Thursday Dec.12, 2019

Lululemon wants you to be its 'guest'

_Guys are getting into Lulu (but still working on Warrior 3)_
_Guys are getting into Lulu (but still working on Warrior 3)_

Hey Snackers,

Is USPS Ground shipping Aunt Anna's rando stocking stuffer? The deadline is tomorrow. We got your holiday shopping/shipping deadlines right here.

Markets barely budged up Wednesday — Britons head to the polls today to elect a new government and figure out how to Brexit (or not).

Sweat

Lululemon isn't expecting a peaceful holiday shopping season

Feel free to go back to child's pose anytime... Investors aggressively dropped shares of Lululemon after Wednesday's earnings report — they're blaming the future, not the peaceful past:

  • The 3rd quarter: Sales rose 17% at existing stores, and 23% overall because it added 53 new Lulus over the past year. All that, plus its profits, beat expectations.
  • This quarter, aka this holiday season: Lulu gave investors a heads-up that it's expecting fewer sales than they do: $1.3B.
  • The unhelpful clarification: The CEO blamed a late Thanksgiving, awkwardly reminding us that there are 6 fewer holiday shopping days this year than last.

Return to the top of your mats... where Lululemon's stock was enjoying a record high earlier this week. The brunch-worthy athleisure industry is fiercely competitive, but sizing up Lulu to Nike has begun (investment bank Cowen compares Lulu's growth to Nike's) — and since Nike is currently 5x as valuable as Lulu, shareholders appreciate the aspirational side-by-side.

Here's the secret to becoming the next Nike... Be a lifestyle brand. Lulu patented "Luon" and "Luxtreme," the technical fabrics that make yoga pants stretchy and sweat-proof. Now it's focusing on some serious lifestyle moves to differentiate itself:

  • Stores with built-in yoga studios (like this 20K-square-foot giant in Chicago).
  • Personal care products from deoderant to shampoo for post-shavasana shower routines.
  • More focus on including guys, whose sales jumped 38% last quarter.
  • And it calls its customers "guests" — seriously, CTLR + F this earnings report to prove it.
Gassy

Saudi Arabia’s profit puppy (finally) goes public: Saudi Aramco

More 200-pound Great Dane than puppy... If oil is king, then Saudi Aramco is the king of oil — and the most valuable company to IPO, ever. It went public Wednesday on Saudi Arabia's stock exchange (not the NYSE or Nasdaq) and shares jumped 10% on Day #1 of trading. Let's peep the key numbers:

  • $1.9T: That's Trillion with a "T." It's Saudi Aramco's record-breaking valuation after that surge in its stock price (Apple, the most valuable US company, enjoys a $1.2T valuation).
  • 1.5%: The tiny-ish percentage of Aramco shares that were actually publicly listed — the Saudi government is keeping the other 98.5% (at least for now).
  • $111B: Aramco's profit last year, making it the most profitable company in the world, by far.

Keeping it gassy (at a low-cost)... Saudi Aramco squeezes so much profit out of every oil barrel because the cost of producing each one is relatively small. It's not just the oil reserve real estate Saudi Arabia sits on — it also extracts the fossil fuel at a super low cost.

  • As of 2016, the UK has to drop $44 to produce a single barrel of oil.
  • The US shells out $23 per barrel.
  • Saudi Arabia spends less than $9. That's less than a Sweetgreen salad. And today oil is selling for $58 per barrel (that's some thick profit margin).

Aramco is a unique combo of risks and rewards... Saudi oil is close to home — they don't have to dig deep into the earth as the US does, or go to ocean depths like the UK. But this natural competitive advantage doesn't mean there's no risk... The world's pivot to sustainable energy could speed up, depriving Aramco of oil sales sooner than expected. Or political instability could mess with its largest shareholder: The Saudi government. Bigger isn't perfect.

What else we’re Snackin’

  • Meta: Brex, a startup that provides credit cards to startups, just earned some financial street cred by snagging a $200M credit line from Credit Suisse
  • Syrupy: IHOP whips up its own fast casual chain (pancake bowls included)
  • GameDrop: GameStop stock tanks after (another) quarterly loss as gamers are waiting for the next gen of consoles to hit shelves
  • Couple Goals: Walgreens and Kroger will start buying products in bulk together to reduce costs (next, Walgreens will start leaving a toothbrush at Kroger's)
  • Ditched: Facebook and Google dropped out of their long-held place on Glassdoor's annual "10 best places to work" list

Thursday

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

ID: 1035008

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Walt Hickey
14h

When the chips are down

Super Micro Computer, which produces the kind of servers fueling the AI boom, declined to pre-announce earnings. This spooked investors and rattled the entire chips-producing sector. That sent Super Micro plunging 23%, and dragged down lots of their customers and suppliers down with it.

Markets
Bottom lines
18h
April 19: AmEx up, paint ain’t, banks sank
2024-04-19-norway-fund-site

Norway now has a wealth fund worth $290k+ for every citizen of the country

William Coulman, David Crowther20h
Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
Wind energy

More wind power capacity was installed last year than ever before

Tom Jones, David Crowther20h
World
Jack Raines
21h

Do you want to run the State Department of McDonald’s?

A couple of days ago, a tweet making fun at McDonald’s hiring a “Manager for Diplomatic Relations” went viral.

At first glance, the idea that McDonald’s, a burger franchise known for its double quarter pounders and perfectly salted fries, is expanding its diplomatic influence with policy makers in Foggy Bottom and the world at large sounds comical. But it’s actually crucial.

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

Read more

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

Read more
Tom Jones, David Crowther
21h
The data doesn’t lie: Taylor Swift is the biggest pop star on the planet

TOPSHOT-CORRECTION / AUSTRALIA-ENTERTAINMENT-MUSIC-SWIFT
Matt Phillips
21h

Nuke stocks up on AI excitement

For most of humanity, the thought of “nuclear-powered AI” sends a shiver down the spine. But the stock market is all for it! Just check out the list of top performing S&P 500 stocks this year. Just behind established AI plays — Super Micro Computer and Nvidia, you’ll find Constellation Energy, the largest operator of nuclear plants in the U.S. NRG Energy, which also operates nuclear plants, isn’t far behind. Bloomberg reports that CEO of power distributor Exelon — which spun off Constellation in 2022 — says in the Chicago area alone, AI could drive a 900% jump in demand for energy from data centers.

Tech
Rani Molla
22h

China makes Apple remove WhatsApp, Threads, Signal and Telegram from app store

In its latest move to restrict foreign tech, Beijing has ordered Apple to remove a number of popular messaging apps from its app store there, including WhatsApp, Threads, Signal and Telegram.

These apps had only been available through VPNs but were popular nonetheless, according to the Wall Street Journal.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Exclusive | China Orders Apple to Remove Popular Messaging Apps

Exclusive | China Orders Apple to Remove Popular Messaging Apps

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Business
Rani Molla
22h

Tesla's recall reveals just how bad Cybertruck delivery numbers have been

Thanks to a recall of Tesla’s Cybertrucks, we now know how many of them have actually been delivered: 3,878 since the EV company began releasing them to customers in November.

In its third and fourth quarter earnings report, Tesla said that its current Cybertruck production capacity was greater than 125,000 a year. Musk had previously said he expected to produce 250,000 Cybertrucks a year by 2025.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Tesla recalls the Cybertruck for faulty accelerator pedals that can get stuck

Tesla recalls the Cybertruck for faulty accelerator pedals that can get stuck | TechCrunch

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Markets
Millie Giles & David Crowther
23h

Cocoa hits $11,000

Cocoa prices are breaking records on an almost daily basis — with cocoa futures closing at (another) all-time high of $11,020 per metric ton yesterday.

That’s up 158% since the start of the year, and over 4x on the typical prices seen in 2022 — as crop production continues to fall short of demand.

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices

Why the World of Chocolate Is in Crisis

Why the World of Chocolate Is in Crisis

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices
4/19/24

Governments and companies tackle the climate crisis as damage intensifies

Jack Morse
Read
4/19/24

Extreme weather has cost the US $2.6T, and the number keeps rising

Max Knoblauch
Read
4/19/24

The cost of waste: e-junk and emerging tech add to America’s pollution prob

Nia Warfield
Read
4/19/24

The biz of electric vehicles: the EV transition hits speed bumps

Jamie Wilde
Read
Jack Morse
$10B blow
4/19/24
Bitcoin business will lose billions in the halving

Investors and miners have spent months prepping for the crypto-shattering event lying in bitcoin’s code. It’s finally arrived.

Silhouette of a bitcoin miner pulling a bitcoin logo from a hole
World
Friday, April 19th
4/19/24
What’s happening
Casey Newton
Platformer
4/18/24
Meta’s new AI paves the way for social networks where nothing is what it seems

Five ways of thinking about Llama 3, its latest large language model

Screenshot of Meta’s AI image generator, frog in a bathrobe
Power
Matt Phillips
4/18/24

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing a US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, it means that Uncle Sam loses more than 2 cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢

Pop Quiz!

What’s the world’s busiest airport?
Don't be a sucka
Business
Rani Molla
4/18/24

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.