Hey Snackers,
An Italian hospital employee allegedly skipped work for 15 years. And you thought a four-day work week was luxurious.
Stocks dropped yesterday on reports that President Biden is considering nearly doubling capital gains taxes on the wealthy to fund government spending (think: 40% taxes on investment gains).
All in the same cockpit... Major US airlines just dropped earnings, and we're sensing a trend: American, Delta, and United all reported $1B+ losses. But their outlooks were brighter on rebounding travel demand (thanks: vax rollout, spring break). While these airlines saw their 5th-straight quarterly losses, Southwest came in out of left airfield:
LUV being different... LUV is Southwest's ticker symbol — and its mood in 2021. The favorable wind boosting Southwest: its domestic and leisure focus. Business travel has been hammered by the WFH life, and some execs say it may never recover. International travel has been hammered as Covid lockdowns hit Europe, and many international borders remain closed.
Sometimes, less is more... Sure, Southwest doesn’t have the reach of bigger international airlines. Most of its eggs are in the US economy class basket, so it suffers when that basket suffers. But its risk exposure to other factors, like international travel, is limited. Now, other airlines are leaning more into domestic leisure travel, too: Delta, American, and United recently added dozens of domestic routes. Alaska added four new routes to tourist-friendly Montana destination (think: Yellowstone). We can expect these airlines to focus more on your Miami girls trip, less on your Dallas conference.
My Nesquik brings all the boys to the yard... Nestlé is the world's largest packaged food company, known for treats like Kit Kats, Hot Pockets, and basically anything that begins with "Nes." A year ago, Nestle reported its strongest quarterly sales growth since 2015, thanks to pandemic snacking and pet-mania (it owns Purina). Last quarter was even sweeter:
Does the Nespresso store do samples?... Nestlé's killer growth was fueled by the at-home coffee boom. Instead of hitting Starbs for a pre-office latte, you were firing up Nespresso pods or Nescafé in your jammies. Nespresso sales jumped a whopping 17% last quarter, as Nestlé won new customers in North America.
One habit is worth a lifetime... of customers. You buy Nestle's Kit Kats and Toll House cookie dough occasionally. But your daily coffee isn't just a product for Nestlé — it's the habit that keeps on giving. You splurge $200 for a Nespresso machine, then spend $30/month to refill pods. That's why Nestlé is making investments to own the coffee habit: it's expanding production centers in Switzerland, and intro'ing new flavors and products (think: touchless machines). TBD if the momentum will continue as coffee shops and offices reopen.
Authors of this Snacks own shares of: Delta and Snap
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