Hey Snackers,
The latest venture to take a hit from the coronavirus outbreak: No Time to Die, the (unfortunately-named) new James Bond movie.
Markets fell sharply after Wednesday's relief rally — the VIX (aka Wall Street's "fear gauge") spiked almost 25% on stock sell-offs.
Not living up to the name... Carnival. The cruise operator's slogan is "fun for all, all for fun" — its customers are far from feeling it. A 71-year-old man just died after sailing on Carnival's Grand Princess cruise, on which he was "likely exposed" to coronavirus. Now the ship is being held off the coast of SF, with 100 people identified for testing. This is Carnival's 3rd debacle in 3 months:
Carnival enthusiastically dominates the cruise world... In 2018, Carnival took home 50% of sales in the entire cruise market. Since January, shares of the 3 big operators — Carnival, Royal Caribbean, and Norwegian — have plummeted 30% to multiyear lows. Still... Excluding the coronavirus outbreak, Americans' cruise-thusiasm has been strong: Carnival's sales have risen 7% each year since 2015.
Major players in successful industries have resources to weather storms... Carnival's dominance might protect it long term from temporary (but major) setbacks. Today's coronavirus impact reminds us of the travel industry's struggle post-9/11. But industry-shaking issues like coronavirus could be bigger tests for smaller players with fewer resources:
Golden egg in the Eagle's nest... American Eagle enjoyed expectations-beating quarterly growth thanks to its teen-centric Aerie brand. Aerie is known for comfy basics from hoodies to bralettes (aka, loungewear). Now it has become American Eagle's golden growth egg. Fun fact: "aerie" means "the nest of an eagle...built in a high place" (we thought it related to breathable fabric). Then we jumped into American Eagle's numbers more...
Aerie snuggled into sweet product/market fit... Its products satisfy a strong and growing market demand: Aerie's ad campaigns promote body-positivity, authenticity, and inclusivity, featuring non-supermodels (like scientist/CEO Keiana Cavé). This branding strategy — backed by in-depth studies/research on young women's preferences — has paid off:
Filling the Victoria's Secret vacuum... VS' sales have fallen because its brand of airbrushed models and extra-padded bras lost touch with customers (VS was recently sold off by its parent company). But the AerieREAL Role Models campaign features unretouched pics of female athletes, activists, and entrepreneurs, boosting sales significantly. The same shift in tastes that led to VS' sale/loss also led to Aerie's growth, positioning Aerie to take what Vicky missed.
Disclosure: Authors of this Snacks own shares of Carnival Cruises
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