🛒 Thrive, Survive, or Dive

Friday, May 22, 2020 by Robinhood Snacks | Disclosures

Public Storage: the horror movie

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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.

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).

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.


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...

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.


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

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