Thursday Feb.27, 2020

🛍 TJ Max beats retail-apocalyse

_When you hit TJ Maxx, Marshalls, and Home Goods all in the same day_
_When you hit TJ Maxx, Marshalls, and Home Goods all in the same day_

Hey Snackers,

The GIF vs. JIF debate is finally over: peanut butter legend Jif is releasing a GIF peanut butter with a hefty serving of "HARD g pronunciation." In case it wasn't clear enough, it's labeled as "animated looping images." Hats off to marketing.

Stock indexes continued their dip as the White House started discussing coronavirus defense measures at home.

Shop

TJ Maxx crushes sales by offering America "affordable splurge" vibes

Coming in hot off the rack... Discount retail giant TJX is the company behind TJ Maxx, Marshalls, and Homegoods (the "treat-yo-self-without-going-broke" trifecta). It reported expectations-shattering sales growth, sending its stock up 7% to a record high. We'll discount the details for you:

  • TJX: Quarterly same-store sales popped 6% from last year with $985M in profit. TJX has opened ~1,100 stores over the past 5 years and its market value is a whopping (and surprising) $77B (that's 7 Lyfts) — for reference, Macy's is $4B. On that note...
  • Retail peers didn't fare as well: Burlington's sales (you know, the Coat Factory) grew a measly 0.6% last quarter while Macy's dipped 0.5%. Meanwhile, JCPenney hasn't posted a gain since 2017, and last month announced it was closing 6 more stores. Oh, and JCP's stock costs less than $1.

It's beating the retail-apocalypse... With brick-and-mortar retail stores closing all over, TJX stands apart from the rest. Part of its success is in creating the "treasure hunt shopping experience" — nothing beats finding a $40 Michael Kors purse in a heap of sweaters.

TJX is all about embracing the "affordable splurge"... The bargain-reputation is TJX's bread and butter — it's not trying to hide its love of price-slashing. TJX's CEO: "What once, maybe, wasn't as cool to give a T.J. Maxx or Marshalls bag has now become very cool." Okay, very cool might be an overstatement, but... you get it. As economic inequality rises, Americans are turning to TJX for brand names, at a discount.

Ride

Pony gets $400M from Toyota to develop self-driving cars

If you want it, let's do it... Pony.ai is a self-driving car startup that claims to be based in both Silicon Valley and Guangzhou, China — and it just got a $400M investment from the world's largest car maker, Toyota. Now Pony's riding high at a $3B valuation. Pony has been testing the robotaxi life since 2018, and is now one of China's leading self-driving car companies (along with Baidu and WeRide). Pony and Toyota's AI love story:

  • Pony has been testing robotaxis since 2018 and first partnered with Toyota in 2019.
  • $400M later, Pony's relationship with Toyota is closer than ever — they're going to be co-developing their autonomous tech.

Toyota has been kinda secretive... about its self-driving car projects — but its investment in Pony suggests things are getting serious. FYI, it's not an exclusive relationship: in 2018 and 2019, Toyota poured around $1B into a similar project with Uber. Toyota's status quo is Priuses, Corollas, and Camrys — so it needs other companies' AI tech to future-proof its vehicles. Because...

Getting ahead of the curve is key... Self-driving cars could be the future, and no company wants to miss out on the future — especially the world's most profitable car company. Instead of wasting time trying to develop its own robocar tech, Toyota (and several other carmakers) are investing big in existing startups:

  • Ford: Invested $1B in self-driving tech startup Argo AI and acquired mobile robotics company Quantum Signal.
  • GM: Purchased Cruise Automation for over $1B back in 2016, and it's reportedly worth over $19B now, with Honda and Softbank as co-investors.

What else we’re Snackin’

  • Sobering: Liquor legend Diageo believes it could make $258M less profit this year because of Coronavirus' havoc on its Asian business
  • Cheesier: Chipotle started a buzz with carne asada — now it's introducing a fancy new 13-ingredient queso: "Queso Blanco"
  • Bye-er: Bayer's chairman will step down in the middle of the Roundup herbicide legal fiasco — the company's got thousands of ongoing lawsuits after its disastrous Monsanto acquisition
  • Grounded: Delta temporarily cuts flight to South Korea as coronavirus cases in the country rise over 1,260
  • Lift: Fitness startup Tempo raised $17M to be the Peloton of barbells — you won't need a spotter, but the screen will run you $2K

Thursday

Disclosure: Authors of this Snacks own shares of Lululemon and Beyond Meat

ID: 1102648

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Markets
Worse than expected
6h
Ugly numbers, but Tesla shares bounce
Elon Musk
Rebecca Moretti, Rani Molla
7h
Just the start

Banning
TikTok

What it means for the rest of the market

Business
Jack Raines
9h

The FTC vs. Big Handbag

The Federal Trade Commission has sued to block big tech, big grocery, big vacuum, and now, big… “affordable luxury handbag.”

Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

FTC Moves to Block Tapestry’s Acquisition of Capri

FTC Moves to Block Tapestry’s Acquisition of Capri

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
Matt Phillips
11h

Tesla had a good ride, but the stock’s price destruction is historic

Few people have created as much value as Elon Musk. The iconoclastic entrepreneur took Tesla from a market capitalization of roughly $2 billion at the time of its IPO in 2010 to $1.2 trillion in early 2023. That’s a return of about 55,000%. Musk made a lot of people a lot of money.

On the other hand, Tesla shares are down nearly 60% since their all-time peak. The company has ceded ground in EVs, prompting a series of profit crushing price cuts to preserve market share. The cumulative loss in market value over that period is pushing $800 billion. Few corporate executives have presided over such a degree of value destruction.

And it could get worse, as people are bracing for an ugly update when Tesla reports after the close Tuesday.

Jack Raines
Opinion
14h
Starbucks could use a CIO

Customers give Starbucks billions of dollars in prepaid credits each year. Should the coffee chain be investing it?

Starbucks American Coffee Chain Cafe In Amsterdam
Tech
Rani Molla
14h

Smaller AI models are in

Tech companies that have long touted the enormity of their AI models are now saying size doesn’t always matter.

Microsoft is the latest tech company to introduce smaller AI models, as part of its Phi-3 tech family. Last week Meta released two smaller models of its AI Llama 3 and earlier this year Alphabet did the same. All are open sourcing these models to encourage wider adoption.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Business
wake up!
15h
Morning earnings report
$127

The average bitcoin-transaction fee hit an all-time high of $127 on Friday.

The temporary spike came as the halving cut miner rewards and traders forked over huge sums of BTC (skewing the average) to be included in the first post-halving block.

Adding fuel to the fee fire was the launch of Runes, a new protocol that lets developers create memecoins on top of the bitcoin blockchain. The debut was so popular that fees popped as traders fought for limited block space.

19h

Amazon adds shoppable live TV to Prime Video, as more Americans buy while they binge

Nia Warfield
Read

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

19h

Warehouse whale Prologis cuts its outlook as retailers embrace “just in time” storage

Max Knoblauch
Read
Business
Reporting soon
4/22/24
Ahead of tech earnings
Sic transit gloria mundi
4/22/24

Chants & chill

Sophia Smith Galer
One Nun Praying Near Group of Nuns
Jack Raines
4/22/24
Nvidia had the 2nd-largest stock decline, ever

Where does Nvidia's recent plunge rank in the steepest stock crashes?

US-TECHNOLOGY-AI-HUANG
2024-04-22-1-america-importing-less-from-china

The US now buys more goods from Mexico than from China

Chinese imports are down as companies begin to "nearshore" in Mexico

Tom Jones, David Crowther4/22/24
2024-04-22-paramount-global-site

Multiple bidders want to buy Paramount Global’s sprawling media assets

William Coulman, David Crowther4/22/24
Junk

How much of the world’s plastic is recycled? Only a fraction

Landfills still account for the majority of plastic disposal

Millie Giles, David Crowther4/22/24
Markets
Matt Phillips
4/22/24

Stock market gains for 2024 cut by more than half

All of the sudden, the stock market seems to be running out of steam.

There’s no big mystery here. War in the Mideast has pushed up oil prices, which will help keep inflation elevated. And annoyingly high price increases in March have already pushed the June Fed rate cuts the market was banking on farther into the uncertain future.

All that’s added up to higher interest rates and lower stock prices.

Tech
Rani Molla
4/22/24

AI needs so much electricity that tech companies are getting into the energy business

To accommodate tech companies’ pivots to artificial intelligence, tech companies are increasingly investing in ways to power AI’s immense electricity needs.

Most recently, OpenAI CEO Sam Altman invested in Exowatt, a company using solar power to feed data centers, according to the Wall Street Journal.

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Super Bowl Winning Team Head Coach and MVP Press Conference

Private equity is eating sports

Private equity firms may soon own your favorite football franchise.

Jack Raines4/22/24
Karma

The front page evolves

ByRyanBroderick

MonApr 222024