The Best One Yet - Bloomingdale’s launches rental clothes, Fitbit is on the market for sale, and Thomas Cook just shut down mid-flight

Episode Date: September 24, 2019

Literally while some people were in the air, British travel agency Thomas Cook shut down, so we look at the millions affected by a big corporate bankruptcy. Fitbit’s fought hard  to survive since Apple unveiled the Watch, but it’s now offering to sell itself. And Bloomingdale’s launched “My List,” a 10-item per month clothing rental for $149/month as “clothing as a service.”Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. And this is snacks. Daily, it is Tuesday. September 24th. Everybody, how are we feeling? We're bringing you a pretty good one today. Is this the best one yet, yeah? This is a really good one, actually.

Three great stories. Really wonderful. Markets were pretty much flat, by the way. Very excited about this, what we got. But the latest company to offer rental clothing as a business? Bloomingdale's? Bloomingdale. And we're going to try on the whole rental clothing industry.

No joke. We got Roppers on. You can't see it. Second story? Fitbit. It's golden era is over. Was it ever golden? debatable, but now it's trying to sell itself after its long post-Applewatch decline.

And then third story, the buzzkill of the day. This is new. We're talking Thomas Cook, the British airline. It canceled all its flights yesterday forever mid-vacay. We're looking at the fallout and we're following the money. What a sad airline story. That was pretty brutal. But Snackers, before we jump into all that, did you know it's T-Boy Tuesday?

Today is T-B-O-Y, the best one yet Tuesday. It's T-Boy Tuesday, which could become a news. thing? We're going to try to make what we're about, we're about to do something, and we're going to try to do it more regularly. We want to see if this thing can go. Earlier this month, we asked you guys for some great names for plant-based startups. It was quite a hoot. I ended up with Chicken of the Tree. Chicken of the tree ended up winning. But every Tuesday, we want to start to do polls of the Snackers because you guys have some of the best ideas we've ever heard. We've done it with ticker symbols. Now we want to do it with another idea, clothing rental startup names. Okay, later this

pod, we're going to talk about my list, which is Bloomingdale's. We're going to talk about rent the runway, which is literally renting the runway. And we're going to talk about newly N-U-U-L-Y by Urban Outfitters. Well, we want to hear your ideas for some rental clothing startups. If you started a rental clothing startup, what would you call it? We thought long and hard about this. I was thinking re-shirt. Like t-shirt? Like t-shirt, but think about it, R-E-Hythin. They're going to be like, you mean reshirt. You're going to be like, no, re-shirt. Mine? No commando. Because simple. The rental class. Speaks for itself. Snackers. Tweeted us at Robin Hood Snacks. We want your ideas. for clothing rent.

We spoke to the lawyers. It snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robberhood family. It's all informational just so. 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. Robohood Financial, LLC. Member Fenra slash SIPC. For our first story, Bloomingdale's just launched a rental service,

and it's giving us an entirely new industry clothing as a surface. Are we renting too many things, by the way? We don't rent much in this economy. We don't rent this podcast equipment. No, no, we own it. No, we do this. I'm renting a car in February in Florida. Oh, but also, yeah, a lease is kind of like a rental.

I think you can rent a fondue machine for a party. I hope you can rent a fondue machine. I have rented scuba equipment. But if you haven't rented a fondue machine, you may want to just buy a money. Now, a big new rental industry that's getting bigger and bigger. You need to know about this. Especially clothing rental. Exactly.

Especially this week when Bloomingdale sent out an email to a lot of people, including my wife, that they were doing their own clothing rental service. It's called My List at Bloomingdale. I like where they went with that name there, creative. For $149 a month, you get to select 10 items that you can rent that month, but you can only have four of those items out at once. None of these 10 skirts all at once, selfish people out there. So you could do like four items the first week, two items the second week. Keep those two items for two weeks, and then do four more the fourth week. Jack's got a calendar out.

He's circling a couple of things. here making some moving them thing. Yeah, you need a spreadsheet for this thing. Now, in case you're wondering about the price, that's actually right down the middle of the pioneer of Rent the runway. Exactly. Rent the runway's got a couple options. They got like an all-you-can-wear option at like $159 a month.

And then they've got a cheaper option at $89. Now, there's an absurd amount of activity in this economy in clothing rental. It's a lot going on here. You kind of want to sit back and like understand and take this whole thing in. Now, if you think that Rent the runway is just like a one-off, you know, ball gown for the prom? Nope. That's what it used to be.

Not anymore. I understand. But it is getting into clothing subscription rentals. It's doing it like on a daily basis kind of thing. They make it super easy. They make 25 drop-off points. You don't have to send it back. You can actually just drop it somewhere.

Yeah, if you happen to be going downtown. 19 of them happen to be at WeWorks because that's where tons of rent the runway customers work. And they're even opening up their own club in San Francisco so you can hang out, network, get some coffee, and then return the script. All right. So we have Bloomingdale's. We have rent the runway. Levi's is also based in San Francisco. But Levi's doesn't have its own rental service.

and yet you can rent Levi's skinny jeans. That's because check out Rent the Runway. They got loads of Levi's in there, and they have a revenue share deal with Rent the Runway. But then Rent the Runway, its world was like really nice. It was enjoyable. It was like relaxing. And then boom, Urban Outfitters comes around. Now, here's the thing.

Urban Outfitters came out with this thing called Newley over the summer, spelled N-U-U-L-Y. Again, creative. Now, Nick and I love trying out products. Not that. Not that. But I don't think any of these clothing rental subscriptions are for Matt. targeting men. No, they're not targeting men. So my wife tried out newly. I got to say, first of all, the package comes in, well, it's basically a duffel bag. Jack's a sucker for a good

package. Lovely packaging with great branding. They send you a nice little handwritten note. Really? Just beautiful clothes. Who signed that thing? I don't know. Does it matter? As long as the S's look scripty, I'm sold. Alex got a fur coat and four other delightful items that she'll return in this duffel bag, or maybe not and keep them and buy them. Very true. But they're not the only ones. You got a bunch more. Even Express has one, and it's powered by a company called Castle, spelled C-A-A-A-S-T-L-E. Yes. Now, we're going to do a little tangent on Castle. C-A-A-S-T-L-E. There's a reason why

there's two A's in there. Because it's a fundamental shift in the entire rental clothing industry. And the C-A-A-S part stands for clothing as a service. Because clothing rental isn't about fashion. It's actually just logistics. Yes. The biggest cost of a clothing rental business, like newly or rent the runway, is shipping the products to and from customers. And then your next biggest cost, it's going to be cleaning the stuff so it gets back stain free. And remember, you have to do this like every week or every month. So rent the runway, it's not just doing stuff online. It has a 300,000 square foot fulfillment center. It's actually got more fulfillment centers to handle all this stuff. So Castle looks at this

trend of rental clothing and sees that rent the runway had to spend a ton of money on a fulfillment center and basically says, we'll handle that logistics, we'll do the cleaning, we'll do the shipping for any clothing company out. Turnkey solution. It has 10 clothing companies that it's signed up and just it's managing the rental. So Jack, what is the takeaway

for our buddies in the rental clothing industry? Clothing rental is one huge bet and we're still waiting to see if it will win. Because on the one hand, renting out all your clothes from your brand could cannibalize your sales. People may stop buying your stuff. Yeah, think about it.

Urban Outfitters, my wife might not buy the stuff. She might just rent. On the other hand, it could boost your sales because you're like, hey, I'm going to try it on this romper. That fur coat looks pretty good. I'm going to keep it. Pretty airy. Even though the duffel bag's great, I can't return this thing.

So right now, less than 1% of the entire paro market is actually renting clothes, which isn't that much. But the rental business is growing 24% compared to just 5% for regular sales. Our take on this? The trend is your friend. The trend is your friend. But a fad's pretty bad. For our second story, Jack, you ready? Jack's building some steps up here because we got Fitbit.

Bit its stock just jumped because it wants to sell it. itself. Let me quickly do a burpee over here. Do FitBits track burpees? I don't know. I can't. So Fitbit IPOed in 2015. Back then, the company was in great shape. Remember 2015? Shares were at $45. I think the Kroonut was a thing then. The Kroon. No, the Ramen Berk. Amy Schumer was doing things. It was great. So back in 2015, the golden era for Fitbit. Fitbit and its competitor, Jabot. Aggressive name. Jawbone were the leaders in tracking fitness devices. But then Apple said, you know what, we're going to like jump into this whole thing. And they targeted a very specific sector of the market. The high sector of the market. Exactly. And what happened to Fitbit,

it lost the people who were paying a premium for fitness trackers. Yeah. So Fitbit could basically not increase prices anymore because then they'd get into Apple Watch price and people are going to buy an Apple Watch instead of a Fitbit. But then here's the problem. Fitbit then started getting squeezed on the low end of the market. Yes, you got Huawei and ShowMe Chinese manufacturers who make fitness trackers just like Fitbits, but for cheaper. And if you're right in the middle of the meaty part of the market. It's hard. It's not a good place to be. It's really hard. It has been squeezed literally, metaphorically, marketly.

All right. So let's say you're getting squeezed Fitbit style. You're like feeling it. One of your abs is clenched and you're sweating a bit. You've got a vein popping out. Well, we've covered it on this pod making some efforts to try to survive. What they did is a pivot. They tried switching a bit and focusing on wearable watches in particular. Yeah, watches are more expensive than fitness trackers. And they also tried to add a $10 a month health subscription. So you've got Fitbit here. a bit. It's doing smart watches. It's doing subscription. It's got hardware. It's got recurring revenue despite all that golden A for effort. It's doing the whole playbook here.

It stock hit an all-time low of $3 last month. Keep in mind, Jack said this before. The stock IPOed at $45. It was at $45 in 2015. It's at $3 this year. I feel like all the momentum was just sucked out of the room. And then Friday things totally changed. Yeah, the stock jumped 12% because Fitbit is chatting with an investment bank about kind of a sad story. It wants to sell itself. It needs to sell itself. And investors are like, you know what? You do you?

This is a great thing to do. Well, that's because when a company gets acquired, it tends to go for a higher price than what the stock price currently is. So investors want to get in on it. And Jack was thinking, you know what this means? A unicornation? Yes. It's back to being a unicorn. When the stock price hit $3, it dipped below $1 billion valuation.

And now it's back up after the $12. Very nice. Now technically, a unicornation. We know what you're thinking. A unicorn is technically a private company worth over a billion. True. But we just love that unicornation thing. It had a unicornation on Friday.

Even though it's publicly traded, we think there's a little bit of leeway there. I hope that was a good party. So, Jack, what's the takeaway for our buddies over at Fitbit? Acquisition synergies, they can be good, too. When you hear about acquisitions, one of the first things you think of are the negatives, like the bloodbath, the firing, the layoffs as one company merges into another. Right. You don't need, you know, this accounting division and that accounting division.

you become one company. You got Ed and Amy over an accounting. Do you need Ed and Amy? So we talk a lot about layoffs and firings, but Fitbit has already cut most of its costs. So it's actually a very efficient potential acquisition target. And if someone acquires Fitbit, they're going to think to themselves about positive synergies. And there's some interesting companies involved in wanting to acquire Fitbit. These companies might want to think, how could we make more money than Fitbit is if they were part of our company? How do you maximize Fitbit's value? you without having to cut so many resources because it's already a lean, mean fitfitting machine. Now, there's reports out there that Alphabet might want to buy Fitbit so that Google could have an

Apple Watch competitor. Right. They don't really have a great wearable product right now at all other than the glasses that were kind of ridiculous. And if Fitbit gets acquired by Google, it could probably have like better software and just work a little bit. On the other hand, you can think of a little outside the box here and say, it doesn't have to be a watch or a Fitbit tracker. Doesn't have to be on your wrist?

Couldn't you take Fitbit's technology and stick it in a shoe? Plant it in the shoe. It's always there. You listening our friends over at Nike? Snackers, let us know your thoughts. Who could acquire Fitbit? For our third and final story, this one is insane. Thomas Cook Travel Company just collapsed.

We're talking thousands of people worldwide on their vacations. I'm sorry, your vacation's ruined. I was thinking holiday, but yeah, their vacation is right. Yes, I forgot Brits go on holiday, not on vacation. Now, some people were in Malaysia traveling. Some people were on their way to a wedding. Some people, it was their wedding. And that is when Thomas Cook, the British travel company, collapsed.

It literally went bankrupt. People were mid-flight on a Thomas Cook airline when they found out the company now ceased to really be an operation. Now, this is a publicly held company where it's stock tradable on UK markets. But we're covering this because of the deep impact to human beings across the stakeholder spectrum. Let's go back to 1841. That's when Thomas Cook began and the focus quickly ended up being low-cost travel packages. Let me just say a low-cost travel package. Let me just say a low-cost travel package in 1841.

What are you talking there? Can you travel low-cost in 18-40? Are you like, you're going across the channel? I don't know. I assume that took weeks back. Sounds dangerous. There's malaria everywhere from what I understand. So to give people travel packages, they created physical stores, like travel agencies,

like the ones Nana goes into. But they also had their own plane. So you'd book it with a Thomas Cook travel agency on site. And then you'd actually go on one of their planes. Yeah. And they've been doing that same business model for like, 180 years. Literally, picture a 1980s travel agency with like the big pictures of Disney World and a family of 16 smiling really high. But on Friday, Thomas Cook Travel Company was in such dire

straits financially. They requested a bailout from the United Kingdom. They went to the parliament and said, hey, we're going to need money ASAP or something bad is going to happen. And the UK said no. Yes, they said that would set a bad example for other companies that think we're just going to bail them out. Fast forward, 72 hours, Monday happens. The company shuts down and the result ended up being the largest peacetime repatriation effort in the country's history. That means that 150,000 loyal subjects were scattered across the world and needed to be brought in by like the queen. We're talking Megan Markle on an airplane going to get these folks and hustling them back to the UK. No, we're not. We're talking about the UK government paying for people's flights.

But it's a wonderful visual. Now, the collateral damage of this collapse is broad. First, you have the customers because there are 600,000 vacationers worldwide who've been left stranded. So 150,000 Brits and 450,000 from other countries. Then you've got the shareholders who own Thomas Cook's stock. Yes, the stock plummeted 27% on Monday to 11%. The company is basically worthless. And then the company itself, they're going to lose jobs, a lot of jobs. 21,000.

And tourism, a lot of destinations rely on Thomas Cook jets to bring people there. Let's talk about the lovely island of Crete. 40,000 travelers from Thomas Cook head to Crete. spend money every year. The Cretians aren't happy about this. No. And then lenders, a lot of companies have lent money to Thomas Cook, and now they're reading that the company is bankrupt. Exactly. To try to get their money back, they're actually going to take those airplanes, the Thomas Cook airplanes, and try to sell them. Thomas Cook had 116 aircrafts. Most of them were leased. And now they've been repossessed by the lenders, and they're probably going to get sold to try to salvage some of that

money. So, Jack, what's the takeaway for our buddies who had a really rough Monday? Well, somebody is probably happy about this news because markets are ruthless. And when you want to see how ruthless markets are, follow the money. So there are people still on vacation trying to get some there. And guess what? They're going to have to take another plane because Thomas Cook doesn't exist. So shares of its German rival, Tuey, jumped 11%. And British Airways parent company IAG also jumped because people need to fly them.

And then EasyJet and Ryanair, the company that owns both those budget airlines, rose 2%. So all those airlines can get more passengers or just raise prices because they know like 600,000 people need a flight. And someone's going to snag those gates that Thomas Cook used to have at all the airports. Good point. Jack, can you whip up the takeaways for us? Yeah, first one was about rental clothing. We forgot to mention that rental clothing has a smaller environmental footprint.

And Bloomingdale's just joined Rent the Runway and Urban and a bunch of others to make clothing as a service a thing. Fitbit stock finally rose on news. It's ready to sell itself to another company. And it's finally thinking about some positive synergies that could actually help it out. We're talking more sales, not less workers. And then the third and final one was wild. Thomas Cook has gone under and it left a lot of negatively affected people. But some positively affected airlines.

Now time for our snack fact of the day. Sent in from the mountains of Denver, Colorado from Chrissy Moss. Okay. When Jennifer Lopez wore that green dress in 2000, I remember it well. You know the one I'm talking about. It was made by Versace. With a deep, deep V. It prompted the creation of Google images.

That is such a fun fact. It is the single dress. Google noticed a lot of people were searching for it and said, hey, wish we had an image repository for all this. Yeah, people were like, I wish I could search Google just for images, because remember, this was back in 2000. J-Lo, thanks for Google image search. Now, Snackers, a few of you wrote in to help give us some quick clarifications and some good

stories from last week. Yeah, we talked about LinkedIn, and we were full disclosure that we don't use Outlook. Not usually, no. But some Snackers hit us up and told us that LinkedIn actually will automatically, like, bring up the profile of, like, Tom from Tiffany's who just emailed you. Also, when we were covering LinkedIn's acquisition by Microsoft, Microsoft, Microsoft, Word has integrated LinkedIn in a way, so it recognizes if you're writing a resume and has some tips for you. That's impressive. Very cool. Finally, LinkedIn knows a lot about you and knows that you worked in the

consumer packaged goods industry, for example. True. And Microsoft uses that for targeted advertising. And we also mentioned Stripe because it just hit a $35 billion evaluation. And we mentioned that they've got a bunch of clients like Airbnb or Lyft that use them for everything, payment processing. Yeah, Lyft, Airbnb, and Target. They use Stripe for a lot of payment processing, but not all. They also use some other companies. Great to have T-Boy Tuesday with you guys. We'll be back tomorrow. Can't wait.

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, or any 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.