👖 Levi's loose quarter

Tuesday, July 13, 2021 by Robinhood Snacks | Disclosures
_Saying a final goodbye to the skinny jeans [Simon Winnall/The Image Bank via GettyImages]_

Saying a final goodbye to the skinny jeans [Simon Winnall/The Image Bank via GettyImages]

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Hey Snackers,

When you don't want to smile with your mouth, you smile with your eyes — aka: smize. Tyra Banks, the queen of smize-ing, has launched her own ice cream: Smize Cream.

Stocks rose to fresh records yesterday, as investors geared up for earnings season. Big Banks are kicking it off this week.

1. Levi’s big stretch: the jean icon is thriving on baggier fits and changed waistlines

RIP skinny jeans... When you realize that skinny jeans are no longer in fashion — a year too late. Levi sales plunged last year as we forgot what waistbands feel like (#legging-life). Last quarter, the company that invented blue jeans made a big comeback.

  • Earnings, unzipped: Levi's sales more than doubled from last year, and it swung to a $65M profit as you traded in yoga pants for "going out" fits.
  • Bring out the party pants: Levi's stock is up 46% this year as reopening drives "revenge spending" on non-stretchy clothing.

Mom jeans FTW... While the days of 24/7 sweats are behind us, consumers are now seeking sweatpansy qualities in going-out clothes. Call it a pandemic hangover: the quest for comfort has carried over to jeans. Levi's CEO said that baggier fits made up nearly half of both men’s and women’s sales last quarter, a major shift from two years ago. Case in point: "balloon pants" are sold out.

  • Trends change: Gen Z revived high-waisted, loose fits, which have become uniforms on TikTok. Now, Madewell is even releasing gateway styles to help hardcore skinnyjeaners transition, calling them: "training wheels for people coming out of skinny.”
  • Waistlines change: One in three US consumers have seen a change in their waistlines since the pandemic, according to Levi's CEO. And nearly 40% of people say they no longer fit in their clothes from last year. That calls for a wardrobe change.

The real opportunity isn't the trend... it's the spillover trend. The skinny jean era has passed, and we've entered a "New Denim Cycle." But the big opportunity isn't changing waistlines or styles — it's the spillover potential of those trends. First you change the cut of your jeans — then you change your tops, jackets, and shoes to match (boots don't pair well with a tapered ankle). The data confirms it: Nine in 10 shoppers plan to revamp their wardrobes. Apparel retailers could benefit.


Subway, refresh... Doesn't sound right. This week, Subway launched an “Eat Fresh Refresh” campaign to win customers back from fast-casual competitors like Chipotle. Subway once set the sandwich bar high by pioneering a healthy, customizable sammie menu. But sales have been slipping for years as consumer tastes shift. Enter, Refresh:

  • 20+ new ingredients, including new breads, smashed avocado, and fresh mozzarella
  • 1M free sandwiches across the country, to whet customers’ appetites
  • A fresh online ordering system with revamped in-app ordering and nationwide Doordash delivery

Biz strategies get stale, too… Subway's “healthy” fast food was out-innovated by competitors like Chipotle, that offered premium ingredients and convenient ordering in addition to customizable, "fresh" meals. The pandemic hit Subway hard, since it had few delivery and drive-through options for contactless orders. Meanwhile, competitors saw digital orders more than double over 2020. Subway has also struggled with:

  • Good fat > Low fat: Changing consumer preferences caused low-fat options like the Oven Roasted Chicken sammie to lose ground to low-carb and organic alternatives.
  • PR disasters: Including fake tuna (#funa) allegations and the sentencing of Subway spokesman Jared Fogle to 15 years in prison.

Innovation is always in season… and even huge, global chains like Subway lose business when they don’t pay attention to changing tastes. Subway relied on its early “Eat Fresh” success for years, even as its reputational lettuce wilted. Now, Subway is trying to win customers back with e-orders and avocados (good fat). But its competitors have already taken a big bite out of the fast-casual market.

What else we’re Snackin’
  • TikBlok: TikTok-owner ByteDance cancelled its IPO — and banned influencers from promoting crypto — as China’s tech and crypto crackdown continues.
  • Check: The Biden admin plans to send $300/month per child to most US parents as part of a temporary increase in the child tax credit.
  • Musky: Elon Musk defended his SolarCity deal in court. Plaintiffs allege he led Tesla to overpay for the home-solar company.
  • Awkward: After Richard Branson’s successful space trip, Virgin Galactic stock had its worst day in more than a year after the company said it could sell up to $500M shares.
  • Taxi: G20 leaders are moving forward with what would be the biggest overhaul of the international tax system in decades (meaning: higher taxes for big companies).
  • Jitters: Global coffee prices are soaring as Brazil faces one of its worst droughts in almost a century, leading to a plunge in java supply.
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  • Earnings expected from Chase, Goldman Sachs, and Pepsi

Authors of this Snacks own shares of: Tesla

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