The Best One Yet - “Sports-pocalypse 2K20” — EA Sports is in the game. Club Apple’s big day. TJ Maxx’s revenge shopping.

Episode Date: June 24, 2020

The Apple Worldwide Developer Conference is both a mouthful and Apple’s biggest day of the year, so we break down the stories that matter for you. Since there are no real live sports happening, EA Sports is really “in the game” during COVID-19. And TJ Maxx is enjoying the “revenge shopping” vibes among Americans.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 is Wednesday, June 24th. Took an early look at the takeaways, Nick. This feels like the best one yet. Jack, I'm going to have to confirm it first story. What do we got for the T-boy?

There are two things from Apple's Worldwide Developers Conference that you should care about. They both aim to fix one flaw in Club Apple. The applications. Not the apps. Like Nicholas First Nick, Jonathan versus John. The applications. Second story, Jack. E.A. Sports.

It's in the game. Except there are no games this year. But EA's stock is a COVID winner. We know because of the CEO's fireside chat. Third and final story, Jack, what do we got? T.J. Max's CEO has an innovative strategy in the coronavirus. Do nothing. Do nothing.

T.J. Max hates e-commerce because it's opposite day for the Max and E-Step business model. But before we hit those three great stories, we want to talk about the best company name we've ever heard. Get this, Snackers. Do not pay. It's all one word, but it feels like it's. should be all one caps. The kind of name you feel like should be communicated via Morse code when you're first here. Do not pay whatever you do. In case you're curious what this is, we're talking about a robot lawyer company that just raised $12 million. How many lawyers does it

take to get this case dismissed? One robot actually. Now the concept sounds like the kind of thing like a VC drank too much hard kombucha on and then threw some ideas up on a whiteboard. The company's slogan is simple though. Fight corporations, beat bureaucracy and sue anyone at the press of a button. Extremely tempting, not too shabby. Jack, the business model, can you tell us more? You pay $3 a month and do not pay, flight's customer service for you,

so that you don't have to pay. Snackers, this thing is crawling through the fine print, literally, and then kind of just harasses the vendors who you're annoyed with. Its default response is just to say representative over and over and over. 14 times. Now, let's do a little case study here. Say you're annoyed you got an e-ticket instead of a cash refund from,

you know, United Airlines. Well, do not pay is called do not. not pay because it believes you should not pay for that canceled flight that United Airlines stuck you with. So do not pay handles the 12 emails and 36 minutes of robo chatting before handing you off as the punchline to the actual human being representative. The punchline being, I'm not paying. Do not pay. We're calling this the most powerful use of artificial intelligence yet. It's the kind of job we're okay with robots taking. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. For 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. Robberhood Financial, LLC, member Fenra slash SIPC.

For our first story, it's not Donglegate, but Apple just completed its breakup. It's not you. It's Apple. with Intel. And this is Club Apple's master plan. And this breakup all went down to the biggest non-Iphone Apple update of the year. It was such a big deal that there was nobody there. Not a single person in attendance. This was the first ever remote worldwide developers conference ever done completely 100% online. The developers are like, oh, we get to just zoom in? Finally, I've been waiting for this. Worst small talk event ever. So were you here last year? Yeah, I was here

last year. Last year, though, I had to get dressed. This year I didn't have to get dressed. No one's getting dressed these days. Now, the two big announcements that Jack and I noticed over a club Apple, they're serving up chips and apps. For a first story, chips, MacBooks will no longer use chips made by the company Intel. Boom, bum, bum, bum, boom. Within two years, all Mac computers will have Apple made chips. Yes. They won't be made by Apple, Nick. They'll be designed by Apple and manufactured in China. They always got to work that in. Apple already makes actually designs its own chips for iPhone and iPad, might as well do it for the Mac computers as well.

Now that's what's going on with the chips, but let's say you're hungry for some apps, Jack, what's going on with the apps? There is a huge redesign for iOS, which is the operating system for iPhones and iPad. Snackers don't look down, but your home screen is about to look very different. Backup, back up, Nick.

iOS 14 isn't ready yet, but they did put out this hype video that blew my mind. It's all about the multitasking. Yeah, this is the high. highlight that we're excited about with the new updated iOS 14. Video will stay in the corner of your screen even as you're swiping and scrolling through other apps. They got a very straightforward name for this. They're calling it picture in picture. And this means that picture and picture is back, baby. Picture in picture is back. You can feed the kids, walk the dog, check your email all while

still watching that YouTube video on the bottom of your screen. And all that news about chips and all that news about apps came together really nicely in yesterday's big Apple update. By developing their own ships for MacBooks, Apple can accelerate the marriage of its apps across its devices. You got to break up with Intel so you can get married to all these other things. Snackers, we're about to point out a nuanced distinction that actually has a big impact on your experience as an Apple consumer. You park in a driveway and you drive in a parkway, just like you've got apps on your iPhone, but your computer has applications. That's right. On the iPhone and the iPad, you download an app. Yeah. But on your MacBook, you download an

application. You go to school, you go by Samantha to the teachers. You get home from school, you're hanging out your friends, you go by Sam. Nick, you finally are understanding this. This is wonderful stuff. I get it. Now applications, they're just a little more complicated than apps, and they're definitely harder to download, harder to install, and harder to use. You need to, like, save the file somewhere, and then it's like jumping around to other places, and then it's like sticking itself in a different folder. It's so confusing. They're like, Jack, you downloaded Chrome. Would you like to save this installer next to the uninstaller? I'm like, I don't care.

Just put one of them in the trash and let's keep the other one running. So Apple announced on Monday they want MacBook to have the same apps as iPhone, iPad, and all the other Apple products. That means Snapchat doesn't just exist on your iPhone. It would also exist in your MacBook laptop. Exactly. You download something on your iPhone. It's magically there on your MacBook when you open up your computer. Boom.

So Jack, what's the takeaway for our buddies over in Cupertino at Apple? The complete club Apple experience must be flawless, but MacBooks had flaws. They had flaws. They couldn't get in the club. Chips are the brains and the hearts of electronic devices. To extend that analogy, apps are like words and code is the language that they all use. Thank you, Confucius. Appreciate that. Now, MacBooks were the only part of the Apple ecosystem kind of different from their ass. They have like the Tyrion Lannister, but like in a bad way.

And maybe Intel's chips, which were baked in MacBooks, were the reason that MacBooks were kind of different than an iPhone or an iPad. So Apple's got to continue getting ultra-premium users to pay a couple grand a year to stay in Club Apple. To do that, Apple needed perfection from MacBooks, which are the mothership of Apple power users. That's right, but Mac's disjointedness with like a whole bunch of other apps was a flaw in the club Apple ecosystem. So Intel's getting the boot, and Apple's going to do everything themselves. For our second story, Jack, you a Maxinista or a T.J. Tommy. I woke up like this. Let's leave it at that. It's always both. T.J. Max is doing the opposite of what every other store is doing right now. T.J. Max knows retail's not dead. Bad retail is dead.

Preach, Jack. Now, Snackers, when you look back on the last few months, you notice that we all keep hearing how COVID has changed everything. But then we heard T.J. Max's CEO boldly proclaimed this week, strategically, nothing will change at TJ Max. And then we were like, do you want to rephrase that and reconsider everything you just said? And then he said this. We are not looking at e-commerce as a solution.

And that's when Jack and I knew we had to do a story on TJ Max today. When you said nothing will change, did you mean everything will change? Is that a typo? A damn you auto-crack. T.J. Max is living in a fantasy land, but it's succeeding in real life.

Going into the COVID-19 crisis, T.J. Max had 98% of its sales occurring in its stores. Not a typo. So overall sales naturally fell by like half during the lockdown. Most accountants at most companies are just going to round up to 100% on that one. In response to the COVID-19 crisis, Nick,

when all of its stores were closed because they were deemed non-essential, it shut down its e-commerce platform. It didn't like ramp it up. It ramped it down. Sir, you're shooting yourself on the foot. No, shoot me in the other foot too. But now that physical stores have reopened

across most of the country, it is time for revenge spending from T.J. Max customers. Spending, snackers. It's a lot like retail therapy, but it's driven by pure anger and frustration. Get this. T.J. Max's sales in the month of June are higher than they were last year during the month of June. It's all thanks to pen up demand for the affordable splurge over at T.J. Max. The masses have flocked to T.J. Max. Its aisles look like toilet paper aisles used to like. There's nothing left. It's like the Black Friday stampede except everyone's like six feet apart from another. It's extremely awkward. Now, why is T.J. Max making this bold and seemingly stubborn bet on its physical stores? Two words for you, Snackers, treasure hunt. You go to T.J. Max so you can leisurely spend

45 minutes crossing eight aisles up and down to discover a golden nugget, like a fashion tie-dye jogger pant by true religion, which is only $40, might I add? Not too shabby, $39.99. You need a little me time. You're going to wander the store. T.J. Max is not a about efficiently shopping online and getting it done as quickly as possible. It's all about the journey, man. And at the end of the journey is the joy of finding a treasure that is 70% off suggested retail price. So, Jack, what's the takeaway for our buddies marking down over a T.J. Max? Ecommerce isn't a silver bullet solution. Not at all snackers. We tend to think that simply selling something online is going to fix all your sales problems, but it's actually way more

complicated. Because online sales economics are a problem for discount brands like T.J. Max. And there are three key reasons Jack and I have identified why. Jack, first reason for e-commerce economics. It's hard to profit once you factor in the costs of shipping and returns. Boom, that $12 address makes a $2 profit, but if it's returned, it's suddenly a $3 loss. Second, brands like Ralph Lauren are not going to like having 60% off their trunks online for the entire world to see on tjamax.com. The brands at Tjs won't be able to sell anything at full price if you know you can get a discount online easily. The third and final reason? You can't recreate that treasure hunt experience online on the worldwide web. No, you can. And that's why retail's not dead. Bad retail's dead.

For our third and final story, Electronic Arts issued some really boring conservative earnings forecasts. It's done being bashful, though, so it's kicked up their expectations a notch. Aggressively. Snackers, let's travel back to May 5th, which kind of feels like 12 years ago. I had just bought my fourth pair of Corona Economy sweatpants. We're doing this pod. Jack had like a Gandalf beard situation going on. We had to like move the mics around. Now on May 5th, Electronic Arts, which has a publicly traded stock with a ticker symbol, E.A, they announced that sales in their Corona Economy quarter would barely rise 1%. One percent. Nick, we're talking April, May, in June, exactly when video game sales should be like soaring.

they thought sales would boost by 1% compared to last year. It's like when you haven't seen your buddy in a while and you say, hey, how you doing? And they say, yeah, but I'm fine. It's like, you're more than fine. You look great. You're fantastic. What are you been doing?

What are you working out with? The abs, I can see them through the shirt. With everybody stuck at home and with nothing to do, electronic arts thought that would marginally help the video game sales by 1%. Understatement of century. On the other hand, if we could look at this jack and be like, you know what? They had much higher expectations for everyone than just playing video games.

Too much confidence in society. Anyway, back on May 5th, when they had that Debbie Downer News, it sent the stock down by 5%. However, things changed abruptly for EA sports this week. Electronic Arts just updated investors at a fireside chat on Monday. Their words not ours. And here's what they said. We were wrong. The Corona economy has been awesome for business.

Sales in the second quarter, the Corona Economy quarter, will be much better than we forecasted back on May 5th. So Snackers, Jack and I jumped in Snackstyle, and we noticed something fascinating about the game creators for sports games in particular in 2020. This is a huge year for them because of the sports apocalypse. Because of the sports apocalypse. Just like some sports betters have turned to stock markets instead, you've seen the same thing with sports fans turning to video games instead. And where is EA sports?

Oh, yeah, it's in the game. It's in the game. EA owns the rights to FIFA, to Madden, to NBA Live, to NHL, you name it. there's competition, they probably own the rights. If sports don't return this fall, which is definitely a possibility because of a second wave of COVID-19, EA will be sitting there on the bench ready as an outlet for the competitive juices of sports fans. And now they've had their like halftime pep talk. They know to give 110%. They know they're accountable every teammate and they know to leave it all out on the field.

Great timing because PlayStation 5 and the new Xbox, which is called Series X, they both come out this fall for the holiday sales. And you're not going to play the game unless you have the equipment to play. Those new consoles could drive even more sales for EA's games. And no one he wants to be a pixelated Patrick Mahom. So, Jack, what's the takeaway for our buddies over at EA Sports? Content is king. That counts in video games, too.

Snackers, rule number one, rule number two, rule number three of media, content is king. Rule number four, see rule number one. Now, we've seen video and audio companies hire talent, acquire IP, so that they have the best content for their viewers. We could go on and on this. Netflix signed D&D, the writers at Game of Thrones. Hulu owned the rights to The Handmaid's Tale so they could make a TV show about it. And Spotify's doing Kim Kardashian and Batman podcast because they got the exclusive rights. Electronic Arts has also bought the storylines, the rights to the athletes, and the characters for their video games. It has even acquired an entire video game studios to fully own the content

that it's creating. Thanks to its rights to Madden NFL football, thanks to its rights to Star Wars video games and thanks to its own video game creations, its stock just hit a two-year high. Content is king, especially in the coronavirus economy. Jack, can you whip up the takeaways for us over there? Apple won't use Intel for its computer chips anymore. It's DIYing instead. Club Apple has to be perfect, so it's killing complicated applications, not apps. For our second story, T.J. Max is ridiculously confident in their physical first retail strategy. Revenge spending and the bargain treasure hunt, enough said. Our third and final story, EA, Electronic Arts, wasn't confident enough in their video games.

But EA Sports is in the game while Reesports are not happening at all. Now, time for our snack fact today. This one sent in by a father-daughter team of Michael and Lizzie Horvitz from lovely Cleveland, Ohio. Jack, what do we say? The Paris of Lake Erie. The Paris of Lake Erie. Now, the baked Alaska dessert is that classic ornate whipped thing behind the glass. to tease you to order dessert at a restaurant.

You ask how much it costs, and if you do, you can't afford it. It's got ice cream, sponge cake, Christmas pudding, and meringue. Turns out this thing was created back in New York City in 1876 to celebrate the purchase of Alaska. Fast forward 130 years, Ben and Jerry's, the Vermont ice cream company, is protesting oil drilling that just started in Alaska by creating the biggest baked Alaska dessert ever. This thing weighed in at 1100 pounds and included 3,600 scoops of ice cream. scream. That's right. It was a thousand pound dessert. Honey, what would you like for dessert?

Something creatively activist. Something with social purpose. The only calories I consume have a purpose. Before we go, happy 29th birthday to read Luchies in Dallas, Texas. And Enwar Gibran graduates from his residency. Congratulations. He's been working on the front lines on COVID. By the way, Snackers, the people have spoken. A number of snackers said that Eminems, that's the mascot that needs a version. Your move, yellow M&M, your move. If you have any buddies who aren't snacking yet, please ask them HY HYSD. And then question

why they're your buddies and then say, have you had your snacks daily? We'll see you tomorrow, I can't wait. If you know, you know. This is Jack. I own stock of Spotify, Nick own stock 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 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.