The Best One Yet - “Can someone wake up Casper?” — Urban Outfitters’ fashion smoothie. Casper’s fresh CFO. Salesforce is in the Dow.

Episode Date: August 27, 2020

We’re looking at Casper’s new CFO, who has 1 mission: Find profits under the mattress (even if that means changing Casper’s core identity). Urban Outfitters’ stock jumped 19% because it isn’t just faux-ironic t-shirts — it’s actually a smoothie of innovation. And Salesforce is the newest addition to the Dow Jones Industrial Average, so we jumped in Snacks Style to its fresh earnings report.$URBN $CSPR $CRMWant a shoutout on the pod? We got the form for Snackers to fill out right here:https://forms.gle/KhUAo31xmkSdeynD9Learn 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 Thursday, August 27th. Nick, you look fantastic and so do the stock markets. Right back at you, Jack. It's a T-B-L-Y for the market and for Snacks Daily. For our first story, if college campuses were actually open, they'd be crawling with Urban Outfitters' outfitted students in like denim t-shirts. If Urban doesn't make those yet, they're going to start making them now, Jack. Now, Urban Stock just jumped 19% yesterday because it's a fashion smoothie with a scoop of innovation. Just a hint. Second Story Jack, what do we got? Casper Mattresses is the former unicorn that fell asleep hasn't gotten up. Yeah, post-IPO life hasn't been good for Casper, but it just hired a new CFO with a surprising plan. Wake up for this. For our third and final story, today I followed up with TPG about the offer.

I had a phone call with my top client, and I fixed a glitch in another client's account statements. But did you put it in Salesforce? No, but I wrote a lot of notes. Then it didn't happen. Salesforce is the newest member of the Dow Jones Industrial Average, so we're looking at its newest earnings report. Now, Snackers, before we jump into that wonderful mix of stories, we're also jumping back into the hoarder's almanac.

Remember the hoarder's almanac, the shortage of things caused by this bizarre shelter-in-place-slash-don't-go-out and see your friend's situation. Jack and I are flipping back through the pages here. Let's go to week one. The big thing that was hoarded was, unshockingly, hand sanitizer. Week two was toilet paper. Week eight was baking yeast.

Week 12 was Bikes. Now we're on week 10,0442, and it's going to be, let's look at this. Ah, lavender jack. It's lovely lavender. Lavender. Technically, Nick, it's week 24 since the March 15th National Declaration of Emergency was announced. But this week, it's lavender. Smells like a combination of a country field and a grandparent.

That's lavender. Snackers, lavender syrup and lavender oil sales are quadrupling during this pandemic. Apparently people are putting it in hand sanitizers, so those sanitizers, smell less like laboratories. Others are sending sprigs of lavender to friends in the mail because that feels like a vaguely wholesome thing to do to show some kinship. Some say it helps with sleep like the ambient of the garden. Now, fun fact, that's not so fun. Back in 1650, the city of London was being ravaged by a great plague. Brutal year. And Nick, back then, doctors were putting lavender in their masks to ward off disease. Jack and I checked out and today there is literally no evidence that that

that helps with anything medical. Nick and I are not hydroxychloroquitting you into this one. Don't try it out at home. We're not lawyers, but we definitely don't think you should rub lavender on anything that is injured. Snackers, week 24, hoarder almanacs. What's going to be week 25? Tweet us at Robin Hood Snacks. 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 robberhood 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, Urban Outfit or Stock just jumped 21% yesterday

because it's shockingly turned to profit in the corona economy. And Nick and I think Urban Stock is a fashion smoothie with a scoop of tech innovation tossed in there. Beautiful image, Jack. By the way, pull over, pull over. No, it's an urban outfitters cardigan, but thanks for noticing. Boho, chic fashion retailer, urban outfiters, they're reporting earnings. We know what you're thinking. It's what everyone's thinking. It's probably going to be a bloodbatch. Its stores were all closed, and even if its stores weren't closed, people don't care what they look like when they're zooming all day. Understanding of the century. Tough market, by the way, to sell more ironic faux vintage V-nex

with an Aerosmith logo splattered all over the front. But despite the The odds against them, the Philadelphia-based company, just announced a $34 million profit for May, June, and July. And then they built up like another surprise on top of all that. Each of Urban Outfitters brands was profitable last quarter. Its brands, of course, being Urban Outfitters, anthropology, and free people. We're talking like the Power Rangers when it comes to fashion. Now, somehow, Urban Outfitters has managed to avoid what Jack and I like to call the old discounting death spiral of death. A discounting death spiral is when you have one period of bad sales which can crush profits for the long term.

It begins with like a splinter. You don't take care of the infection. Next thing you know, you're amputating a leg. Exactly. Now, a weak sales quarter means built up extra inventory of clothing that you have to store somewhere in the back. Suddenly you got a human-sized stack of a high-wasted wide-leg jeans in the back of a place. And when you have extra inventory, a retail store is tempted to offer discounts on that inventory to clear it out and make up some room in the back. so you can have next falls like apparel coming in. Boom, next thing you know, you're putting out Facebook ads for 40% off that Janice Joplin-style dress sunglasses combo only at Urban Outfitter. So you offer a discount one time just for one season

to clear out one batch of surplus inventory. And that's when the death spiral begins. Customers come to expect discounts, not just this season, no. Every single season. Suddenly you got permanent 40% off everything situation. Jack, what happens then? Then you pull a J. Crew and you end up going bankrupt. No one wants to have J. Crew used as a verb against them. Let's just say that.

So that's the context. And that's why we were looking at Urban Outfitters inventory line within their earnings report for the last quarter. And what ended up shocking Jack and I is that urban sales fell 16% last quarter and yet their inventory of unsold clothes didn't build up. Thanks to operational discipline. Aggressive. Inventory actually declined by 21% for Urban Outfitters. which is great for their profit prospects going forward. All that despite selling fewer clothes. So, Jack, what's the takeaway for our buddies over at Urban Outfitters? Urban Outfitters is a fashion smoothie with a scoop of tech innovation.

Snackers, you got free people, you got anthropology, you got their Urban Outfitters brand. Those are its three core labels. This is the blueberries, the banana, and the mango, the standard, big ingredients filling up most of Urban Outfitters stock smoothie. But then we're looking at the smoothie. There are a couple more ingredients in there, case in point. There's newly a giant scoop of online. almond butter heaped into that urban outfitter stock. Newly is a subscription clothing rental.

88 bucks a month gets you six items, whatever you want. Yeah, you keep any of the six items you want, usually to discount. You can just return the rest. Newly is pretty much rent the runway. Yeah. And its sales have doubled so far this year to $11 million and it's owned by urban outfitters. Now, when Jack and I pop out, we noticed that newly is only 1% of urban sales right now.

But this experimental division is a nice hedge for the future in case the whole fashion industry he gets disrupted. For our second story, Jack, softer firm. All that matters is that I have two pillows, one for my head, one for my body. Softer firm. Casper, Mattress, just snagged a new CFO with a single goal we noticed. How to Turn a Profit in 10 days. Matthew McConaughey, Kate Hutz.

It feels like a sequel opportunity, Jack. McConaughey. Snackers, we're talking mattress in a box pioneer Casper. the company that used to just have one mantra when they launched. Spend anything to get you on their mattresses. Literally spending everything open pocketbooks, they spent $100 million a year on marketing from 2016 to 2020. Subway ads, podcast ads, Instagram ads about their podcast ads.

And that apparently really pleased investors who gave it a $1.1 billion valuation. If you bought a Casper mattress without inserting a promo code, what were you doing? But that was as a private company. As a publicly traded company as of January this year, Casper is losing $100 million a year. And the stock has plummeted and is now worth one third of what it was valued as as a private company. Jack and I tried to convert this to lifts. The calculator broke. We don't have that many decimals of precision. So we notice Casper is going through a really interesting pivot right now. No more growth at all costs. Instead, focus on achieving profitability for the first time. At all cost.

So they're bringing in a new guy. We just noticed yesterday. His name is Mike Monaghan, and he's the CFO. He was previously the CFO of a cannabis company, and he's known by some as the Cupid of profit. And by some, we mean Jack and I. We just called him that. We just came up. We made up that nickname. Now, Snackers, if you want to become a profitable company, it's actually a pretty straightforward operation. You got to do one of two things. Increase revenues or cut costs or maybe both. Now, there is a third option. You could engage in fraud like our buddies over at Luck and Coffee, This is Jack. Nick and I still own stock of Luckin. But just like lavender medicine, Jack and I do not endorse fraud. No, we do not. So increasing revenues and cut costs, those are the two options to boost profitability.

Boom, class is two, three, six, and 14 at business school for you right there. Now, when a company hires a new CFO, it's a signal to investors and to the company that they want to do those two things faster. So we looked at what the X CFO of Casper did, and he already did like the cost cutting part. Yeah, the painful stuff. He laid off 20% of. the workforce and he shut down the European expansion plan. So the new CFO has a very specific focus by the process of elimination. Sell, sell, sell, sell, sell, sell, more mattresses to make more revenue. Jack and I were fascinated with how he's going to do this. It's very particular, which leads to our takeaway. Jack, what's the takeaway for our buddies over at Casper? To become profitable,

Casper is becoming less innovative. Snackers, let's go back to 2019. Casper was doing like dog beds. They were opening up nap stores. They were partnering with airlines. It was wild and crazy over there. Full disclosure here, River, the profit puppy of this podcast. Yes. Has a Casper dog bed and used to like it. She's sleeping in it right now. And when Casper went public, they said they wanted to become the Nike asleep.

They were even playing around with like CBD pills. It was fun. That is a boatload of innovation and excitement, Nick just discussed. But today, to increase sales, it's going to do the opposite of its direct-to-consumer disrupt things origins. Yeah, here's what the new CFO is going to be doing. They just committed to sell more. more Casper mattresses, not just online, but just in Walmart and Target stores. They're also going to

sell the mattresses in Ashley's home stores, Denver Mattress Company, and Oklahoma's regional mattress chain, Mathis Brothers Furniture, who even knows how many brothers there are in that whole thing. They realized over at Casper that you can't fight human behavior. Most people want to touch and feel and lay down on a mattress before buying it. You're either doing the squish test, which we've all done, or you're put in the wine glass on one side and bouncing on the bed. If I bounce a bowling ball on this mattress, will it spill my wine glass on the other side of the mattress? And does it have to be red wine? It does. It has to be red wine. Snackers, as a public company, Casper has sadly realized a new perspective to get to profitability. Reverting back to the old

school mattress ways, it was trying to disrupt. The more things change, the more they get the same. For our third and final story, Salesforce just had its first ever $5 billion quarter. So we're looking at what Salesforce actually does. Yeah, no one really knows. It's kind of crazy. Now, Salesforce also just got tapped for the unsecret quasi-elite 30-person club. It's called the Dow Jones Industrial Average, but you know it on the radio show as just the Dow.

Now, the stock jumped because that's kind of a big deal. Benioff, Mark Benioff, the founder's mom, would be very proud of this to be part of the Dow. Yeah, no big deal. I'm part of the 30 U.S. heavyweight companies included in the Dow. But that was like two days ago. And then yesterday, Salesforce's stock surged 26% after its earnings report. Because last quarter, Salesforce's revenues were $5 billion, which is double what it was just two years ago. Now, Snackers, you hear tech, you think San Francisco, but you really should be thinking Salesforce.

Salesforce is tech and San Francisco. It's the biggest employer in the city. You're walking around Soma, you are going to get smacked in the face by that cloud logo stitched onto like dozens of types of outdoor paraphernalia. One reason Salesforce is so valuable is because its target addressable market is every business there is. The old T-A-A-M. Now, do you sell things, Snackers, or do you have customers who you need to support? If you answered yes to either of those questions, Salesforce wants you paying monthly subscription for its software. If you answered no to either of those questions, then you probably do not have a business or you're not going to very soon. If you don't have customers, you're not a business. Yeah, this is a problem.

Now, as Rolladex's and business cards have disappeared, they've been replaced by Salesforce's ubiquitous customer relationship management software. Now, one practical example, so you can really, like, sink your teeth in and get Salesforce is think like five years ago you're doing a sales visit to a propane parts supplier over in Wichita, Kansas. You got a spiral notebook. You took notes about everything that was discussed. You exchanged business cards. And you probably stuck a sticky note on the calendar in your cubicle for one month from now to follow up with a guy. I'm going to write it, write email one month from now. Everything was great. Really enjoyed the cheese. Now, today, things are a little bit different. All of that information from that sales meeting in

Wichita, Kansas, it goes into your corporate Salesforce account. And because that account is cloud-based, everyone in your company pretty much can see it, which is a benefit to the company. It's also a benefit to business continuity because let's say Timmy, the salesperson, leaves the company. Then your company still has all the information about that propane part supplier, despite no more Timmy. And instead of Timmy going after that propane deal in Wichita because he's almost there, there's a warm lead waiting for your replacement to chase it as well. So Jack, what's the fake takeaway for our buddies over at Salesforce? Salesforce is pretty much Dunder Mifflin Infinity. The software Ryan Howard was pushing on all the sales guys in the office. So Jack, what's the real takeaway for our buddies over at Salesforce? Salesforce's CEO feels bad about how successful Salesforce has become.

Snackers, as companies have implemented these like discipline sales structures, Salesforce has become enormous. And work from home makes Salesforce even more valuable because managers need to track what their workers are doing even when they're not there. Yeah, they're like, hey, Timmy isn't in the office right now, but I see he posted a call report at 9 a.m. and 5 p.m. Convenient times to post call reports to prove that you're working, Timmy. I give Timmy the benefit of the data now. Now, founder and CEO Mark Benioff did make a no layoff pledge in March, and they're keeping all these workers for like the past 90 days. He's a great philanthropist who wants like the American economy in San Francisco to do well.

But despite his guilty feeling right now, Mark Benioff's company is officially a blue chipper of the Dow, and now it's worth a quarter trillion dollars. Jack, and you'll whip up the takeaways for us over there. Urban Outfitters trifecta of boho clothing brands made a profit despite lower sales. They avoided the old discount death spiral, which ends in J-Crew bankruptcy. For a second story, Casper hasn't been sleeping well since IPOing back in January. It's kind of going back to just old-school mattressways in search of profits. For a third and final story, Salesforce is becoming an essential software for every office. It's joining the Dow, its profits are booming, and its CEO feels bad about it.

Now, time for our snack fact of the day. This one tweeted in by Jess Preet Singh in lovely Santa Clara, California. If you were to stack Apple's $2 trillion valuation and break it up into $100 bills, which would be nice. The stack would be 1,357 miles tall of stacked $100 bills. It's like the ultimate dividend, and that would be five times the height of the International Space Station. Apple is a valuable company. We use lifts as our preferred unit of measurement between Jack and I for market value.

Jaspery uses miles of stacked $100 bills. Must be nice, Jasperit. Must be nice. Now, before we go, Snackers, congrats on the nine-year anniversary to Sean and Nicole Wolf over. in Berlin, New Jersey. And Jutan Pripmani, congrats on getting a new job over in Abu Dhabi. Then we got happy birthdays to Shelby Kensley turn it 25 over in Boulder, Colorado. District Attorney Jody Owens, happy birthday in Jackson, Mississippi. Grandma Jade in Boston, Massachusetts. Battalion, Luxembourg. Postal worker Kyle Simmons, happy birthday in Lewiston, Maine. Did you know Lewiston, Maine was the host of a Muhammad Ali boxing match? Did not know that, but did know that

Sarah Penny Packer also her birthday in Winston-Salem, North Carolina. Happy birthday, Happy Birthday Jerry Gooby in Minneapolis, Minnesota. And Carson Hyderchite in Dubuque, Iowa. And Reagan in Boise, Idaho. And Minigas Mikulis in Tewksbury, Massachusetts. And Camille from Richmond, Virginia. And not a birthday here, but Jake White over in San Diego, California, started saying T-Boy at the beginning of all his meetings,

and now there was 25% more attendance at all those meetings. According to PFWTM, which is Jake White. Now, Snackers, just during the recording of this podcast, Nick and I, like, can't help but see the push notifications. Big developments in Wisconsin, the latest place where an unarmed black man was shot by police. And then you go further south, in the Gulf Coast, you got a category for hurricane, which is about to hit land. Nick and I want to give a shout out to Snackers in Texas, Louisiana, and Arkansas, and also Snackers fighting for racial justice. We're thinking of you, this pod.

We can't wait to see you guys tomorrow. This is Nick and I own shares of Apple. 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 Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only, 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.