![A man wearing a Ukrainian flag ribbon at the Mobile World Congress in Barcelona on Tuesday [AFP via Getty]](https://cdn.robinhood.com/static_content/mwphzyq69oso/en-US/assets/files/7KQX4BXQfkSMDFrGQS95mD_1_GettyImages-1238848955.jpg)
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Wednesday Mar.02, 2022
💼 Russia’s corporate exodus
A man wearing a Ukrainian flag ribbon at the Mobile World Congress in Barcelona on Tuesday [AFP via Getty]
Hey Snackers,
Russia has targeted civilian areas in Ukraine to demoralize the country’s resistance, after President Putin’s invasion slowed. Russian forces launched rockets into a central square of Ukraine’s second-largest city, killing at least 10 people.
Stocks continued to fall, while gold and bitcoin gained. Oil jumped, too, topping $100/barrel again on concerns of supply cuts from Russia. The US and other world powers will tap into national reserves in a push to ease prices.
Squeeze
From BP to Disney, Western companies are flexing “soft power” by cutting ties with Russia
Corporate exodus… A growing list of Western companies are responding to the war in Ukraine, from offering gestures of goodwill to cutting business ties with Russia. Yesterday, Visa and MasterCard blocked Russian banks from using their payment systems, to comply with US sanctions that restrict domestic companies from doing biz with certain Russian firms. But not every retaliatory move has been about sanctions:
- Giving shelter: Airbnb is offering free housing for up to 100K Ukrainian refugees with the help of volunteer hosts in neighboring countries. Meanwhile, Elon Musk shipped SpaceX Starlink satellites to help keep Ukraine's internet online.
- Sending a message: Disney, Paramount, and Warner Bros. agreed to immediately halt movie releases in Russia (no “Batman” premiere this weekend in Moscow). On the tech front, Microsoft pulled Kremlin-backed news outlets from its app store, while Google and Meta blocked Russia’s state-media outlets from monetizing on their platforms.
- Cutting bait: BP dumped a near 20% stake in its Russia-related energy biz, while Shell ditched its Russian oil ventures, including its stake in the Nord Stream 2 pipeline. Uber’s looking to sell its remaining $800M stake in Russian ride-hailer Yandex, and Apple has stopped selling all its products in Russia.
Corporate resistance can take time to unfold… Corporate boards worldwide are calculating the risk vs. reward of doing biz in or with Russia. While many companies want to pressure Putin to stop the war, ditching operations in a major country isn’t always easy — and could also hurt share prices. That could be partly why some US companies with high exposure in Russia haven’t acted yet. A tragic consequence: some corporate actions are hurting innocent Eastern Europeans now.
Untied
Nike tries to luxe-ify its brand by selling less at Foot Locker and more directly to consumer
Just don’t do it… Retailers like Foot Locker need brands like Nike. But brands don’t always share the love. Foot Locker shares have fallen nearly 30% since last Thursday. That’s when the sneaker retailer said it expected sales to slip this year as top vendor Nike sells fewer shoes in its stores. The sneaker giant says it won’t fully abandon Foot Locker, but will reduce inventory to ensure scarcity and sell more top kicks directly to buyers.
- Big shoes to fill: Foot Locker expects Nike sales to make up 60% of total sales this year, down from 70% last year and 75% in 2020.
- To make up for lost Nike $$, Foot Locker plans to stock more Adidas, Puma, New Balance, and Crocs.
Kicked to the curb… Nike makes twice as much profit selling shoes directly as it does wholesale, so it’s not surprising that it’s focusing less on retailers. By investing in its own stores and apps, Nike has more than doubled its D2C sales since 2011, to 35% last year. At the same time, Nike has been unlacing retailer relationships:
- Nike stopped selling its shoes on Amazon in 2019 to push customers to its sites, and ended partnerships with DSW, Zappos, Dillard’s, and Urban Outfitters.
- Other shoe giants like Under Armour and Adidas have also ditched retailers to boost D2C sales. But Allbirds, a smaller shoe biz that started out D2C, is investing in wholesale to tap new customers.
Markdowns scuff brand image… Nike’s D2C push is all about control. If Nike can control its supply, it can control its brand image — and if Nike can elevate its brand image, it can sell shoes for higher prices. But Nike can pitch Jordans as luxury items only if they’re not available in Foot Locker’s clearance bin. As the Swoosh moves up market, it could expand past partnerships with luxe brands like LVMH, whose profits are soaring despite inflation.
What else we’re Snackin’
- Olig-arks: As the West starts freezing assets, megayachts owned by Russian billionaires are on the move toward Montenegro and the Maldives, where they could be harder to seize.
- Pivot: Peabody Energy, the US’s largest coal producer, is getting on the renewable train, forming a joint venture to generate solar energy on land near decommissioned coal mines.
- Forceful: It must’ve been McConaughey’s Super Bowl ad: Salesforce shares jumped 4% after-hours yesterday on record 2021 sales. Last year Salesforce bought Slack to boost its hybrid-work tools.
- Superapp: Uber launched an “explore” tab that lets users book concert tickets, dinner rezzies, and other “experiences,” as the company expands its services beyond ride-hailing.
- Strikeout: MLB canceled Opening Day after the players’ union and owners failed to agree on a contract by yesterday’s deadline, putting baseball — and the $10B it generates each season — on hold.
Wednesday
- Earnings expected from: Snowflake, Dollar Tree, Okta, Splunk, Trip.com, Victoria's Secret, ChargePoint, American Eagle Outfitters, Abercrombie & Fitch, and Zuora
Authors of this Snacks own: Bitcoin and shares of Amazon, Microsoft, Google, Disney, Uber and Apple
ID: 2060999
