The Best One Yet - Amazon gets in with the Yankees, Forever 21’s bankruptcy, and higher minimum wages can save companies money

Episode Date: August 30, 2019

The Disney merging with Fox saga is officially over now that Disney sold YES Network… partially to Amazon. Forever 21 is a fast-fashion founding father, but it’s reportedly going bankrupt (there���s another key F-word here: Fad). And Citibank and Panera bread both have minimum wage stories that will surprise you.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 Wonderful Friday, August 30th. Oh, Labor Day weekend. Nick, what are you doing this weekend? I'm doing more of the pod. Well, you're not wearing a shirt, so I hope you're at the beach. Full disclosure, there's no cameras here. We do what we want on Friday. Jack, what's going on? This is the best pod yet. Markets rose today, and we have three unbelievable stories. Jack, what do we have to kick things off? Kicking off with Forever 21. It is reportedly filing for bankruptcy. Just a few years. years after, it defined fast fashion. Jack, are we talking about the F word again here? Yes, sir. We're talking about fads in fashion. What is the second story? What do we got on deck?

Family-friendly warning here. Watch out. This pod's no longer PG-Waded. We've got a menager-tois media deal going on. Disney just sold the Yankees Yes Network to three different companies, Sinclair, the New York Yankees, and Amazon. I like it. With that many sectors involved, we had to jump in snack style. Third and final story. This is a new York. stories about paychecks. We found one about Panera Bread and another one about Citibank. Completely different industries here. But there's one takeaway about how increasing the minimum wage for a company might actually save it money. Jack, I can't wait to jump into that one? In the meantime, Jack, can we talk about what's going on with Nike? And I don't know, the future that is now.

Full disclosure, I'm wearing some Nike sneaks as we speak. Full disclosure, my vans wear all birds, which wear boat shoes. But before we even deal with that situation, we got to talk about the Naipi Adapt Harachi, which is the first iteration of a shoe that connects to a Nike app so you can loosen or control it with the app. People, we have hit smart shoe status with artificial intelligence. This is back to the future. Nike is living in 25,006. Now, if you're really lazy, you can tell Siri, hey, loosen my shoe Siri, or you can do that with your Apple Watch. But does it make you jump higher? Jack, it doesn't matter because if you're feeling really lazy, you can set up your home pod to actually untie your shoes when you say, hey, Siri, release my shoes.

The only problem with this marketing strategy is nobody owns a home pod. The other problem with this marketing strategy is that at the future, some point the artificial intelligence is going to start judging us for this level of lazy. Once we start getting like toilet paper involved with artificial intelligence, we've gone too far. Once we're being judged by artificial intelligence, hopefully they'll be listening to Snacks Daily. You're tuned in to Snacks Daily. We spoke to the lawyers and we got to get some illegal out the way.

The snacks are about to hear rain 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.

Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Jack, how do I look in this thing? Doesn't even matter. Forever 21 may be declaring bankruptcy. And this could be the end of fast fashion as we know it.

Jack, before we get at this, can you take me back to 2012? I didn't have my magic beard yet. My hair wasn't even parted. Google Plus was the future. Homeland hadn't become a terrible show yet. Frose hadn't even been invented. Emphasis on the Zay. And fast fashion also was a thing.

You had H&M, you had Zara, and you had Forever 21. These were the three icons of Fast Fashion. Fast fashion was huge. And now, Forever 21, one of the big three of Fast Fashion, may be going bankrupt, according to Bloomberg. Now, Forever 21 has the ridiculous name. It's privately held so he can't buy the stock, but it's got 800 stores and it's in 57 countries. It was actually a great founder story. A South Korean husband and wife who immigrated to Los Angeles, they started the company in 1981 for a clean $8,000 in their pocket. And in case you want to really get to know fast fashion, here's how the business model works.

Basically, you churn out a lot of new inventory thanks to supply chains. Super efficient, fast supply chains. And then the people who buy the clothes, they replace. place it like two weeks later. It's super unsustainable. You're not like waiting for like the Dior Winter Collection to come out so you can be inspired. You're just buying what's on the shelf next. We're looking at this forever 21 bankruptcy and we're calling it right now. Fast fashion is a trend that is dying. Now the two of the rivals we mentioned, H&M and Zara, they're both publicly traded and they both reveal a lot. Rival H&M has lost half its value in the last five years. And it has $4.3 billion worth of inventory that is sitting on the shelves, unsellable, they're

even thinking about burning those clothes. And then you've got rival Zara, which has missed full year earnings expectations, again as it tries to continue to grow in a fast fashiony sense. Part of the issue, H&M, Zara, Forever 21, they were all dependent on shopping malls, which are struggling. Right, we can't ignore that. But the main issue here is that sustainable fashion has innovated and it's taking down fast fashion. Woke millennials have found an alternative to fast fashion in companies like Rent the Runway, which allow you to rent everyday outfits in like a membership subscription. Boom, Jack, I want that cashmere top.

I can get it like six days a week. Stitch fix. It sends you boxes every month with new clothes to keep your look fresh. Jack, you want a maxi dress? They're going to get you a new version every month. I do want a maxi dress. Those things are amazing. Also, Urban Outfitters.

It just launched its own Rent the Runway type subscription box service. Right. Let's say you don't like that cashmere top from Rent the Runway. Boom, you try the version from Urban Outfitters. And even Macklemore loves this story. The Real Real is a thrift shop online. It just had its IPO. It's publicly traded.

Jack, that Chanel purse, I don't care if someone else owned it. Here's an amazing stat. Used fashion. Secondhand clothes. Experienced clothing will surpass fast fashion in sales within the next decade. We're going to put it simply. Sustainability has crushed the fast fashion trend. So, Jack, what is the takeaway for our buddies over at Forever 21?

Fashion is particularly susceptible to the F word fads. Victoria's Secret. They miss the brawlett trend. The stock is dropped. Abercrombie and Fitch lost its coolness factor because of over-colon shirtless dudes in the stars. Michael Kouris lost its high-end status because it started focusing on cheaper lines. And then Gap is barely hanging on because it's getting beat by its little cheaper younger brother, Old Navy. Brands and retailers, they always face trends, but we see particular problems in fashion when it comes to the F word.

It's a vicious business, fads. For our second story, Jack, I've been wanting to say this for years. Disney just sold the New York Yankees to Amazon. That is so exaggerated. It's just straight up false. So the actual headline here is that Disney sold the Yes Network to three different companies and one of them shockingly, disturbingly, questionably, we had to triple check it was Amazon. There you go. That's the nuance headline, little less exciting, but there's still three crazy organizations involved in this deal. So technically, Amazon now is part of a TV channel that covers the Brooklyn Nets, the New York Yankees, the New York Liberty, and the New York Football Club. Yes, we're talking to the Yes, network. Not just technically, Nick. They do. do own part of the Yes Network, which has a value itself of $3.7 billion.

Which we should point out is wild because the New York Yankees are valued at $4.6 billion, which isn't that far off. So the Yankees TV channel is worth almost as much as the Yankees who are probably going to win the World Series this year. Now this was rumored recently. Now it's official. And this is the last chapter of like the Disney acquiring Fox saga. So Jack, in order to cover this saga, you got to give me some peanuts. I kind of like, you know, Skippy's peanut butter.

put me in the Snacks Time Machine and take us on a timeline tour of what happened here. Let's go way back to late 2017. I did have my beard. My hair was parted. Disney and Comcast were reportedly in a bidding war to acquire 21st Century Fox. So that would have included X-Men, Fantastic Four, The Simpsons, and like 22 regional sports networks with like charmingly local ads. Plus the Yes Network. Right. So then in 2018 in June, Disney won the bidding war for Fox. So they got all of this treasure. And then a couple of weeks. weeks later, the Justice Department chimed in. They're like, we will allow this merger between two huge companies, Disney and Fox, but only if you guys sell all those 22 regional sports networks and if you sell the Yes Network. So this is like a classic case of like, hey, LeBron and Kobe, you two can merge and play on the same team, but Steph Curry, he's got to go somewhere else.

You can't have it. So this week, Disney finally is complying with the Justice Department's demand. It has 80% of Yes Network and it's selling it. And the Yankees actually still have the other 20%. So Disney's selling 80% and it's selling that 80% of Yes Network to the Yankees to Sinclair broadcast and then to Amazon. So Jack, what is the takeaway here for the confusing situation with our buddies over at Amazon who now owned the New York Yankees in a way but not really? Amazon now owns 15% of the Yes Network and nobody knows what it's going to do with it. No. The first thing we're thinking naturally is, are we going to be watching the Yankees on Amazon Prime?

That is the obvious solution here. Amazon Prime video would get the New York. Yankees. Now, Amazon is paid for, like, Thursday Night Football, Premier League Soccer, and Prime perks. This means the Yankees might get a national TV deal. We haven't seen this since, like, the Atlanta Braves on TBS when I was a kid growing up, or the Notre Dame Fighting Irish Football Team, still today, who for some reason are on NBC. There is a huge question mark around this. Amazon's not saying, but in the meantime, they're enjoying some like HQ2 style anticipation and letting this just hang out. Once they announce what they're going to do with YAS Network, we will definitely

Definitely covered on snacks. For our third and final story, it is a fascinating moment right now for the minimum wage, so we got to give it some attention. If you increase the minimum wage you pay your employees, it could save your company money. Now, we notice this because there are two companies right now that just made two different announcements in two different industries, but they're completely tied together. Jack, can you serve me up some bread here and tell us what's going on with Panera? Panera, the place where you get a bagout with everything.

If you need another napkin, you get a bag at with it. They're like forcing the carbs down your throat. It's actually kind of intense. The CFO of Panera told CNBC yesterday that it loses 100% of its workers every year. That, like, mind math sounds kind of confusing. It basically means that for every 1,000 workers that Panera has, a thousand quit in that year. So we're talking about a churn rate. Yesterday, we said with Peloton that its churn was just, like, less than 1%.

Panera's churn is over 100% for its employees. And get this, in the rest of fast food, that churn rate has gotten up to 150%, which means that you're losing the employees, during the year who replaced the employees who you just lost. Everybody's quitting and going to new places. And two years ago, the turnover rate at the restaurant industry was 80%. It is almost doubled now because of super low unemployment rate. So that's what's going on with our buddies over at Panera.

But, Jack, can you tell us what's happening over its Citibank where things are a little more buttoned up? It just announced on Wednesday that it's increasing its company minimum wage to $15 an hour. Now, that's partially political. Congress has been like calling on Wall Street to come in and they're saying like, hey, can you guys increase the minimum wage? This isn't that cool. Please make it a living wage. It's also partially peer pressure because Wells Fargo has already increased its minimum wage to $15 an hour. And then Bank of America jumped in and said, hey, I raise you to $20 an hour. And classic J.P. Morgan Chase on Park Avenue, New York, they play things a little different.

Their minimum wage is $15 for some places and $18 for other places depending where you live. Now, the real reason driving all these different minimum wages is that unemployment is so, low, workers are in ridiculously high demand, and they can kind of go wherever they want to, whether it's in the bank industry or it's in the fast food industry. Right. The banks are not just trying to make Bernie Sanders happy. They're trying to keep their employees at home because they have offers elsewhere. So, Jack, what is the takeaway for our buddies at Citibank, our buddies at Panera, and everywhere that seems to be upping the minimum wage? Paying people more money could save your company money right now. Jack, the story is econ meets Wall Street meets fun. Turnover is not

something that's just about quitting. Because when you'd have to turn. turnover, you lose training and you lose institutional knowledge. Exactly. That Panera server who just quit, she was trained for two weeks on how to make the perfect pesto and it's all wasted now. And Jack, that city banker who just quit, they knew how to process checks faster than any other city banker who'd been banking over at city. The cost of employees leaving is the cost to higher replacements, the cost to train replacements, and the cost for that replacement to learn on the job how to flip an egg without breaking the oak. So increasing the company minimum wage, that's the kind of thing that could save money over the long term by not having to go through

all that training again with all the new employees. Jack, can you whip up the takeaways for us over there before the long weekend? Forever 21 is reportedly broke, and it's a sign that fast fashion is dying. And fast fashion's dying as sustainable fashion wins because the F word fads. Amazon is the proud new owner 15% of the Yes Network home of New York sports teams. Netflix has Stranger Things, and Amazon Prime Video now has like Aaron Judge. Truth. Third and final story, minimum wages could see. save companies money. Panera's doing it,

Citibank's doing it, everyone's kind of doing it. It's a total peer pressure situation. Now, time for our snack fact of the day. Jack, can you step up and share this one with us? This one's brought to us by Kendall Baker, who writes an awesome sports newsletter. Participation in high school sports dropped in America last year for the first time

in 30 years. We were shocked by that, but interestingly, that does not include e-sports, we should point out. Does not include Pokemon Go either. And does not include any other things like helicopter parents these days considered to be sports. Snackers, we love to having you with us. Enjoy the three-day weekend, and we'll catch you guys on Tuesday morning. Jack, what are you doing in the meantime? I'm going to Santa Barbara with my beautiful new wife, Alexandra, for a mini moon. And Snackers, I got a request. We don't know what beach to go to in Santa Barbara. Can you let us know the best beach in Santa Barbara at Robin Hood Snacks on Twitter? Jack, I'm channeling your honeymoon vibes here. I'm going to be with Molly on Nantucket where we had gotten married. In the meantime, I'm having multiple lobster rolls and I'm not stopping. Mini moons for everyone. Snackers will tuck you Tuesday.

This is Jack. I own stock of Amazon. The Robin Hood Snacks podcast you just heard reflects the opinions of only the host who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood 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. Heavenhood Financial LLC, member FINRA, SIPC.