🛍 TJ Maxx's "Revenge Spending"

Wednesday, June 24, 2020 by Robinhood Snacks | Disclosures

"Don't bother me while I'm Revenge Spending"

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Hey Snackers,

Best company name of 2020: DoNotPay. The robot lawyer startup just raised $12M to robo-cancel your unused gym membership, get an airline refund, and appeal your parking ticket. And of course, to help you DoNotPay. So unsubtle that it's borderline subtle.

Markets continued to inch up Tuesday, and the Nasdaq hit an all-time high thanks to the big tech stocks it's comprised of. Apple stock hit a record high after the company showed off new features at its developer conference. More on that below.

1. TJ Maxx is the unexpected rebel of the corona-conomy, laughing in the face of ecommerce

Biggest fashion rebel of 2020... TJ Maxx. Discount retail giant TJX is the company behind the "affordable splurge" trifecta: TJ Maxx, Marshalls, and Homegoods. Now, it's also the unexpected rebel of the corona-conomy:

  • "Nothing will change:" Not a phrase you hear in an economy-pummeling pandemic. TJX's CEO said it won't leverage ecommerce to boost sales. It'll continue to do absolutely nothing to ramp up its tiny online shopping operation that's currently only 2% of sales.
  • But TJX takes it to another extreme: It fully shut down its websites during lockdowns, making online ordering impossible. Now it's actively limiting the items available on its site.
  • TLDR: TJX laughs in the face of online shopping, and wipes ecommerce tears away with a $6 Free People shirt.

The magnetic pull of the "treasure hunt"... TJX is confident in the joy its customers derive from the "treasure hunting" experience. Finding a $27 Michael Kors bag under a shoe rack is not only fun, but also something to brag about. TJX knows this can only be achieved at its physical stores.

  • TJX's only focus: Drawing shoppers back to its 4.5K brick-and-mortar stores. Since 98% of its sales are in-store (and those stores were closed), TJX took an $887M loss last quarter — But now a majority of its stores have reopened.
  • It's working: Sales at reopened stores are actually higher than they were a year ago, as deal-starved shoppers flood back into TJX. Call it it "revenge spending" — when you've been cooped up so long that you need to make up for all the shopping you didn't do.

Ecommerce isn't always the solution... Online shopping operations can be expensive to implement and maintain. Shipping and returns make it hard to turn a profit on heavily discounted goods. And brands like Ralph Lauren don't want you to see their items selling for $12 online. Plus, ecommerce reduces the number of shoppers at stores. Since TJX thrives on the in-person shopping experience, it's one of the rare companies that can sidestep ecommerce.


Sounds like a pro wrestling match... WWDC 2020 is Apple's annual developers conference, where it shows off its latest software goodies. App developers eagerly await the week in June, crossing out days on their iCals. Apple says there are now over 1 Trillion ways to customize your identity with Memoji. But there's only one way to hold a massive event during a pandemic: online.

iSpy some changes... Meet the new iPhone operating system: iOS 14. Some of our Snacks highlights:

  • Defaults: You can now set a default mail app (hello Gmail) and a default browser (goodbye Safari).
  • Home screen fun: The "App Library" automatically organizes apps into sensical folders. You can also drag big widgets (like a Weather page or Calendar day) and pin them on your screen for real-time updates.
  • Picture-in-Picture: Keep watching Apple TV or Facetiming while scrolling — the video keeps playing in the corner of the screen while you multitask. Only works for Apple apps, for now (no Netflix/YouTube).
  • App Clips: Tiny apps that have specific functions, for when you need to do something like pay a bill or rent a scooter (but don't want to download the actual app).
  • Slack’ified group messaging: You can now reply inline (in a thread) and mention people in group messages. Also, you can choose to only be notified when you're @'d.
  • Digital car keys: Unlock and start your car via iPhone. You can also share keys with others through iMessage (and deactivate whenever). The 1st car to support this will be the 2021 BMW 5-series.

The "new new" hype is crucial... to Apple's sales growth. It obviously doesn’t want us holding onto our Macs for 5+ years. Apple had to pay a $500M fine over a lawsuit that alleged it was purposely slowing down older iPhones to make you buy a new one. But these annual shows are a positive way for Apple to stoke enthusiasm over its latest products. The novelty factor is key. TBD if Apple can come up with cool new features indefinitely.


When the FIFA match goes better than expected... Electronic Arts is the video game company behind FIFA, Madden, NBA Live, and 2000s legend The Sims (unforgettable).

  • Back in May, EA said sales for its corona-conomy quarter (April-June) would only rise 1%.
  • Yesterday, at a cozy "fireside chat for the investor community," EA revealed that it was way off. First quarter results are likely to be much better than expected.

The stock also rises... EA stock ticked up after it leveled up its forecast. Some game publishers were expecting 2020 to be a down year, since upcoming new gaming consoles haven't been released yet.

  • Turns out, 2020 was a big one for video game creators. Gaming companies like EA, Activision Blizzard, and Nintendo have rallied to multiyear highs on lockdown boredom. With live sports canceled, you've turned to EA Sports' games for entertainment.

Content is king... in media. That goes extra for video games right now. We've seen media snatch up content/IP: Netflix is on a media buying spree (including signing GoT's writers) and Spotify struck deals with Joe Rogan, Kim Kardashian, and Batman. EA bought the rights to make games featuring major sports teams like the NFL, NHL, and NBA. Its pipeline of new content for games will be key to continued growth.

What else we’re Snackin’
  • Slick: Square gets some heat for reportedly holding onto 30% of some small business customers' payments.
  • Craft: Etsy stock hits a record high — it has tripled over the past three months thanks to fabric mask sales.
  • Work: President Trump temporarily suspends H1-B Visas for highly skilled workers (like software engineers) seeking employment in the US.
  • Board: American Airlines plans to raise (another) $3.5B in new financing as the corona slump keeps it strapped for cash.
  • Personal: Microsoft's Teams pivots to individual consumers, launching a personal version meant for friends/family.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Snacks Daily Podcast

There are two things from Apple’s Worldwide Developers Conference you should care about. And they both aim to fix one flaw in Club Apple: The applications (not the apps).

Tune into our extra digestible pod for entry into Club Apple.


Disclosure: Authors of this Snacks own shares of Apple, Spotify, and Square

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