The Best One Yet - 🤑 “$1.75B (and Quibi hasn’t even launched yet)” — Spindrift’s $70M seltzer water. Burlington Coat Factory’s anti-ecommerce. Quibi’s starting lineup.

Episode Date: March 9, 2020

Burlington Coat Factory is going against the trend in retail: it’s ending its ecommerce to focus on physical stores. Mobile video streaming pre-icon Quibi has now raised $1.75B — and you can’t even use it yet. And LaCroix-fighting Spindrift just snagged another $29.8M — it’s differentiator is real fruit.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks Daily. It is Monday. Welcome back, March 9th. Everybody, last week was another wild week. Stocks ended slightly up after the worst week since 2009. We're still recovering from daylight savings.

Despite that, we've managed to make this one way better than Friday's pot. This is the best one yet. Our first story is Burlington Coat Factory. Yeah. They have a fresh take on online sales. It's ending online sales. Not Burlington, Vermont, not Burlington Mass. Not online Burlington either.

No, it's not. Our second story is Spindrift. This is the anti-Lacroy sparkling water. They just raised a fresh $30 million. Jack, pop the popplemuse flavor already. I'll tell you now, this tiny company has huge competition. They're based just outside of Boston, kind of like everyone from Boston. Snackers, seriously, they write on their website were based just outside of Boston.

Third and final story check, what do we got? Quibi just raised another $750 million. carry the one, add the four, multiply by six, and you get $1.75 billion this company has raised. Here's the crazy thing. Quibi hasn't even launched yet. We're looking at the Netflix for phones and where it stands one month before it goes live. But Snackers, before we get to all that, happy day after International Women's Day. This is post-International Women's Day. Technically, it was yesterday when we were recording the podcast. Yes.

For today. Nick and I recorded the podcast on Sunday during International. Women's Day, so we're going to give it some respect today on this podcast Monday morning. Now, it's technically celebrating the women's right to vote, which didn't happen until 1917 in Russia. Right. It actually happened in 1918, in Germany. And then it didn't happen in the United States until 1922 years later. We are huge fans of the 19th Amendment, which is when women got the right to vote in the United States. But we noticed some injustice still today taking place with International Women's Day. That's because the day this year happened to fall on daylight savings, which means technically we lost an hour of International Women's Day.

What the heck? International Women's Day was only 23 hours. That's why we're giving it a little bit of time in today's podcast just to make up a little bit for that. Snackers celebrate with 15 minutes during this pot, then 45 minutes later today. Maybe get a 19th Amendment tattooed up on your bicep over there. On Robin Hood Snacks, we try to identify disparities in business and biases based on gender. We're sick of this like razors that are pink costing more than razors that are blue. What's going on Gillette. Snackers, if you have ideas, though, on how we can up our inclusion game, please DM us at Robin Hood Snacks on Instagram or tweet us at Robin and Snacks on Twitter. Snackers, you know, Jack and I love to hear from you about anything. Let's hit our three stories.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robin Hood family. It's all informational just so. You know, we're not recommending any securities. Nope. It's not a research report or investment. advice. Not an offer or sale of a security. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Jack, easy on the leopard print over there.

Burlington Coat Factory is taking a dramatic step with its e-commerce business. It's ending it. Nick, I saw this story. I saw the company was called Burlington. I got excited because Burlington's the biggest city in Vermont. But it's not Burlington. Vermont, and apparently it's not even Burlington, Massachusetts. It's also not Burlington, Iowa, which is the third most famous Burlington, I'm aware of. Or is it Burlington, Kansas, nor is it Burlington, Ontario. This company is based in Burlington, New Jersey, which apparently exists, and its ticker

symbol is Burl. Snackers, we know what you're thinking when you think Burlington Code Factory, but don't. Do not call it a discount store. Burlington doesn't call it a discount store. They prefer to call their products off price. Oh, great name. It's also the third biggest off-price retailer in the world after T.J. Max and Ross stores. And last week, we told you that T.J. Max is thriving in this era of income inequality in the United States. Jack and I heard Burlington Coat Factory's reporting earnings. Looks like they're coming after the Max and Eistas. But Nick, do not call Burlington Coat Factory a coat store. No, no, no, Snackers. That's like saying David Blaine does a couple card tricks.

Burlington's selling coats, sure, but they're also selling luggage, jewelry, dog beds. I swear, they probably got it lip-on by the cashier. That's almost a guarantee. And by the way, Snackers, do not think the stock is cheap or off-price. The company sells off-price products. The stock is on price. It's up 700% since 2015. So like we said, Snackers, Jack and I bundled up, jump into the earnings here, snack style. We noticed that Burlington's earnings report last week was classic good news and then a little bit of surprise news at the very end. All right, let's get to the meat and potatoes this earnings report. Profits surge 12%. Revenues jumped 11%. That's pretty good.

Too shabby. Also, it's expecting another 9% sales jump next quarter. Oh, by the way, Burlington decided last week it is quitting e-commerce. Can we throw in one of those like record scratch things? Like, er! Can we say goodbye to the shopping cart? What's going on, Burlington? So they're not going to sell stuff online, but we assume they're still going to have a website. I don't know what's going to be on there, but they're not killing their website. Ass it's like a homepage that just shows like a map of where their 700 stores are. No one has any idea. Here's the thing. For Burlington, online sales are just a smidge of their business.

Tini, they're just 0.05% of their total sales. So Burlington's like, why are we even maintaining this online e-commerce situation? Let's just double down on physical stores. That's why they added 46 stores last year. They're adding 54 more this year. And Jack, what's the takeaway for our buddies over at Burlington Coat Factory? selling online with e-commerce is not a one-size-fits-all solution for retail. Snackers, when we all hear e-commerce, we tend to assume it saves money for you, us, and the company. Casper cuts out the middleman, and that's how they're able to sell us lower-cost mattresses, right?

Amazon saves money not having stores so it can sell you toothbrushes online for $1.27 a brush. But here's the thing. There are real costs if you want to run an e-commerce business online, and that cost can be really expensive, especially for smaller, cheaper stores. Jack, I think you meant off-price stores. And those prices, those expenses can be things like keeping things in inventory, maintaining that inventory, leasing the real estate to hold all that inventory. And then you've got to market your products online. You need to process individual orders online. You need to coordinate shipping for everything to show up at customers' front doors. And you need to accept return somehow. Oh, and the whole time you got to keep tech people

on staff because inevitably someone's mom's going to email and say the shopping cart isn't working. I love this stat we found. The average product sold at Burlington Code Stores is $12. Snackers, $12 for the average product. E-commerce, math just doesn't add up when your things are $12 each. For our second story, spin drift just raised $29.8 million. But now it is time to spin driftify beyond sparkling water. This is a company that's headquartered just outside of Boston and Charleston, Massachusetts. That's what the company says on their website.

They said we're based just outside of Boston. This is not the same Charlestown that, like, had Ben Affleck rolling around remotely killing people, Wattmocky-Mock style. Charlestown is completely gentrified. There are more hypoallergenic schnauzers than there are children in this town. You're not going to find, like, Matt Damon, the CFO of any startups in Charlestown. No, this sparkling water company was founded in 2010, and it was called Spindrift Seltzer at the time. And now it has $70 million of venture capital backing.

Now, the name itself, the logo, Spinterter. is actually a very poetic phrase. It means the spray from the cresting waves on the ocean. But while they were founded right outside of Boston, once they expanded beyond New England, they realized people don't call it seltzer. They call it sparkling water. Jack and I actually had no idea about this. Apparently you head west of Ohio, south of New York City. You're talking sparkling water no longer seltzer territory. Right. So that's why in 2016, they rebranded to just spindrift. They basically dropped the the the. Now, if you hadn't noticed this company before, you'll maybe start noticing on social media where it's pushed by spinfluensers trying to get the name out there.

I love this. Our friend Sarah has been an influencer of Spin Drift, aka SpinFluencing for years. Aggressive spin influencing. The other place you're going to notice, spin drift is if you ever raising money from a venture capital firm or you're at a startup in San Francisco, they probably have it in the fridge among a lot of other perks. Now, we've talked on snacks before that healthier beverages are very popular these days. You shouldn't be surprised that they grew sales by 147% percent last year to nearly 30 million. But as a little bit of context here, we dove in and noticed that LaCroix sales are nearly 20 times that snacker. Spindrift's differentiator, though, is that they use real fruit, and they actually squeeze the fruit to get the essence in the drink.

So they're getting like the cucumbers from Michigan. They got Alfonso mangoes coming in from India, and they're squeezing like 10% of the actual can to be juice. Nick, they got grapefruits, lemons, oranges, and strawberries coming from California, Arizona, and Florida. Jack and I looked at those little further on their website. They've got a map to show where everything's coming from. This is the kind of thing you'd want to turn into your wallpaper. They deserve a cartography award. Now, unlike lots of sparkling water companies, spin drift beverages actually have like 20, 30, 40 calories in them because there's real fruit in the drink. Ironically, drinks like LaCroi have zero calories. On the other hand, they like don't have any actual real fruit. It tastes like

fruit and you're wondering, where's this taste actually coming from? So Snackers, here's the problem, with a company like Spindrift. Technically, it's a private company, so it's kind of hard for Jack and I to jump in snacks style and get information on. That's why we looked at their closest publicly traded rival, a company called National Beverage Corp, which is the owner of LaCroix. Funny thing, just last week before the weekend, LeCroix's parent company, National Beverage Corp, decided to whip up their quarterly earnings report. Now, context, from like 2011 to 2018, National Beverage Corp sales were blowing up because they were like the only sparkling water company in the game. You couldn't go to a beach without tripping over LaCroix as someone threw you a LeCroix.

But in the past year, LeCroy's sales only rose by 1%. That's practically no growth. By the way, part of that's because they're facing like a lawsuit about where they get their ingredients from and the flavor. But the other part that LaCroi highlighted, it is a much different sparkling water market than just a couple years before. So Jack, what's the takeaway for our buddies over at Spindrift and the rest of sparkling water? can't survive forever as just a sparkling water company. It needs to become the ocean spray for our generation. Snackers, to build off of what LaCroix just said, sparkling water as an industry is getting really crowded, especially by big beverage. Coca-Cola, the biggest brand in the world, just acquired a

sparkling water company, Topo Chico, and it's also launching Desani sparkling water. Meanwhile, Pepsi launched its own Bubbly did a Super Bowl commercial, and Nestle has launched Poland Spring, sparkling water. Okay, so in sparkling water, Spindrift has serious competition. To keep growing, we think it should expand its real fruit business model to other products. They got to start doing extensions like Spindrift supplements. Or Spindrift fruit snacks. Spindriff liquor, Spindrift jelly, Spindrift jams. Ocean Spray did the same thing decades ago, taking cranberries and turning it into everything. They also kind of a similar name as Spindrift, and they did it with cranberry juice to then cranberry snacks to then cranberry sauces.

Oh, and guess what? Ocean Spray has billions of sales. Spin Drift is just 30 million right now. For our third and final story, Quibi, the Netflix for your phone has spent $1 billion on a product that doesn't even exist yet. Now, here's the funny thing about Quibi. Unlike every other startup, it doesn't want to become a verb. No. It wants to become a noun. Yeah, based off at Super Bowl commercials, we know that Quibi wants you to know one Quibi as the unit of measurement for eight to ten minutes of content. Yeah, that's how long, like, each episode is going to be. We're going to try to finish this story in about half of a Quibi. It's kind of like when we say there's one lift or two left. By the way, this company is worth like one tenth of a lift.

Exactly. Now, here's the news. Quibi just raised another $750 million, bringing its total funding to $1.75 billion. We're talking billions with the B. And by the way, this new streaming service, it doesn't exist yet, doesn't launch until April 6th. Right. And it's called Quibi because it's quick bites. What's that called, an abbreviation, a mashup?

It's kind of like a mash abbreviation. Now, it's partly owned by the movie and TV studios that you know and love. Right. Companies like Disney, Comcast, Warner Media, they've strategically invested in the company that could disrupt them. It's always a good move to get in on the ground floor. Exactly. It's also a private company, so there's no public stock available yet for Quibby. Now, as we mentioned, it hasn't launched yet, but that hasn't stopped the team over there from spending billions of dollars on new content. And now we know its first 50 shows for next month.

All right, we're going to mention three of them. One is a reality show hosted by Jennifer Lopez called Thanks a Million. Kind of love the concept here. She gives away a million dollars. Someone gets to keep $500,000, then they give away $500,000. Then that person keeps $250,000, and then they give away $250,000. It's a whole like paying it forward show where everybody gets money. The second movie we want to highlight, Guillermo del Toro is putting on a vampire movie.

TBD, if Robert Pattinson's involved, we kind of hope he is. That guy always seems like he's a little down. This last one's my favorite, a show called Barcitecture, which is architecture for dogs, a aka a show about dog houses. They're barking about the things on TV already. You might as well give them something they actually care about. Now, this thing is going to be $5 a month starting April 6th with ads, or you can pay three bucks more, $8 a month to get no ads.

None of this like giving away stuff for free like all the newspapers did 20 years ago on the internet. Now, remember last week we asked if the electric car industry is having a, if you build it, they Will Come situation. It's the same question being asked by Quibi. They're making a situation where you have one movie or whole TV series that's broken into eight to 10 minute chapters of bingeable video content, aka Quibbys. And each chapter is getting released each day until the show actually ends. And it's made for vertical binging on your phone so that you can hang on to the subway rail with one hand, hang it on to your phone with the other and watch like three episodes of Barcitecture.

Incredibly Gen Z as opposed to the very millennial. old architecture situation. Now, we say this is like the electric car if you build this will-they-come situation, because customers have never asked for eight to ten-minute quibby chapters. No, Jack and I are looking at the billion dollar they spent on content and wondering, this is just a big bet that customers want to actually use this thing. It kind of reminds us if Apple making the iPhone or Apple taking the headphone jack away from the iPhone. Because Snackers, this isn't just like a new thing. It's a complete behavioral shift to be watching this much content just on your phone. Exactly. And the Steve Jobs of this bet is a guy named

Jeffrey Katzenberg. LinkedIn, Resnman. We got Shrek, Lion King, How to Train a Dragon. He made them all. There's also Meg Whitman, who's the co-CEO-CEO-CEO-Coree. She was the CEO of eBay who took it from 30 employees to like 30,000 employees, the Amazon before Amazon. So, Jack, what's the takeaway for our buddies binging over at Quibi? There has never been a better time to be an actor, a producer, or show creator. Snackers, you've noticed a lot of distribution networks that are streaming everywhere. Well, those streamers, they want your subscription bucks. In video, it's being led by Netflix, which is spending a crazy $17 billion on shows and movies this year. In audio, it's being led by Spotify, which is on pace to spend a billion dollars on podcasts. Now, the original

content bubble that we're talking about, it could pop at some point. Until then, though, creators are taking advantage of this Oprah moment. You get a Netflix show, you get a Netflix show, you get a Quibi show, you get a Quibi show. Jack, can you whip up the takeaways for us over there? Burlington Coat Factory was making 0.05% of sales online, so it's killing its e-commerce. Online shopping is not a one-size-fits solution for retail. Spin Drift, just got $30 million new funding to grow its sparkling water plus real fruit juice business. And Jack and I would like them to spin-fluence into other product segments like fruit snacks, please, as soon as possible. It's a key. Third and final story, Quibi launches April 6th, and they've already

raised $1.75 billion to change the way we watch video. They're really making an entirely new product and they're really just betting that people actually want it. Now, time for our snack fact of the day. This one sent in with hometown pride from St. Louis blues fan, Joanna Lee Dish in St. Louis with some love from Luke G. We assume Luke G is also from St. Louis. Got to be. It's so true. He's a good guy. Last week, we talked about Panera's $9 a month unlimited coffee deal. Beautiful thing. Turns out Panera is based in St. Louis, Missouri, and it used to be called St. Louis Bread Company. But here's the weird twist. Before they changed the name to Panera, they didn't make the name change for their local St. Louis locations. So if you head over to our buddies in St. Louis, Joanna and Luke, you'll see them getting a $9 coffee deal at St. Louis.

It's still called that in St. Louis. And by the way, they call it just Breadco, because if you're in the know in St. Louis, you call it Breadco. I love that. Snackers, thanks. Thank you for snacking with us today. I cannot wait for tomorrow already. Tomorrow is going to probably be better than this one. And in the meantime, remember, share your snacks, H-Y-H-Y-S-D. Have you had your snacks daily? If you know, you know. This is Jack. I own stock of Spotify and Amazon.

The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA SIPC.