The Best One Yet - 🧘‍♂️ “Lululemon’s pandemic-proof mantra” — Nike is a close-talker. Fast beats Amazon/Apple/PayPal. Lululemon’s Power of 3.

Episode Date: March 30, 2020

It’s been one year since Lululemon set an intention known as its “Power of Three” — and sticking to its 5-year plan has become pure corporate leadership in the coronaconomy. Startup “Fast” raised a new round of financing from Stripe to solve online shopping cart anxiety, but its real power is as a Big Tech outsider. And Nike’s earnings report reveals a valuable Wall Street strategy: Be a “close talker.”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. Welcome back. It is Monday, March 30th right now. And Nick, I'll tell you, drastic times call for drastic measures. Last week, this country made some progress. We're talking about the $2 trillion bill that passed the House.

Now it's a thing. Tea with a tree. It also passed the Senate. I'm telling you that Schoolhouse Rock Bill is just so impressed. It's also right now the end of the old 15 days to reduce the spread White House order. And we're guessing you're probably still in a home right now. Yeah, we're waiting to see if the school. There's another 15 days coming, another 30 days coming, another 90 days of stopping the spread.

We don't know what's going on. In the meantime, Jack and I slapped down some spandex to whip up today's snacks. You're going to see why three wonderful stories. Jack, how are you feeling about today's pie? I feel like the nutty professor after he like became Eddie Murphy. This is our best snacks daily yet. Jack, first story, what do we got? First story, Lulu Lemon set an intention one year ago.

The power of three. And through all this market and business madness, it's focused on one thing. thing. The power of three. This is pure and focused corporate leadership. Second story, Jack, what do you got? Fast is the startup that just raised a fresh round of capital trying to solve one thing. We're talking shop and cart anxiety. That's real. It's defined. But to really succeed, it can't become part of big tech. Only an outsider can solve payments. Third and final story, Jack. Nike stock jumped after its earnings last week, and that's because of an old Wall Street practice. You've heard of close talkers. We're talking close readers. But before we get into that, we know what you're thinking, Snackers. How can I block people from tagging me on an Instagram story to do like pushups or five things I miss about this, five things I miss about that? You're like, this is a couch. I'm on it. I don't need to necessarily get off of it. Or if you're a little more virtuous, you might be wondering how you can help local businesses in your economy. That's why Jack and I have jumped in Snacks style. Last week, we tested out Mask Match, which basically connected you with someone else offering masks for.

hospital people in your neighbor. Right. If you have an N95 mask, log on to maskmatch.com, and you can find a doctor near you who needs that N95 mask. In the meantime, Jack and I woped up again another option for you. This one was actually a creation from the Instagram founder. Right. The Instagram founder is no longer at Facebook. So he started up some sort of nonprofit website techie thing called Save Our Faves. By the way, that industry we just came up with is a real official thing. We're assuming venture capitalists are going to be all over this. Save Our Faves is basically. It's basically. a website where you can buy a gift card to support your local restaurant only in the Bay Area, but we'll get to a solution for those outside the Bay Area. In San Francisco, for example, you're a fan

of Nush's falafels. Boom, buy a gift certificate to Nush. Grasias Madres, which is all Mexican, all vegan. I've been there twice, delicious margaritas. Also, Suvla, which is by far the best fast, casual Greek salad option in the world. Get it Greek style. They add French fries. So you can help these restaurants bridge this crisis when they can't let anybody inside. They're not making tips, the bartenders aren't whipping up any cocktails, you can help them out by buying a gift card, which you can redeem when this is all over. We're hoping this comes to my hometown in New York because we really would like to get some gift certificates from the old town bar where they make the best cheeseburgers, Jack and I know from experience. Okay, so that's Save Our Faves, which is only

in the Bay Area currently. If you're outside, like Nick mentioned in New York City, you can just hit up their website and hopefully buy a gift certificate online or on the phone. Email a restaurant, get a gift certificate, support your local spot. Let's hit our three stories. You're tuned in to snacks daily. We spoke to the lawyers and we got to get something legal out the way. 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. You know, we're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you.

Robahood Financial, LLC, member FINRA, slash SIPC For our first story Lulu Lemon's earnings reveal it's focused on one single thing right now. We're talking its corporate mantra. Now the company released earnings last week,

same store stales, they were up 20%. It has $1 billion in cash so you don't have to worry about it going bankrupt. It's dealing with its landlords because all of its stores have to close down centrally. It's trying to get its rent excused, yada, yada. But that was not the highlight that Jack and I found fascinating.

The star of the earnings report was the power of three. Snackers, one year ago, Lulu Lemon had a mindful moment. First, it adopted its social media hashtag to become its corporate vision. That hashtag, sweat life. It means an active lifestyle. If you're sweaty, you can still go out and see people. No joke, that thing is actually in its earnings and stuff. But then Calvin McDonald, the CEO, turned on some instrumental playlist, lit up a candle, and then set an intention for the company. He got every single Lulu Lemon employee in a yoga studio. Not bad. And he announced a five-year plan called The Power of Three. He did that in April of last year. Now, this is a real thing. This is an actual corporate thing. It is not a self-help

book. The power of three is Lulu Lemon. The top line goal is to drive revenue growth at Lulu Lemon for five years in three distinct ways. Okay, so Snackers, Jack and I jumped in snacks out. We check this out. We got the three ways for you. The first way Lulu Lemon wants to drive revenue growth for five years is product innovation. Basically, double its sales to men and increased self-care products like shampoo and deodor. Basically, Lulu wants dudes walking around at work in khakis so you can be doing burpees after the meeting. I'm wearing Lulu Lemons right now. That's a disclosure, I swear. True story. Jack's not wearing a shirt, but he is wearing Lulu Leu Levens. We are working from home. Also a true story. For the second part of the Power of Three, Lululemon decided to focus on a little bit

a jargon here called the Omnichannel experience. Omnichannel means online and offline, merging merging them together with the ultimate goal to double digital sales, aka e-commerce for Lulu LeMond. This is exactly why Lulu Lemon opened up a 20,000 square foot Chicago store that basically is like a yoga spot. It's got as many yoga studios in this store as like your SUV as cup holders. And the third and final element of Lulu Lemmon's Power 3 is international expansion. This one's simple, quadruple international sales. This is straight up out of like the JFK playbook. Get one man on the moon, quadruple international sales.

So Jack, what's the takeaway for our buddies over at Lulu Lemon? Lulu Lemon's mantra strategy is pure, toned, healthy, well-aligned corporate leadership. Snackers in the face of the coronavirus, Lulu isn't shifting priorities, it's not changing direction, it's not calling its parents, it's not distracted, it's not freaking out. It is singularly and devotedly focused on the power of three, despite all the noise. Case in point, all the investors and analysts the other day, they were looking at Lulu's earnings, but they may not have noticed that Lulu also released a one-page, sharp-looking memo on its power of three results. All right, number one, men's revenue, it increased 32% last quarter compared to just 17% growth in women's sales. Che-ching, that checks off the first part of the power three.

How about digital sales, Jack? They jumped 41% last quarter compared to just 9%. percent growth in stores. And Jack, for the third and final leg of the three power of three stool, what was the international results? International sales jump 25 percent compared to just 19 percent in its home market of North America. Fun fact, Lula Lemon is based in Vancouver. Also, fun fact, if you send an intention and keep it, you may get Lula Lemon-style results, even through a global pandemic. For our second story, Fast, Real Name is a startup trying to do what PayPal, Apple, Apple, and Amazon never have.

One e payment to rule them all. Or if you go to page 43 in their VC pitch deck, we're a platform agnostic login and checkout services service. I like our description a little better. It's so much better than that. What's our translation on this one, Jack? This company is trying to kill shopping cart anxiety. Oh, yeah.

Everyone's feeling shopping cart anxiety. I got a pair of two can boxers in a J-Crew shopping car right now. I can't pull the trigger on you. You're sweating in bed and you can't sleep because your bed's too hot. You open up your phone, you're about to buy some eucalyptus sheets, but then you got to type in like a bajillion things. Snackers, I'm going to point out here that I was thinking you would go with extra light cotton sheets on this.

Jack made clear I was definitely missing out on eucalyptus. You got your shopping cart ready, and then you got to put in your username, your password, your shipping address, your billing address, your CC number. Oh, wait, the shipping and billing are different. Then the expiration date, the zip code, and then the CVC, which you thought you remembered, but no one remembers the CVC. Oh, by the way, are you a robot? They make you press the button.

you got to do the recapture, then you got to do a thing, like how many signs are there? How many of these nine images have a fire hydrant? Feels extra insulting because a robot is asking you if you're a robot. Snackers, people bail on online purchases at the last second when they're one step away because of laziness. Shopping from a couch is not convenient enough. We want one-click shopping. Now, Amazon has come closest to achieving the one-click shopping, but that only works when you're buying things on Amazon.com. Right, which is why Fast wants every.

we online shopping cart to be using fast. You just enter your fast username and password. Boom. Everything's there. You're ready to make the purchase. So Jack and I noticed his company because they just raised a $20 million series A and they're still in like the early phases of a startup life sign. When a startup's born, it starts with friends and family chipping in money to start the business. Then you get an angel investment, then a seed investment. Now series A for fast. By the way, Airbnb, like oldest startup in the U.S. right now basically, they're on like their series F. Right. But this is also just a log in and checkout service. That's pretty much the whole company. When we're looking at that, Jack and I then started wondering, feels more like just a feature and not an entire company.

That's why we think this is an obvious acquisition target for niche e-commerce payment companies like Shopify, Stripe, Square, or PayPal. Or giant tech companies that are curious about expanding their domination into payments like Google, Apple, and Facebook, they may acquire it too. So Jack, what's the takeaway for our buddies moving quickly over at fast? Only a tech outsider can rule online payments. Snackers, you've heard this before. I'm a proud outsider, not one of those career politicians. I haven't been living in Washington, D.C. my whole life. I understand what real Americans live like. You may have noticed that outsider status has had appeal in politics, and it could be gaining appeal in tech too. PayPal, Google, Amazon, and Apple, they have all

tried to do exactly what Fast is trying to do. Very simple one feature. Easy checkout with PayPal, or one click checkout with Apple Pay. Right, we've seen these before. That is just what Fast is. trying to do. But we're living in a moment where privacy concerns and fear of too much power are preventing like widespread adoption of big tech's new features. Right. It's like Google and Apple already know everything about me. I don't need them to control my payments as well. So in order to scale and grow the fastest, maybe fast shouldn't sell itself to big tech. Maybe you can only win the trust of online shopping America and regulators if you stay independent. For our third and final story, Nike's earnings reveal a classic Wall Street practice. What do we got you?

earnings report, close reading. We're talking, you know close talkers, they're up there, they're right up there, they're like right up on the mic like this. You're basically tip to tip with this guy. You can smell what he just had for dinner. Nike, meanwhile, has a very interesting earnings report because it's one of these like off-peak season earnings reports. It's like trying to book an Airbnb from Tuesday to Wednesday. It's probably available because everyone else is on the weekend. That's why no one else is paying attention during that time of year. Now, most companies report their first quarter, which is January through March, three months, the first quarter of the year. Yeah, you know, like the actual definition of a first quarter.

Right, but Nike's first quarter is from December to February. So the last month of last year, and the first two months of this year, it's awkward. As you know, Snackers from your toilet paper acquisition moves, things can change really quickly because on February 29th, you had TP. Today, you're like fighting over Kleenex. So Nike's earnings report shows us just the pre-coronavirus, plenty of toilet paper era of American business. And it turns out digital sales, search 36% during that period from last year, and revenues were up 5%. Honestly, though, investors don't really care about how Nike's business was doing before the coronavirus impacted everything. Nike, what have you done for us lately? How will you perform

when global supply chains get frozen stores closed and people start playing like NBA jam instead of actual basketball? Now, there is one tiny part of the Nike's earnings report that is quite revealing and quite relevant during this corona economy, China. Jack and I were entirely focused on the China section, because coronavirus, it happened way sooner in China than it did in the U.S. or Europe. By the time this earnings report period ended, which was the end of February, China already had 80,000 confirmed cases of coronavirus. Oh, and by the way, Nike has huge sales in China.

17% of its sales are in China. Like one out of every five of its shirts sold to China. So unsurprisingly, sales in China for Nike fell for the first time in six years last quarter by 5%. Coronavirus was only a problem for the second half of the quarter that Nike just shared its results on. Right, like pretty much from mid-January through February, that was all Corona economy in China. All right, so let's look at what they had in China. That 5% drop was, again, only for the first half of the quarter. And it probably would have been 10% if Corona economy was happening the whole quarter. So Jack, what's the takeaway for our buddies over at Nike? Now that we're

done close reading Nike's earnings report, it's time to zoom out. Snackers, let's say there was that 10% sales drop in China if coronavirus affected the entire quarter. The question is, how we're would that translate in the U.S. and Europe, which are Nike's biggest markets? Well, let's go back to China. 80% of stores that were selling Nike products in China were closed during the coronavirus, which is about the same as in the U.S. and Europe. Okay, so probably equalish impact here. Let's look at another thing. The China lockdown lasted for about two months. It could last longer in the U.S. and Europe, but right about now, it's going to be likely around two months. All right, let's look at like the level of shutdown that occurred in the economy. In China, there was an

aggressive shutdown, like you weren't even allowed to go outside. In the U.S. and Europe, not quite as aggressive a lockdown as in China. So when reading earnings reports, first zoom in on the relevant part and understand the impact. Then zoom out. Jack, and you whip up the takeaways for us and put a shirt on, but first we go off the takeaways. It's true. This is working from home. Shirts are optional. Snackers, you're welcome for the audio focus of this podcast. Lulu Lemon made big progress on its power of three strategy last quarter. Despite a global pandemic, it's not changing. It's not change in its corporate mantra. Second story, fast is trying to make all online purchases on all websites fast, but it might have to stay independent to succeed in tech. Third and final story, Nike's

earnings report was mostly irrelevant because they reflect the pre-COVID 19 business. But if you zoom in on the China part, you can then zoom out on the rest of Nike's business. Now time for our snack fact of the day. This one sent in from Page in lovely Somerville, Massachusetts, which I assume, like all towns in Massachusetts is right outside of Boston. Wellesley, Walthough, Wasteland. I think you've got to be right there. Now, Paige asked this one in a form of a trivia question. What is the only of the 50 U.S. state capitals that does not have a McDonald's restaurant?

The answer is Montpelier, Vermont. I love the Vermont love from Paige from Massachusetts. This is great. Interesting rivalry move. Also want to point out this is not a verified snack fact. Montpelier, only state capital that's not. technically just a village. That is not true.

No, it may not be true. But also, Paige, I see from her Twitter account, goes to Colby, which is a great Nescac school based in Maine. Mules, baby, the Mules. Another great New England state. Snackers, remember to follow us on Twitter at Robin Hood Snacks and get your Snacks Madness

matchups out there for your favorite products. Yeah, you get to vote on what is the best product and who is going to win Snacks Madness. We love starting the week with you. We can't wait till Tuesday. See you then. This is Jack. Nick and I both on Stock of Loo. Blue Lemon. I own stock of Amazon. Nick own stock of Shopify.

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 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.