The Best One Yet - FemTech grabs $42M for breast pumps, Whole Foods finally cuts prices big, and Walgreens drops 12%

Episode Date: April 3, 2019

Elvie raises $42M to scale its “iPod of breast pumps” in a big week for FemTech. Whole Foods (finally) cuts prices today, but it shows how Amazon’s grocery strategy is a mess. And Walgreen’s is officially the worst stock in the Dow yesterday and for all of 2019 after another rough quarter.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's Wednesday. April 3rd. And this is the best snacks daily yet. Snackers flat out. Markets dipped, but we got three great stories for it.

Wonderful healthy mix we got. First, we got Whole Foods. It's stealthily jopped prices overnight. And it's about time Amazon does something with Whole Foods. What I love about this is that the Amazon team had code words prepared to this didn't leak. Wow. Second story, Walgreens. It's officially the worst performing stock in the Dow after following.

12% yesterday. Now, get this, it's the worst performing stock of the Dow of 2019. But we love how the CEO is a straight shooter. He's going to get right to it. Really honest guy. I can't wait to all over this thing. Third and final story is Elvi. This is the iPod of breast pumps. It just raised $42 million and it's changed in the game. And it's a big day for Femtech. Femm tech. Now, before we jump into that mix of stories, we got to talk about what Patagonia is doing and why banks and financial firms are not happy. The California announced yesterday that it's not making custom vests anymore for finance companies. We repeat, if you were a finance company trying to deck your team out in Patagonia gear, not happening.

Yeah, it's reserving the right to custom vests for companies that have a mission, a promise, and are fixing the world, like charities and non-profits. If you are a venture capital VC firm, a venture capitalist trying to deck out everyone you've ever worked with in Patagonia gear, here is the rejection letter you're going to get from Patagonia. No joke. Here's what they send. Patagonia has nothing against your client or the finance industry. It's just not an area they are currently marketing through our co-branded division. Now, this brings up a fascinating question. Big one.

Business schools? Yes, because they kind of fit both worlds. Technically non-profit institutions. However, they are breeding the future of financial firms. We will tweet at Patagonia and get down to this question. We got to figure out Patagonia, how are you going to handle MBA programs? But before you get into those stories, listen to this. serious money.

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 to hear 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. Robahood Financial, LLC, member FINRA slash SIPC. For our first story, Whole Foods just strategically cut prices after a secret, ridiculously stealthy Amazon mission. It starts today, actually.

It's big. The lower prices. It happened overnight. Can we walk back to 2017 for a moment? Please do. I remember when Whole Foods got acquired by Amazon. I was expecting your paper or plastic bagged groceries to be delivered to your front door by drone. I was remembering like $1.

Ammon butter was my dream. Didn't happen. None of this stuff happened. We expected prices to fall like crazy. incredible convenience from Amazon being the new owner. Instead, when you look back on Amazon's Whole Foods prices just a few months ago, they were only 0.8% lower than before the $14 billion acquisition. So practically nothing changed so far. Except till today. This is the biggest broadest price cut we've ever seen at Whole Foods since it's been purchased. It applies to 500

products and the prices are going down 20% on average. Jack, I've got great news for you and your vegan fiance. What do you got? All right, here we go. Rainbow carrots? Yes, what about it? The price is down a full dollar to like $199. That is a 50% cut.

I don't even know what size carrots. My fiance is actually not vegan. She'll eat chicken from time to time. Great. The price of chicken is down 40%. As a reducerarian, I approve. Yeah. Now, Whole Foods hasn't just been cutting prices.

True. Over the winter, it actually raised prices a couple times. It did. And that's actually to be expected. I got to give Whole Foods credit. It's normal for grocery stores to raise price. It's totally fair. That's how inflation works.

We get it. You got to do it. So not increasing prices is actually a good thing already. But here's what we loved about this story. It's that basically Amazon went on a stealth mission with this. It didn't want word to leak at all that this was going to happen. And so it used code names, internally code names. And that if some vendor was walking through Amazon and heard the code name, he'd have no idea what it was.

No idea. We're going with Operation Dumbow Drop. But we totally made that one up. Now, employees for Whole Foods have been working hard literally, literally staying late all of last night. Putting up new signs for how much things cost. All right. So guys, here's the cool thing.

This is where Amazon's value to Whole Foods becomes incredibly powerful. Strategic pricing. Basically, Amazon comes in and ID is what it calls, quote unquote, known value items. I did air quotes there. I did too, actually. These are things where you probably know the price

if I had to throw it at it. Right. And these are pantry and kitchen staples, like milk, eggs, and chicken. Basically, you're meat and potatoes. Right. And so Amazon is a wizard of price. They have like 100 MBAs working on just pricing.

And they know that you have price value perception. You want to break that down? Yeah, it means if you expect something to cost a certain amount and then suddenly it's less, you are pumped. You are stoked. Exactly. We all know what egg prices are. What I don't know, and let me throw this at you, how much do you pay for shrimp?

I have no idea how much I'm paying for shrimp. What size do shrimp even come in? I'm hoping I'm paying less than 30 bucks. I think it's like that U-Dash 15 is one size. Does it include the tails? No one has any idea what shrimp prices are. So the point here, if Amazon had cut the price of shrimp, none of its customers would have even noticed.

Because it has no price value perception. So instead, it's making these highly visible price cuts. So Jack, what's the takeaway for our buddies over at Whole Foods and Amazon? We got to be honest about Amazon. Its grocery strategy is a mess. There is an Amazon fresh. I don't know what that thing is exactly. You have Amazon Go, which is cashier list grocery stores.

You've got top employees from Whole Foods getting frustrated that Amazon hasn't given it attention. Yeah. They're leaving. Only 11% of Amazon Prime members actually shop frequently at all. And then get this. This is the real kicker. Amazon revealed last year that it's actually going to launch its own Amazon grocery stores. It's already got leases. Like Amazon Go? Amazon Go, but not Amazon Go. It's just a grocery store. So it's got like five different simultaneous grocery strategies. Exactly. All going on. For our second story, Walgreens just fell 13%

because it's the victim of bullying. Yeah, and shareholders are done with what. They're not feeling. It's the worst performing stock in the Dow of 2019. But first, let's talk about the CEO. This guy is a straight shooter. He is a walking lesson on talking to humans. Talking honestly, though, and straight to the chase.

We love it. He said in the first paragraph. He's doing everything we're not doing right now. So he said, this has been the most difficult quarter we have seen since the 2014 merger with boots. Now, when you look into the first paragraph, we're not doing it. financials. Their profits at Walgreens fell 14% last quarter. But even worse, shareholders were super bummed that the outlook for the rest of the year, flat earnings. No earnings wrote

at all expected in 2019. Now, here's the other great thing about the CEO. He went on to say, you know what? There's quote unquote, no excuse. No excuses. But he did have a whole bunch of reasons for the poor performance and they weren't his fault. No, first, he awkwardly blamed like a week cough, cold, and flu season. Yeah. Now, that's good for society. Fewer people got sick, but it's bad for Walgreens. So sales at stores dropped by 3.8% in fourth quarter.

Then he said, you know what? Tobacco, all right? They did this little experiment where they stopped selling tobacco products and some Walgreens. CVS banned tobacco nationwide. And so Walgreens tried it out too. Now, Walgreens then said, you know what? We did the experiment.

Sales fell, so we're not happy with it. They're not expanding that pilot. And then there was a surprise from last week. week where they revealed that at 1,500 Walgreens locations, they are going to start selling CBD products. Right. In the jurisdictions where cannabis has been legalized. Exactly.

And that's like the chill, relaxing component of cannabis. It's also Walgreens way of saying, hey, hey, we're with it. We're cool. We can do this. So, Jack, what's the takeaway for our buddies over at Walgreens and the straight shooting CEO? Yeah, Walgreens problems. It's not with customers. It's with insurance companies.

Healthcare is like a like a Shrek-infused onion. It's got layers. So many layers. So many layers. Layers on layers. Walgreens is just one of those layers within the industry. But the most important layer is insurance companies. They're the ones that pay Walgreens the most.

So like, let's say you're buying a prescription for, I don't know, let's say it's prescription dandrew shampoo. Okay. And they say it's free at the Walgreens. Yeah. It's not free. So not free. It might be free to you, but the insurance company pays Walgreens.

And these days, insurance companies, they've been consolidating, buying each other merging. And that makes them really big and really. powerful. And Nick, what happens when you become really big and really powerful? You're tempted to bully the little guy and Walgreens has gotten bullied. They're getting paid less. For our third and final story, we got to talk about LVey, which just raised $42 million to scale wearable breast pumps. Yeah, and the company name Elvy, it's not just the two letters. True. It's like elves, but plurl. But Elvy. Plural female elves. Plural female elves. The company was founded in 2013, and it designed the iPod of breast pumps. It's kind of like a fifth bit of breast pumps.

But better looking. But it looks like an iPod. Beautiful design. Incredible app-connected wearable breast pumps that are doing something no other breast pumps do. Well, for one, they operate silently. You can wear them beneath your clothes. Nobody will even notice. And there are no, like, wires and tubes sticking out in 30 directions.

And there's an app that tracks pumping history. It's like a very Apple-y product. It's subtle and it looks cool. Now, a second product that's making that's also app-connected is a pelvic floor trainer. So this is a tech company led by women making product. for pre and post childbirthing women. Now, this is what's fascinating about Elvie. Its brand differentiator is that it's not like any female tech-focused company you've ever seen.

Check out the website. Please. Not a dash of pink anywhere. Not a bit of cliche. No, the company kind of got its early surge from some viral marketing. Okay, here we go. London catwalk at a fashion show. Model walks all the way down, Jack, gets to the end.

Busts open a shirt. And she has a LV breast pump on and no one knew. the entire time. Bold move. Second big viral marketing, it inflated these gigantic, like, building-sized inflatable breasts, placed them all over London. And the point of this in-your-face marketing is to bring the conversation about body talk into the open instead of just in lactation closets. It has a serious approach. And here's the other side. It's not just the brand differentiation they're doing. It's also on the financials. They're targeting a huge market. So here we go. 80% of American women who've had a child breastfeed. And then get this. Millennial moms are working right after

they have kids. They have disposable income. They want high-end iPod-looking products. So you've got a big market with members of that market who are willing to spend, and that's why revenues have tripled in the past six months. Who wouldn't want a breast pump that looks like it was designed by Apple? So, Jack, what's the takeaway for our buddies over at Elvie? So Femtech. Femtack requires Femvesters. Yes. Opportunity has been right. there all along, except the investors didn't know anything about it because they've all been guys. Yeah, this product probably should have been designed 10 years ago, but guess what? 91% of startup investments come from men.

So when you're facing a room full of 40-year-old vest-wearing... dudes. Who are VCs in Silicon Valley, it might be tough to pitch a product like Elvys. It's a lot of user to pitch a product for like mail enhancement. Right. So good news, the investment community finally realizes this big market opportunity, and there are investors dedicated to companies like Elvie. And then there's another big development.

This week has been particularly good for Femtech. First, you got Cora, which makes natural tampons and female wellness focus. They just raised over $7 million. And then this other company called NextGen Jane, which raised $9 million, and they're bringing like big data analytics to periods. It's an incredible combination. Jack, why don't you whip up the snacks daily takeaways for us? Amazon's grocery strategy looks like a mess.

We want our almond butter delivered by drones already. What is taking you so long? I can't believe we're still asking for this. Walgreens, it has a big problem in its insurance companies because they're getting bigger. But the CEO deserves his own podcast. Third and final story was FemTech requires Femvesters. Breast Blimp balloons for the win. Time for our snack fact of the day.

This one is maybe our favorite part of the big Saudi news from yesterday. Yeah, we covered yesterday Aramco, Saudi Arabia's giant oil company. which we just learned is the most profitable company on earth ever in the world. So that company is so big and it pumps so much oil every day that it loses 10,000 barrels of oil every day. Totally unaccounted for it. It loses it. Just dropped. And like it doesn't even matter. It doesn't even care. Because that's only 0.01% of its daily output. Not one, not 10,000, 10,000 barrels. That is size. How big is a barrel? I have no idea. Now, yesterday, a couple other great stories. check out our Snacks Daily newsletter to learn about Andresen Horowitz, which just raised

two billion new dollars to finance the Ubers of the next generation. And if you think you're having a bad day at work, get this. The Blue Apron CEO quit and the stock jumped 14% on the news. That is rough, man. It's brutal. We loved having you on the Snacks Daily podcast with the state. We can't wait to have you tomorrow. We'll talk to you tomorrow.

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.