Wednesday Apr.10, 2019

Skinny jeans. Big Levi's profits.

"_Behold... Denim!_"
"_Behold... Denim!_"

Hey Snackers,

Denim underwear. Now a thing. Fits snuggly with Levi’s biggest day since last month’s IPO.

Wall Street's 8-day win streak ended on word President Trump's considering new tariffs on $11B of European cheese, wine, and planes.

Wear

Levi's tries on its first post-IPO earnings report

No shrinkage... In its first earnings report since its March IPO, Levi's sales and profits rose 11% and 81%. That's 11x81 in jean-speak. The stock's now up 25% since its first day of trading. Even better, the CEO doesn't think you should wash your jeans. Maybe ever.

Ripped. Not intentionally... Because of two market trends, denim sales globally have only risen 3.5% per year over the past decade — Not very fast, considering the rest of the economy's grown faster.

  1. Athleisure's surged 7% per year as consumers rethink boot-cut skinny-crops for jog-worthy yoga pants — In 2017, US imports of stretchy knit options beat denim for the 1st time ever.
  2. Online shopping now makes up over a quarter of all apparel sales. But unlike jeggings, jeans need to fit just right, best tried-on pre-purchase. That's a challenge online.

Stretch jeans to everywhere... That's Levi's strategy. It's leaning into its 166-year-old brand's global recognition to win jean sales away from other denim denizens. The real growth story is international, and it IPO'd to focus on that. So far, it's working — Here's where that happened last quarter (adjusted for foreign currencies):

  1. Americas: Sales up 10% to $717M
  2. Europe: Up 10% to $465M
  3. Asia: Up 14% to $253M — China + India is where Levi thinks there's huge potential for growth
Surprise

JetBlue jumps on new London flight leaks

Pulling a Meghan Markle... Shares of JetBlue popped in after-hours trading on speculation it could go transatlantic for its 1st time with a new London flight. Word leaked to CNBC that JetBlue's holding an "all-hands" meeting this afternoon from New York's JFK airport, with "viewing parties" from other hubs. The details look cheeky:

  • A save-the-date email announcing the April 10th event featured a London ~~subway~~ underground style design.
  • Buttons with Big Ben and the London Eye were sent to JetBlue offices to be handed out during the "event."

The royal treatment... JetBlue's channeling it. The airline's focused on its profitable business class-ish segment — Mint. It has flat-lying seats, fancy sliding-door suites, and meals that don't come in wrappers. Since 2013, Mint's focused on long East Coast <> West Coast flights (for now).

  • JetBlue's President: "When we think about transatlantic, we do think we can disrupt largely around a Mint-like product."
  • Then she goes on about the transatlantic haul: "It suffers from the same lack of competition and high fares that transcontinental routes in the US saw before JetBlue introduced Mint." That's convenient.

JetBlue's innovating a whole new category... "Upgraded Low-Cost." The airline industry's divided between low-cost and high-cost carriers — 75% of transatlantic flights last year were high-cost airlines like Delta or British Airways. But among the 25% that are low-cost, JetBlue's Mint option would fly above. London's calling.

Payday

Bank of America leads with $20 minimum wage

Inspired by Captain America... The North Carolina based bank is jacking up its minimum wage to $17/hour on May 1st, rising to $20/hour by 2021. Boom. Compared to the too-low minimum wage of $7.25/hour nationwide, we're impressed. Bank of America shareholders weren't, because higher pay could affect profits.

The economy needs this... Americans in the bottom 60% of the wage scale haven't enjoyed a real income raise since 1980. Pay promotions have happened, but barely covered the increased cost of living. But record low unemployment of 3.8% is changing things:

  • Since available workers are so scarce, they've got serious leverage in pay conversations with their bosses.
  • So Bank of America is paying workers (a lot) more because they could probably go somewhere else.

Treat tellers right... With digital-based banks sprouting up, Bank of America's building 500 more physical branches to remind customers that it's physically there for them. Branches need human tellers. This pay raise ups morale for "tens of thousands" at BoA — And happier tellers charm customers.

What else we’re Snackin’

  • Headline: Onion-owner Gizmodo (also publishes Deadspin and Lifehacker) was just bought by a private equity firm
  • Positive: Standard & Poors is rolling out a new version of its S&P 500 index, but focused on "socially-minded" companies
  • Starring: Netflix is in talks to buy LA's famous Egyptian Theatre on Hollywood Boulevard
  • Punished: Standard Chartered Bank fined $1.1B for violating US sanctions on Syria, Cuba, Iran, Sudan, and Myanmar
  • Grounded: Boeing revealed it received zero 737 Max orders last month

Wednesday

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Kering Warns Profit to Tumble Following Gucci Woes in China

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