quarter at an all-time high and strong holiday performance."
Fedex:
"Thank you, Raj. Good afternoon, everyone. Q2 delivered our second consecutive quarter of 14% revenue growth, demonstrating the strong demand for our differentiated portfolio and our ability to drive revenue quality as a result. Constrained capacity has continued to support a favorable pricing environment. We are maintaining a brisk pace for repricing contracts, ensuring a high surcharge capture and yield improvements."
....
"Export demand in Europe and APAC has fully recovered to pre-pandemic levels and capacity on international lanes remains scarce. We anticipate a continued favorable pricing environment and an embargo on our deferred services out of Asia Pacific for the foreseeable future."
...
"Just want to kind of just double-click on the pricing environment in the back half. Yes, the comps are aggressive, but we still believe that there is upside from a revenue quality perspective. We're expecting a higher than normal capture of our general rate increase."
Columbia Sportswear, Feb 3, 2022:
"Gross margin performance in the quarter was better than planned as high demand and lean inventory in the marketplace resulted in a highly favorable full-price selling environment. The combination of net sales growth, gross margin expansion, and SG&A leverage fueled an 18.7% operating margin in the quarter.
This was the highest fourth quarter operating margin performance since 2004. We exited the year with cash and short-term investments of $895 million and no bank borrowings. Our profitable growth trajectory and fortress balance sheet have given our board of directors the confidence to approve a 15% increase to our quarterly cash dividend. For the year, we generated 25% net sales growth, expanded operating margin by 890 basis points, and delivered 229% earnings-per-share growth compared to 2020.
...
Our 2022 gross margin outlook of 50% represents the second-highest gross margin performance in our company's history just behind our record 2021 performance...
...
As we look at renewing our ocean freight contracts, we expect some degree of normalization in the latter part of '22. Frankly, those as we look out further into '23 and beyond, we do believe that certain of the product costs, inflationary pressures that we've seen that they're transitory in nature.
You'd see that in the case of certain of the commodity and raw materials, those fluctuate from time to time and that they're at elevated levels currently. And as ocean freight goes down or normalizes more over time, we've taken advantage of the strength of our brands, the pricing power that we have. And that should -- as those events occur, that should put us in a stronger place from an overall gross margin and operating margin perspective."
...
I mean consumer trends, the full-price selling environment we've been in has continued. So we're continuing to see good healthy margins in the DTC space with not much in the way of promo and markdowns.
https://www.fool.com/earnings/call-transcripts/2022/02/03/columbia-sportswear-colm-q4-2021-earnings-call-tra/
Boston Beer Company (from last fall): Analyst asks "what gives you guys the confidence that you have that kind of pricing power" to raise prices 3-6% next year given a decelerating market and potential "shakeout" in the industry. CFO says that the price increases are driven by inflation and observes that so far no one in the industry is cutting prices to capture market share.
But then the CEO adds "if there is a shakeout does occur in hard seltzer, fewer brands actually would support higher -- would support the ability to take more price." https://www.fool.com/earnings/call-transcripts/2021/10/21/the-boston-beer-company-inc-sam-q3-2021-earnings-c/
But inflation is international and America exports so little, so the companies that are using their market power must also be foreign, no? How much have prices from China Inc, Japan Inc, Korea Inc, and Taiwan Inc increased?
And here I was thinking that here across the pond, where workers have traditionally had relatively strong rights, have been laid off en masse thus enabling the profits, but perhaps I was wrong.
It may be strange to the American reader but in several countries it has been very hard to get rid of employees who turn up and follow the rules but don't necessarily produce a lot of value. With a pandemic, anything goes, it seems.
Two other points: I am seeing a real pricing push on small subcontractors from the major players, e.g. forestry firms are making a killing with high lumber prices, curiously those running a man-and-machine woodcutting business are not seeing rate increases, on the contrary, while operating costs run up. Same with farming. Finally with record high energy prices a tipping point is being reached.
Last but not least. I see a lot less effort from companies into activities like quality, safety, even preventive maintenance too. It seems like everything not directly generating profit was massively scaled back at the start of the pandemic and then normal service just never resumed.
I can tell you, making a week long audit via Teams with 10 experts sitting at home sure costs a lot less than shipping 10 experts to a foreign country for a week. The downside is, you are not getting nearly the same effectiveness, and after all auditing is a sampling based approach. Also, the intervals are pushed to the maximum and everything seems postponed.
On more heavily affected travel industry you will find another example, as at airlines flights are resuming but people nearly starve as catering is severely cut back on.
Actually, a place where both saving on customer service and laying off people is definitely on cruise lines. A relative worked the same terminal since 1985. Finally he was let go along with every salaried employee, sans the managers. The replacement was a skeleton crew of poorly paid employees with varying amount of competence and bad terms of employment. Too bad that captains absolutely need to know every person that goes on their ship, and already there have been cases where ticketed passengers are refused entry due to some discrepancies in passenger manifests.
Probably the ship operator is making more money due to spending less, but the level of service is much worse and even unpredictable for the consumer. I guess this sums up what I am trying to say about the costs aspect of record profits. Thanks for reading.
"It may be strange to the American reader but in several countries it has been very hard to get rid of employees who turn up and follow the rules but don't necessarily produce a lot of value. With a pandemic, anything goes, it seems."
No, we understand it very well: we have many government jobs.