Restoration Hardware goes ultra (analog) upscale

Thursday, June 13, 2019 by Robinhood Snacks |
_"Those are some nice armoires"_

"Those are some nice armoires"

Yesterday’s Market Moves
Dow Jones
26,005 (-0.17%)
S&P 500
2,880 (-0.20%)
Nasdaq
7,793 (-0.38%)
Bitcoin
$8,155 (+3.64%)
10-Yr US Treasury
2.120%

Hey Snackers,

"Salad Frosting." Now a thing. Kraft is renaming/repackaging its ranch dressing to trick kids to eat veggies with a white marketing lie.

Stocks inched down Wednesday ahead of two more IPOs arriving this week (Fiverr and Chewy).

Nesting

Relax into that upholstered sofa... and enjoy the 25% jump of Restoration Hardware shares after Wednesday's earnings (FYI, it goes by "RH" now). The fancy furniture brand jumped for 2 reasons: Sales rose 7% and it's moving some production out of China because, you know, trade war (investors were glad). But 1 detail in the report was the centerpiece.

Good news for your 3rd home's coffee table... RH just released its 136-page "RH Beach House" catalog ("RH Ski House" arrives this fall). Real and printed. Flip through the St. Barts and Mykonos chapters to gaze upon the naturally "teak" $1,000+ patio necessities. While the rest of retail errs on the side of online, RH does the opposite.

  • CEO Gary Friedman: We "refuse to follow the herd in self-promotion on social media.”
  • And it's working: RH invested $50M to build a multi-story Gallery flagship (brick and mortar) in NYC's Meatpacking district. Now it's on pace to generate $100M in annual revenue.
THE TAKEAWAY

This is the extremification of American retail... Income stratification in the US is increasingly reflected by what stores are succeeding — Stocks of Dollar General and luxury LVMH are close to record highs. Now Restoration Hardware is leaning into its opulent origins by aiming even higher upscale with Beach House and Ski House. And more RH Galleries hit SF and Charlotte, NC this year.

Stretch

Stretchy pants, stretchy earnings... Lululemon's stock rose 5% Wednesday on a report that sales jumped 20% last quarter compared to the year before. Here are the different asanas that contributed to that growth:

  • More sales: At existing stores (ones open a year or longer) sales rose by 6% on average.
  • More stores: A fresh 44 new Lulus ceremonially ohhhhhhhhhhm'd over the past 12 months.
  • More online: Online sales leapt 33% as #SweatLife members order stuff they can stretch, sweat, and sip apres cocktails in. A quarter of total sales are online now.

This is vintage Lulu... It constantly introduces new products, but last quarter was driven by its OG flagship goods — women's leggings and jogger pants. At $100+, they're more expensive than the competition, but the CEO has no plans to lower the price. He even boosted his expectations for profits for the rest of the year.

THE TAKEAWAY

Mo' men, mo' money... Lulu profits hit a record $97M last quarter driven by sales to women. But this past spring, the CEO released an aggressive 5-year plan with a bold goal: Double men's sales by 2023. He's also pushing the Lulu lifestyle with clothing-free deodorant and sneakers. Plus there's expansion to China and Europe. Operation power flow.

Protect

When the DNC was hacked by Russia pre-election 2016... CrowdStrike was there. The cybersecurity company that protects against hacks discovered the breach, told the FBI, and then snagged a lot of PR. Now it's earning attention for its IPO — Shares surged 71% in their first day of trading and CrowdStrike is worth almost $12B (aka 2/3 as much as Lyft).

Who ya gonna call?... Probably one of these companies. The attention on CrowdSource reveals how packed the competitive landscape is for securing your digital stuff (work and home):

  • Personal: LogMeIn owns LastPass, keeping your "!-2-3-4" passcode less obvious.
  • Home: ADT, Brinks, and Alarm.com are all on guard.
  • Business: Palo Alto Networks and FireEye are always at work (competing with CrowdStrike).
  • Side-hustlers: Their core biz isn't security, but Google's Nest covers your kitchen, while Amazon's Ring doorbell has the front porch.
THE TAKEAWAY

Bikes need bike helmets... As internet adoption grows, so does the data generated along with it — And each bit of data probably needs protecting. The rise of tech is driving the cybersecurity industry that guards it. CrowdStrike (and its 5X revenue growth since 2017 to $250M) is happily caught in that trend.

What else we’re Snackin’

  • Arriving: Uber's new drone delivery with a San Diego pilot program hits this summer
  • Playlisted: Spotify launches a new playlist called "Your Daily Drive" that's filled with news & music
  • Tandem: Bird (the standup scooter-sharing pioneer) officially acquires Scoot (the sit-down scooter-sharing pioneer)
  • Reveal: Google's new Pixel phone details were leaked — So Google responded with an official image of the thing
  • Situation: Facebook emails reveal Zuck may have known about "questionable privacy practices" before they blew up

Thursday

  • Gig economy platform Fiverr IPOs

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