Jan 28, 2020
Coronavirus hits global markets — and some sectors get a double whammy Read More Spreading fast ... Coronavirus. The contagious respiratory illness is alarming the world and dragging down global markets. It first broke out in Wuhan, China, but has expanded far beyond the fish/meat/live animal market where it originated:
Over 2,700 people infected, with over 100 deaths
The virus has spread to 13 countries, with 5 cases confirmed in the US
Nearly 50M people are under quarantine in China — Travel restrictions are an attempt to contain the spread of the disease (as surgical masks are selling out across Asia)
Stocks take a hit... As fears of coronavirus intensify, US markets have been jolted out of the blissful serenity they've enjoyed since October. The Dow and the S&P 500 both fell Monday by 1.6% and the Nasdaq dropped 1.9%. Some sectors are feeling it more than others:
Travel-related companies (think United Airlines, Marriott hotels, and Carnival cruises) were hit hardest and all traded lower — oil prices have also fallen because of reduced travel demand.
Luxury fashion companies that rely heavily on Chinese buyers (like Burberry and LVMH also took a tumble — in 2018, Chinese consumers spent $115B on luxury goods
Nike and Estée Lauder dropped too, since both now get nearly 1/5 of their revenues from China
Some investors ditched stocks and bought into "safe haven" assets like gold and treasury billsThe Takeaway:The world's 2nd largest economy is China... No surprise that a viral outbreak there hurts global markets. Oh, and this is all happening during the Lunar New Year holiday, China's busiest travel season (3 billion trips were expected) — the holiday was just extended to keep stores closed, and US companies that do business in China are suffering as well (like Starbucks). FYI, 2002's SARS outbreak cost the global economy around $40B.
Dec 20, 2019
Air Jordan hit $1B... but Nike didn't dominate at home Read More 25 pts, 6 rebounds, 4 assists is great... but not Nike great (LeBron's laughing at you). That sums up Nike's 3rd quarter, which just got off the bench to share its stats. The results dropped shares 2% Thursday, knocking Nike slightly off its record high.
www.MVP.com: Online sales leapt 38% thanks to an insane 70% Black Friday surge in North America — that's even more impressive since Nike just stopped selling on Amazon (where it was listed among knockoffs).
Home-field disadvantage: But shares fell because North America makes up 39% of Nike's sales, yet it's growing about a third as fast (5% sales growth) as it is abroad (13%).
Achilles among the Myrmidons... That's Air Jordan. The brand is named/logo'd after the 6-time MVP-winner. Michael enjoys handsome royalty payments for each pair sold, but Air Jordan is still owned by Nike. Jordan just hit $1B in quarterly sales for the 1st time ever — it's now 10% of Nike's sales as it suits up legends at Universities of Michigan and Florida (Go Gators, Go Blue).The Takeaway:Mark leaves Nike in good shoes... Mark Parker, the longtime CEO, taps out in January. He's replaced by John Donahoe, whose biceps scream tech (ex-eBay CEO). Here's the funny thing: Nike's tech-powered online sales look better than ever. Direct-to-you Nike.com and Nike app sales crushed its physical stores. This new guy has big shoes to fill — shoes that doubled the stock since 2016.
Dec 12, 2019
Lululemon isn't expecting a peaceful holiday shopping season Read More 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.The Takeaway: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.
Nov 14, 2019
Nike breaks up with Amazon, deciding everything should happen at Nike.com Read More (Gasp). Wait. (Gasp)... Amazon doesn't take rejection well. But it just got dumped by Nike. It's ending the 2-year relationship and moving out because it doesn't want to sell its gear on Amazon.com anymore.
We smelled this ghosting before it happened... Nike CEO Mark Parker was replaced by eBay's former CEO last month — and he's already flexed his ecommerce muscles by going directly to consumers online instead of via Amazon. That move could lose the love of Prime members and their "ship 2-day-free or it's not me" policy. But here are 3 big benefits to owning your own online shopping:
You get customers' email addresses. Then you can pepper their inbox's promotions tab daily with reminders that you exist and sell things.
You don't get middlemen. Cut out the platforms that may take a cut of every sale of your goods on their sites.
You control the customer experience. Nike.com is a sleek, ripped website. Amazon.com isn't. Better looks leave customers happier and willing to pay higher prices.The Takeaway:The real winner here is Shopify... If you buy something online, there's a good chance it's powered by Amazon or Shopify. Shopify lets retailers control the front-end website, while it handles the back-end logistics. Nike may or may not become a Shopify customer — but if other big brands ditch Amazon, Shopify wins.
Shopify stock rose 2.9% Wednesday.
Amazon's fell 1.4%.
Aug 20, 2019
181 CEOs just renewed their vows with society Read More To love, honor... and generate profits at all costs forever. Since economist Milton Friedman first articulated it in the 70s, the purpose of corporations has been to maximize shareholder value — "profits." But now the Business Roundtable (a club of 181 big CEOs) wants to change that. Led by JPMorgan's Jamie Dimon, the group met up, probably ate well, and then recommitted itself.
Old vows (Since the 70s/80s): Ruthless capitalism
New vows (yesterday): Sustainable capitalism
Customers, employees, diversity, ethics, the environment... The Business Roundtable wants them all in a corporation's purpose — Apple, Amazon, and Bank of America's CEOs agree. We're already seeing major brands act on it: Think Nike's sponsorship of Colin Kaepernick through his social justice campaign, or Patagonia donating tax cut savings to environmental causes.The Takeaway:Capitalism is evolving for wokeness... It's created immense wealth, value, and innovation — it probably drove the motivation for whatever device you're reading this on. But a shocking less than 50% of Millennials believe capitalism is good. As young consumers reject Big Beer, Big Food, and Big Fashion, corporations are realizing the value in acting with principles. Now the Business Roundtable is building a framework around that.
Aug 14, 2019
New US tariffs on China get delayed... because of holiday shopping Read More iTariffs... President Trump announced them just 2 weeks ago. With everything else already tariff'd, the US planned to tax the remaining $300B worth of consumer products made in China starting September 1st — including the iPhone. Yesterday, he said nevermind: waiting until December 15th for most new tariffs so American shoppers can have a Merry Christmas.
Teachers hate procrastination... Markets don't. The tariffs were essentially a 10% tax that would hurt profits for companies manufacturing in China, while raising prices by 10% for everybody. Here's who wins with Tuesday's sudden flip:
Apple: Shares popped 4% because iPhones and MacBooks won't get 10% more expensive until after most holiday shopping is done. Made in China AirPods, the Watch, and HomePod still get hit on September 1st, though.
Mattel & Best Buy: The stocks rose 5% and 6% as Made in China action figures and speakers will remain tariff-free through the holidays.
Nike: Sneakers were also on the exemption list, so the swoosh jumped up 2%.The Takeaway:This sends a message to China... If the trade war has political or stock market costs, America might cave. Credibility is important in negotiations, and Trump's credibility takes a hit with this one.
Political cost: Since American buyers pay US tariffs, not Chinese exporters, this latest round would have grinched Christmas for American households.
Stock market cost: If tariffs caused poor holiday sales, stock markets likely would've suffered.
Aug 13, 2019
Nike unveils its 1st kids kicks subscription box: "4 pairs/year for $20/month" Read More If baby Jordan went back-to-school... he'd subscribe. A stealthy sneaker club startup called Easy Kicks has been delivering shoes to 10K member families. Turns out it was Nike all along. Easy Kicks just got rebranded as "Nike Adventure Club" for kids 2-10, and it's Nike's 1st-ever subscription service:
The tiers: 3 options — Get 4 pairs of sneakers per year for $20/month, 6 pairs for $30/month, or 12 pairs for $50/month.
The feel-good: Send back the kicks and Nike donates or recycles them.
The asterisk: Pediatricians say that's way too many shoes for even fast-growing kids.
Subscriptions — so hot right now... From Dollar Shave Club razors to Lola tampons, subscriptions guarantee recurring revenues for the biz and build brand loyalty (plus, customers don't have to shop/think anymore). Now, Kid-scriptions are gaining traction because they grow so fast (😭) they constantly need new stuff. Here's who else has boxes for size "24 months" up to "16 husky":
Walmart partnered up with kids' clothing startup Kidbox.
Foot Locker invested in Kidbox rival Rockets of Awesome.
Algorithm-powered fashion subscription Stitch Fix launched a kids version last year.The Takeaway:It's all about the upgrade... The biggest surprise for Nike was how offering different price tiers let users test it — and then commit. Intensely. Most began at the cheap $20/month option, craving more adorably small kicks. And then they paid up for the fancier tier ("just $10 more for 2 more pairs!"). Nike's pricing strategy was the real winner.
Jul 2, 2019
The Women's World Cup is handing Nike (multiple) records Read More Technically... Nike reported its earnings last week. Technically it missed analysts' expectations for the 1st time in 7 years. But we're more focused on CEO Mark Parker's call with investors after the earnings report. Just in time for today's USA vs. England World Cup match, he thinks 2019 is a "true tipping point" for women's sports.
Women are winning Nike... 14 of the 24 Women’s World Cup teams enjoy a Nike swoosh across the chest. And the combo of Nike spending big on this ad, covering almost 2/3 of the jerseys, and record TV ratings are doing it. These Nike stats just arrived:
The US Women's National Team jersey is the #1 selling soccer jersey — men's or women's — ever sold on Nike.com.
And enthusiasm for women's apparel has extended to bras — Parker announced Nike's now the biggest seller of bras across North America.The Takeaway:Nike vs. Lululemon... That's the biggest matchup worth watching right now. Both are focusing on the opposite genders in the same (non-US) places. It's a fight worth watching.
Lulu’s 5-year plan: Double men’s sales and quadruple international sales (especially in China) since the majority are sold to North American women.
Nike’s focus: Sell more to women and to China — 75% of its apparel sold is to men, and China is its fastest-growing market with nearly 20% of all sales.
