The Best One Yet - Levi’s 1st earnings report, Under Armour drops 4%, and Bank of America’s big pay raise

Episode Date: April 10, 2019

In its first earnings report since its March IPO, Levi’s shares jumped. Under Armour dropped 5% because a single survey showed it’s lost consumer love big-time. And Bank of America just jacked up its minimum wage to $20 an hour — And that says a lot about the current economy.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 10th. Correct. It is. This is our, I mean, I love this one.

This is my favorite. This is the best one yet, even though markets fell yesterday. Oh, my God. The winning streak for the S&P 500 stopped at 8. We were going for the hat trick of hat tricks of 9. Yeah. Investors are blaming it on a threat by President Trump to add a bunch more tariffs to Europe. I think like 11 billion more.

That's a bunch. It's a lot of billions. Now, three fantastic stories we jumped into Snacks. I'll get you to this. The first one is Levi Strauss, based in San Francisco, California, has its first earnings report since its IPO last month. We're going to try this one on, see how it feels, and get you the report soon. Nick's not going to try it on. No, I hate jeans, but I'll try this one on.

Second story is about Bank of America. It upped its minimum wage, big, like really big. We're talking to $20 an hour. $20 an hour. Big win for tellers and the bank. Third and final story is Under Armour. Shares dropped by 4% because he's just not. that into you. I'm sorry,

we had to say it. This is one big consumer survey that is bad news for Under Armour. Now, before we jump into all that, we got to talk about Amazon and Google for a second. Drone delivery is the common element. Amazon teased us about this whole drone delivery future five years ago with the CBS. Amazon Prime Instant. Yeah, I thought we were going to have these things zooming around dropping off, you know, my RX bars. But Google announced yesterday that its wing subdivision has raised.

regulatory approval to deliver by drone in Australia. Beautiful thing. They've already done 3,000 drone deliveries in suburbs of this one little town in Australia. You know, dropping off, you know, your medications. Kangaroo food. Maybe some like broccoli, the whole situation. Now, the most interesting part about Wings drone delivery is that it's not dropping packages in the air. It's also not landing a drone in the backyard.

We all, like, know those drones that just bang into your door or drop stuff in the backyard. A rope. We love this. Like the Navy SEALs. Really cool. And packages are rappelling down from the rope to the front line. A straight line. This is just, it looks badass. Repelling is so in right now.

There's all this mountain climbing documentaries on Netflix. Yeah, by the time you slept up the mountain, I don't know why you want to like repel down. But either way, we think it's pretty cool. I might move to Australia. Before we jump into the rest, listen to these important words. You're tuned in the snacks daily. We spoke to the lawyers. The snacks about to hear rain food.

It's air candy. They don't reflect the views. of 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. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Levi's jeans just had its first earnings report since last month's idea. Yeah, but can we talk about the CEO? Please enlighten me. He has some bold advice for jeans wears. This is aggressive. He's suggesting that nobody ever wash their Levi's jeans. Don't even

think about washing the jeans. He says it was water. Yep. And it makes the jeans worse off because it loses some of the blueness. I don't even get this. I don't wear jeans. They give me the chills. I'm not comfortable with them either way. This makes me even less comfortable with them. Okay. For the rest of us who actually wear jeans, he says use a toothbrush to spot. I'm going to let you take this from here. Okay. So technically, this is Levi's's first earnings in 35 years because it used to be a publicly traded company. Drew, it was founded in a back in 1853, San Francisco Gold Rush, went private in 1985, and then did its IPO again in March. It's back, baby. It's back. Now, if you rule out some foreign exchange mumbo-jumbo. Yeah, I'll carry the three. Sales rose by 11% last quarter to

$1.5 billion. And that was actually a surprise, because denim has not been having the most fun recently. No, Athlizier has eaten into denim sale. Yeah, basically there are two key reasons. for this. The first is Athleisure. Yeah. And I can't vouch for this because my household, my fiance and I, we have tons of denim and tons of adage. But apparently, Athleisure is replacing a lot of denim. Right. Particularly people are looking at and saying, you know, I can get the slim fit low rise, or I can look better at yoga class with yoga pants. And they're opting for the yoga option. I love when Nick tries to talk about it like he knows jeans. I just go for the yoga pants every time. And the second tough trend is e-commerce, because anybody who wears some jeans knows that you

need to try them on. In person. No two pairs of jeans are the same. That's what I've heard. So that's tough in the e-commerce era. Now, you see these two trends. You look at what's happening. You're like, all right, how is this affecting Levi's? Well, denim sales overall across all companies have only risen by a mere 3.5% in the last decade. So it is a tough industry to be in. And Levi's peak sales was actually way back in 1996. And it's not even back to those sales. So what Levi's has been doing since it IPOed is saying, hey, we're going to focus on getting the brand big abroad. The brand is strong. This is one of the classic American brands that actually, like other countries were threatening

to tariff during the show. I wish they made khakis. And they're going to use the money from the IPO to scale aggressively into China, India, and Brazil. So, Jack, what's the takeaway for our buddies over at Levi's after their first earnings report? Whatever you do, do not compare this revenue growth with tech's revenue growth. Exactly. Now, Levi's had a 11% revenue growth jump, which is actually pretty good for, like, physical goods.

Yeah. Now, Amazon and Facebook, they get like 30% revenue growth each quarter, so they would laugh at this 11%. But, you know, scaling a tech company means like you're pressing a button in putting some code and posting a lot of ads. Yeah. And scaling a jeans company means actually making more jeans for each customer. And then you need to like have this, you know, this way size with that length. I mean, they're like a million options. So the expansion to China is going to require like a new plant. That takes time. It's a lot of money and a lot of people to craft these things.

So investors know it's not an apples to apples comparison between physical goods and tech. And that's why you tend to see tech companies with higher valuations than a denim company. For our second story, Bank of America just jacked up its own minimum wage on itself. Whoa. Here we go, Bank of America. By a lot. Significant. Over the next two years, people are getting paid more at Bank of America. It's so true. And can I say we've all deserved this? this. I know what you're going to say. We've endured so many kind of BSE Bank of America ads. We get it. You're investing in the community. You're building strong communities. We get it. Well, they finally are. Can we talk about the numbers here? Yes. Back in 2016, Bank of America's

minimum wage internally was $13.50. It came up a year later in 2017 to $15. But here's the news. Starting May 1st, everybody at Bank of America will get at least $17 an hour. It's like an Oprah situation. They're just giving out a higher minimum. And by 2021, everybody gets $20 per hour. Did they do a math on that. Forty-eight percent pay increase in five years, and it's long overdue. Yeah, between 2016 and 2021. That means everyone there is going to get $40,000 a year if you work like a 40-hour a week. Now, other banks like announced some similar things after last year's tax cut. But now Bank of America is seriously ahead of the pack. Now, this is impressive. All right. So classic snack style. We were trying find the right trend here. And this fit in perfectly with what we were talking about on Monday

after the latest U.S. jobs report. We were just telling you that not enough people are getting pay raises. I feel like we were here Monday doing the same thing. Since 1980, the bottom 60% of American workers haven't gotten a real pay increase. And part of the reason is things like today's news just weren't happening enough. But here's the thing. When unemployment is at a record low, Like it is. Right now at 3.8%, workers have a lot more leverage and can demand higher pay, or else they're just going to leave. Right. So still, share prices fell by 1% because investors realize it's going to cost Bank of America more money to operate, and this could affect profits. Right. Tens of thousands of employees are going to be affected in a good way. In a very good way.

So, Jack, what's the takeaway for our buddies over at Bank of America? We're paying up a little more. This is the right thing to do for Bank of America's profits. Now, this is not a charity. It's not doing this to feel good. No. But Bank of America has one particular advantage over digital first banks. And that's brick and mortar physical locations. It has thousands of them across the U.S. And Bank of America would tell you that this is where the magic happens.

This is where customers get to interact with Bank of America employees and have a good experience. Right. But these branches are only as good as the people working in them. And those are the tellers, and they need to get paid. And Bank of America is investing big in this. They're like opening 500 more of them over the next few years. They want their tellers to be very happy. happy and having great interactions. So this minimum wage increase, it keeps those tellers working at Bank

of America because they could go somewhere else, and it keeps them happy, which will be good for customer experience. For our third and final story, Under Armour just dropped 4% because consumers just aren't into it anymore. I think we know who to blame here. Are you thinking of a celebrity couple? Under Armour's first couple is Tom and Giselle. Tom Brady and Giselle. And any time as a New York sports fan, I can blame Tom Brady. I'm going to. Now, Under Armour, don't take this personally. You can still protect the house. But one annual survey thinks you're not protecting this house. No, that is the B. Riley, which is an investment bank, annual survey of just, you know, athletic and apparel and footwear. They survey all sorts of people, thousands of people, and they come up with like the top athletic apparel companies.

And if you are really into apparel-related stocks, you wait for this report. You circle your calendar every year. just came out yesterday. Spoiler alert, Nike won like every category. Yeah, congratulations, shocker. That's not a huge surprise. One surprise is that Vans is moving up in the casual department. Very, very nice, very sleek. It's doing it, you know, very casually. But Under Armour, wow, dropped in two key categories. One is basketball shoes, and the other is just overall casual apparel. Felt a fifth place in basketball shoes and seventh place in casual wear. Fifth place in basketball shoes. I can't even think of four basketball shoe companies. I can think of three. I'm going to pretextual shoes. I'm to pretend I'll make up a fourth. But yeah, fifth is rough. And this is the second year in a row

that Under Armour has fallen in this survey. Now, there is a key quote in the survey that we think sums the whole thing up. Jack, do you want to give this thing? Susan Anderson, the equity analyst at this company, said, we believe this is reflective of the limited innovation we've seen at Under Armour Footwear compared to Nike and Adidas. Yeah, we take back what we said, take this personally, Under Armour. Now, this reflects a big shift. in the apparel industry, which is that consumers want less technical stuff, and we want more fashiony stuff. We talked about it last week. Beyonce just got signed by Adidas. This is about how you look, not as much how you're performing. Literally, in the survey, they found that fewer respondents want to

buy, quote-unquote, athletic sneakers and footwear. Right. So Under Armour is still focused on sweat-wicking athletic apparel, but Instagram-able colors is what you need. Exactly. So, Jack, what's the takeaway for our buddies, not over at Under Armour, but who are listening. This survey was an information advantage. Everyone is looking for an advantage. They're looking maybe on their expertise. They're looking to get a little bit of luck. They're looking for any information they can get.

Yeah, and this survey gave investors a great information advantage. Now, typically investors are kind of waiting around for information to come to them. Yeah, quarterly earnings reports. They come out every three months. Super scheduled. Under Armour is about to come out with their earnings report. You could have just waited for that. Or you could take the survey information we got yesterday and use it.

Right. This is one of those nuggets that just sprinkled throughout the year, and you kind of just have to capture it. It's an information edge. Jack, why don't you whip up the takeaways for us? Takeaway number one, do not. And I repeat, do not. Compare Levi's growth to tech growth. I just don't even feel comfortable talking about genes at this point.

All right, second, Bank of America is raising its minimum wage, not for charity, but for profits. We love what you're doing, HR department. And finally, you need to find your information. advantage wherever you can get it. So does Under Armour if it's going to keep protecting things. Now, time for our snack fact of the day. This one's at your wallet. Yeah, this one is a surprise. Yes. The number one most preferred method of payment for American adults. Are you going to give this away? Yes, I am. Right away. Do you want to just like that? Should we keep them hanging? I already know the answer. Debit cards. Yes. Fifty-five percent of Americans prefer debit cards to anything

else. Next up, credit. Right, but not as much as you think. Credits like 20% and then cash comes in third at like 15%. And then checks and mobile payments are just, I barely even see them down there. I was really surprised debit beat credit card by that much. But the more you know, it was serious. So Jack, what else are we coming in the Snacks Daily newsletter? I think we got JetBlue? A huge story from Jeff Blue. This is developing news. Breaking after hours. So the company announced an all hands meeting, not at their Queens, Long Island City headquarters, but at JFK International Airport. And people wonder, are they going to announce transatlantic flights for the first time? Jack, on a similar economy class theme here, Boeing stock fell because it announced it had zero

737 max orders in the month of March. And its deliveries in the first quarter just were way down. Not pretty. That was a great pod. We loved having you with us. And we'll love spending tomorrow with you as well. We'll see you. That sounds good. 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, 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.