⚔️ 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%)
14,449 (-0.44%)
$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).


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 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.


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.

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.

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Snack Fact of the Day

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


  • August consumer spending

Authors of this Snacks own shares of: Disney

ID: 1858302