đź›’ Thrive, Survive, or Dive

Friday, May 22, 2020 by Snacks
_Public Storage: the horror movie_

Public Storage: the horror movie

Yesterday’s Market Moves
Dow Jones
24,474 (-0.41%)
S&P 500
2,949 (-0.78%)
Nasdaq
9,285 (-0.97%)
Bitcoin
$9,027 (-5.27%)
10-Yr US Treasury
0.676%

Hey Snackers,

Netflix is doing so well that it's now actively trying to reduce its own subscription revenue. If it doesn't hear back from customers who haven't streamed anything in a year or more, it's going to cancel their subscriptions. Netflix: always doing the most.

Markets took a slight dip on depressing unemployment data — 2.4M Americans filed for unemployment last week, bringing total corona-conomy claims to an eye-popping 38M. Rising trade tensions with China also didn't help.

Survive

1. The Retail Thrivers, Survivors, and Divers of the corona-conomy

The Sorting Hat has spoken... We knew the Retail-pocalypse was accelerating during the corona-conomy. Now, we've got more stats to confirm just how much — and results are more varied than you'd expect. Some retailers have thrived, some have survived, and many have taken a big old dive. Let's start with the Divers:

  • L Brand sales plunged 37% — now the Victoria's Secret owner is closing 250 Vicky stores.
  • Macy's sales took a 45% nosedive — the big-box retailer expects a $1B loss. Its buddy Kohl’s suffered a similar fate with a 41% sales drop.
  • TJ Maxx, which was winning with its "affordable splurge" biz just a few months ago, saw sales drop 52% (and suffered an $877M loss).
  • And Neiman Marcus, J.Crew, JCPenney, and Pier 1 have all hopped on the bankruptcy train.

Onto the essential Thrivers... E-savvy — and most importantly, essential — retailers like Walmart, Costco, Amazon (and even Lowe’s) have enjoyed skyrocketing sales and decreased competition from shuttered non-essential retailers.

  • Non-essential Thrivers: Despite closed stores, Lululemon made it into the Thrivers club with its online-ready biz and versatile work-leisure wear.
  • Non-essential Survivors: Best Buy sales fell only 6% and it managed to snag a profit (thanks to curbside pickup and in-demand home tech/appliances).
THE TAKEAWAY

There's no "one-size-fits-all"... But non-essential big-box department stores are feeling the most pain — especially those that weren't exactly thriving before (looking at you, Macy's and JCPenney). Retail apparel sales for the year are down a whopping 52%. Non-essential retailers like Lulu had WFH-friendly products and e-savvy biz models to prop them up — the unlucky rest didn't.

Close

2. Ford just reopened its factories — and it just had to "re-close" two of them

When the party gets shut down before 9 pm... Detroit's Big Three automakers — Ford, GM, and Chrysler — all reopened plants Monday. Update: it's not going well for Ford.

  • Monday: Ford's American assembly plants reopen for production (with health precautions like temp checks and only half of worker capacity).
  • Tuesday: Two employees at Ford's Chicago plant test positive for COVID-19 — the plant is shut down.
  • Also Tuesday: An employee at Ford's F-150-cranking plant in Dearborn, Michigan tests positive for COVID-19 — spoiler: the plant is shut down.

What would Lear do?... Lear is the "iconic" car seat maker that, early on, issued a 51-page "Safe Work Playbook" for resuming production. In true Lear fashion...

  • Ford shuttered the two factories for 24 hours for a little DCD: "deep cleaning and disinfection."
  • It also asked anyone who had been in close contact with infected employees to self-quarantine for two weeks. If you think this "start-stop model" isn't sustainable, that's because...
THE TAKEAWAY

This "start-stop" model isn't sustainable... Shutting down a factory of thousands each time a person tests positive for COVID-19 is not viable long-term. The infected Michigan employees were working a mile away from the main plant — but because parts from their building were brought to the main assembly line, the whole complex had to be shut. As long as COVID-19 is around (or at least until we have a vaccine), this will continue to be an issue.

Store

3. MakeSpace raises $55M to make storage fun: The Return of the Non-Gig Startups

Even storage can be sexy... with $55M in fresh venture funding packed in. When you think of storage, you probably picture massive orange Public Storage facilities on the side of I-95 that inspire horror-thriller movie plots. MakeSpace wants to be the fun, non-horror version of that — and it just packed up an extra $55M in funding:

  • Unlike OG storage companies, MakeSpace doesn't want you ever to visit its units — its slogan is literally: "Never visit a self-storage unit again!" Niiice.
  • Order in-app: MakeSpace pick ups, stores, and delivers your valuables (or clutter). You don't have to rent a U-Haul or lug anything (MakeSpace really wants you to know: it's not Public Storage).
  • The catch: To keep costs low, units are located in inconvenient places with lower rent — you can't pop by 24/7 to pick up your golf clubs (you get them delivered).

The storage industry shouldn't be popping... Home sales dropped 18% in April, so you'd think there'd be less moving/storing happening. But MakeSpace's sales have grown 30% more than expected because it's actually the opposite:

  • People are moving back to their childhood homes in droves: New leasing in Manhattan and Brooklyn plunged 70% in April.
  • Corona-Spring cleaning: More time at home means more time to clear out and store all that clutter that's been piling up for the past ten years.
THE TAKEAWAY

The return of the non-gig startups... A VC-funded storage startup might be inclined to call itself the "Uber for Storage." But MakeSpace employs only full-timers — this no-contractor biz model is becoming increasingly rare in the startup world. This out-of-the-box thinking in a gigi-fied world could be a selling point — Gig icons like Postmates and Lyft struggle with new gig economy laws, tension with workers, and bad PR.

What else we’re Snackin’

  • WFH: Zuck predicts 50% of Facebook employees could be working remotely within 5-10 years — but they might have comp lowered based on location.
  • Deals: Amazon pushes its deal-apalooza Prime Day (which, ironically, lasts two days) to the fall.
  • Potty: Canadian pot producer Aurora Cannabis acquires American CBD company Reliva in a $40M all-stock purchase to go south of the northern border.
  • Pickup: Car dealerships are struggling with a pickup truck shortage (the people want Chrysler's Dodge Rams) — demand is hot, supply is not.

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Friday

Disclosure: Authors of this Snacks own shares of Amazon, Lululemon, and Alibaba

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