⚔️ Disney’s Star Wars

Friday, October 1, 2021 by Robinhood Snacks | Disclosures
_Room service has arrived [EyeEm via GettyImages]_

Room service has arrived EyeEm via GettyImages

Yesterday’s Market Moves
Dow Jones
33,844 (-1.59%)
S&P 500
4,308 (-1.19%)
Nasdaq
14,449 (-0.44%)
Bitcoin
$43,692 (5.23%)

Hey Snackers,

While you’re visiting grandma in Jupiter, Florida, NASA’s new spacecraft will visit eight asteroids around Jupiter’s atmosphere — 4X more than any in history.

Stocks dropped again to close out September, notching their worst monthly performance since March 2020. Investors have been stressing over inflation, global supply-chain crunches, and rising Delta cases. On the plus side: Congress narrowly avoided a government shutdown (for now).

Washington

1. Dollar Tree ditches the dollar standard — and paves the way for higher profits

Three Dollar Store… just doesn’t have the same ring to it. Discount legend Dollar Tree announced plans to start selling more items for $1.25, and even $3.50 (gasp). Driving the price jumps: a triple whammy of inflation, a global supply crunch, and the ongoing labor shortage. Despite the sudden shift from its signature price point, Dollar Tree shares jumped 16% yesterday after its announcement.

The namesake barrier... has been broken before. Since 2019, Dollar Tree has experimented with $3 and even $5 items in a section labeled “Dollar Tree Plus” (not a streaming service). Last year rival Dollar General launched Popshelf, a store aimed at higher-end shoppers like suburban moms who still love a good deal (prices up to $5). For Dollar Tree, price bumps have been hugely successful so far. And investors smell profit...

  • Profits are 6% higher at “premium” Dollar Tree Plus stores than at regular Dollar Trees. DT expects to have 500 Plus stores by fiscal year’s end — and 5K by 2024.
  • $5 products such as “Grandma’s Heirloom Pillow” and “decorative topiary” appeal to higher-income customers, who are more willing to splurge.
  • Ditching the dollar standard allows Dollar Tree to expand into pricier — and potentially more profitable — new categories. Think frozen meats and seasonal decorative goods (#HallowLantern).
THE TAKEAWAY

The price is right — if the time is right… Some companies can justify price hikes thanks to coveted brands or cutting-edge tech. Since DT doesn’t have either of those, timing is key. Right now, consumers appear to be less sensitive to price hikes: Consumer prices jumped 5.3% year over year in August and have risen at record rates for five straight months. And despite a 5X increase in freight costs, Dollar Tree’s profits have grown since 2019. Once costs and inflation levels stabilize, Dollar Tree may be in a position to get even more bang for its buck.

Yoda

The Tourist Strikes Back… So does Mickey. After a desolate pandemic stretch, Disney is opening an immersive “Star Wars”-themed hotel to win back customers’ hearts. It'll open in March at the Disney World Resort in Orlando. Fans of the intergalactic franchise can opt into a two-night choose-your-own-adventure stay aboard the Halcyon Starcruiser (featuring lightsaber training and model ship building). The package includes tickets to the Hollywood Studios park and three meals a day (#lightsavor).

Experiences are back-ish... Disney’s "Parks, Experiences, and Products" division, which includes resorts and cruises, lost a record $2B during the pandemic. Meanwhile, Disney+ saw impressive growth. Last quarter, Disney’s Experiences biz turned a profit for the first time in over a year. But not all experiences are created equal...

  • Sad carnival: Disney’s cruise fleet has been stalled as Covid resurges, and Carnival's Princess Cruise line canceled a number of its voyages. The cruise industry is now worth just $24B, down from $154B prepandemic.
  • Parks intensify: Disney’s park-pass reservation system has allowed it to maximize attendance under Covid restrictions. Last quarter, Disney's Parks and Experiences division pulled in $4.3B in sales, up 4X from the previous quarter.
THE TAKEAWAY

Safe thrills > cheap thrills… To attract customers after the height of the pandemic, companies need to offer supercharged experiences — with safety precautions. Airbnb has expanded to unique stays like yurts, houseboats, and caves to lure adventure-hungry remote workers. Disney’s new Wish cruise line will feature Broadway-style musicals and an infinity pool, and Celebrity Cruises debuted a 3D laser show for dinner guests. But all have implemented Covid safety measures, like contactless check-in, proof of vaccination, or facial-recognition tech to make their thrills safe.

What else we’re Snackin’

  • Stress: Congress passed a short-term funding bill just hours before a deadline that would’ve started the first government shutdown since 2019.
  • Nuggets: Chicken giant Tyson said 91% of its employees are vaxxed, after implementing a vax mandate that covers all 120K of its US workers
  • Accelerate: Pharma giant Merck signed a $11.5B deal to buy drug developer Acceleron and its portfolio of rare-disease treatments.
  • Oregano: Shares of spice classic McCormick dropped 3% after it warned that inflation and pricey packaging costs will lower profits for the rest of the year.
  • Blimey: UK-based food-delivery company Deliveroo partnered with British grocery chain Morrison’s to transport treats in as little as 10 minutes.
  • Play: IKEA partnered with Asus sub-brand Republic of Gamers to roll out a line of furniture for gamers, including desks, chairs, and COD-friendly neck pillows.

Snacks Daily Podcast

“Happy Fri-Ye never felt so good.”

Gap just dropped $90 hoodies in partnership with Kanye’s Yeezy brand. And they’re already sold out.

Tune in to hear why designer collabs are premium profit puppies.

Apple podcast button
Google podcast button
Spotify podcast button

Snack Fact of the Day

Both the Dow and the S&P 500 just posted their worst September since 2011

Friday

  • August consumer spending

Authors of this Snacks own shares of: Disney

ID: 1858302