How to avoid tariffs like Keanu

Tuesday, September 3, 2019 by Robinhood Snacks | Disclosures

To dodge a tariff, channel your inner Neo

Last Week’s Market Moves
Dow Jones
26,403 (+3.02%)
S&P 500
2,926 (+2.77%)
7,962 (2.71%)
$10,396 (+3.98%)
10-Yr US Treasury

12:01am Sunday.

While you were not-reading-news mid-LDW, a fresh $110B of Made in China goods were hit with a 15% tariff tax by the US.

Today we're thinking of our Snackers in Hurricane Dorian's path as the 4-day week kicks off.

1. Who's up...

Therapy in aisle 6... Walmart's making it happen. The chain subtly updated its website last week to include hearing, vision, dentistry, and mental health services for $59-$99. The pilot stealthily starts on September 13th at one Georgia location as Walmart tests the concept. With 140M American visitors every week and 1.5M employees, it could actually democratize doctor access like it did tube socks.

"Peloton sells happiness."... The privately-held workout-tech unicorn stuck that in its IPO paperwork as it plans to go public. Peloton makes nearly 80% of its money from selling $2K bikes or $4K treadmills — the rest rolls in from $39 monthly video subscriptions to its streaming fitness classes. It lost $196M last year, but we were impressed by the loyalty of the 500K+ Pelotonistas: Only 0.65% of customers end their subscription each month.


Spend money to make money... Citigroup raised its minimum wage in the US to $15/hour. It's not doing it for smiles — with an ultra-competitive market for workers, it's upping paychecks to keep tellers from ditching for Bank of America (which pays $20/hour). We also learned that Panera Bread has 100% worker turnover — if it hired 100 sandwich-crafters, it'll lose 100 by the end of the year. Promotions cost money. Losing a worker costs more.

Your new farm-raised almond butter routine... is killing your childhood peanut butter go-to. Smucker's sales dropped 6% as grocery stores are stuck cutting peanut butter prices. The 122-year-old master of jelly, Jif, and UnCrustables (picture a PB&J dumpling) claims grocers face 2 problems: price pressure from Walmart/Amazon and taste buds preferring alt-nuts over peanuts.


2 dollar store companies, 30K American locations... Stocks of dollar chains are living their best lives. Dollar General's CEO put it best: "The economy is continuing to create more of our core customer. " While rising American inequality's been great for his business, the trade war hasn't. Then last week happened:

Red pill or blue pill?... Imports from China made dollar stores possible. But Trump's latest tariffs (a 15% tax on $110B of Chinese goods) just kicked in Sunday. That left dollar store managers with 2 options: raise prices by 15% (make customers pay) or don't raise prices (pay the tariffs themselves). But they twisted into 3 way more creative options:

  1. Find the same products made in other countries: If your Solo cups are made in China, find Solo cups made in Vietnam.
  2. Find just-as-good products (aka "substitutes"): Paper cups should do just fine. Source ones crafted in the US instead.
  3. Make someone else pay them (aka "negotiate"): Try to get the Chinese Solo cup company to reduce prices by 15%.

Dollar stores get a "10" for dodge-ability... Those 3 tricks above didn't completely offset trade war pain, but Wall Street is pumped that they're adjusting well. Other retailers aren't as nimble. Picture shoe, apparel, and electronics companies — you can't just up and move a Nike, Ralph Lauren, or GoPro factory. And Abercrombie can't start stocking American Eagle henleys to avoid tariffs (the teens will notice).

What else we’re Snackin’
  • Work: 6 things that'll turn your manager into your fiercest advocate
  • Life: Personal branding for people who hate personal branding (you've got 4 options)
  • Money: How much a cheeseburger currently costs in every state
  • Venture: The 17 biggest mistakes you're making with your pitch deck
  • Crypto: Understanding cryptocurrencies — we break it down
Snacks Daily Podcast
  • To survive the retail-pocalypse, stores are trying to be like malls (not a typo) — we dive into Walmart's "everything" strategy
  • Spacious is "WeWork for empty restaurant spaces" — and pre-IPO WeWork just acquired it
This Week
  • Monday: Markets closed for Labor Day
  • Tuesday: British courts decide whether the UK's parliament can be suspended while they try to figure out a Brexit deal in 3 weeks
  • Wednesday: The first earnings report from Slack since its direct listing
  • Thursday: Earnings from Lululemon, DocuSign, and Zoom
  • Friday: The big August jobs report

Disclosure: Authors of this Snacks own shares of Lululemon and Amazon


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