The Best One Yet - 📚 “The ultimate plot twist” — Barnes & Noble’s revenge. Lululemon’s discounting death spiral. DoorDash’s downturn diva.

Episode Date: January 10, 2023

For the 1st time in a decade, Barnes & Noble is adding stores… and doing it by taking over shuttered Amazon stores. Lululemon plummeted 10% because its fanny packs on sale — which means it’s facing the Discounting Death Spiral of Death. And the entire gig economy from DoorDash to Uber just got upgraded because they’re all Downturn Divas.$LULU $DASH $UBER $LYFTFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeWant a Shoutout on the pod? Fill out this formGot the Best Fact Yet? We got a form for that tooLearn 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. It's Tuesday, T-Boy, Tuesday, January 10th. And today's pod is the best one yet. What do you think of Jack? Yeties. My son Wilder was actually very sick this weekend. But I'm happy to confirm the pod sun has fully recovered.

Jack, should we do an early shout-out for the nurses and doctors over at the UVM Medical Center? Can we make that happen? Absolutely. For that matter, nurses and doctors everywhere, thanks for taking care of us when we need you most. Jack, did those nurses and doctors make you a cough cocktail, by the way, over the weekend? Yes. They gave me like a job. ginger ale cocktail. I loved it. One part Advil, one part night quill, one part quill, quill.

And they refilled us every hour. It was great. You got to hydrate. You want to be peeing clear. First story, what do we got, Jack? The greatest revenge story ever told? It's Barnes and Noble and the return of the book. For our second story, Lulu Lemon has a secret it doesn't want you to know about. Get this, 41% of Lulu is on sale. Problem for Lulu, potentially great for us. Don't tell anyone. Tell everyone. And our third and final story is Uber, Lyft, and DoorDash. They all jumped yesterday in the stock market. Yeah, because now we got ourselves a team of downturned divas. But Yeties, before we hit that fantastic mix.

Just a wonderful mix for a T-Boy Tuesday Jack. We know where you are right now. Yeties, we know that the odds are there's a big chance. There is a high likelihood you're on the toilet. According to the Washington Post, 65% of cell phone use is on the toilet. Oh, wait, no, no, no. Hold on. Good clarification.

Yeah. 65% of us use our cell phone at some point on the toilet. Ipso facto, two out of three Yetis right now are listening to our takeaways on the toilet. We're playing Wordle from the washroom. We're liking photos from the lavatory. We know you TikTok from the toilet, Yeties. Yeah, and we know you Pinterest in the powder room. But this isn't something you can blame millennials or Gen Z for.

Jack and I didn't bring the iPhone into the restroom and neither did our buddy Timmy. Turns out humans have been turning bathrooms. into libraries and reading rooms for ages. Jack, books, magazines, the sports section, the entire Sunday, New York Times. Reading on the toilet is a great American pastime. Because besties, the toilet is the one chair in your home where you won't be disturbed.

It's actually the only socially acceptable place to lock yourself alone in a room. Now that we're talking about it, Jack, it is not just a seat, the toilet is an escape. It's a throne for you and your phone. Yeah, the bathroom. It's where you do your business all along. Except now with Mark Zuckerberg there, too. So to quote writer Near A-all, there are two types of people in this world.

Those who use their phone in the bathroom. And those who lie about using their phones in the bathroom. Are we the former or the latter? No comment. Let's hear three stories, Jack. Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea that caused a cultural storm. It's the best one yet, but the best is an norm.

I need to practice. 50% that's a fat tip. Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show. For our first story, Barnes & Noble is already the comeback story of the year. Because sometimes the best way to improve a business is to do less. Do less.

But first, Jack, should we start with the drama? Prince Harry, his memoir drops today. Call up Oprah. This is already the number one book in the United States. It's a continuation of his very third. Mr. Media Tour. Yeah, honestly, if we called Harry, he'd be very available to be on the podcast right now, Jack. But the biggest surprise of 2023 is not that Prince William once pushed Harry to the floor.

Which just has some context here, isn't that what brotherhood is? Like, didn't you push your brothers all the time, Jack? Yeah, pretty sure brothers do that at some point, you know, it's inevitable. No, yet he's the biggest surprise of 2023 is actually Barnes & Noble is back, baby. According to people familiar with the matter of Barnes & Noble, PFWTMs. We are growing tremendously. Get this, Yeties.

Barnes & Noble is actually going to open up 30 brand new stores this year. They're most in a decade. For the first time in a decade, Barnes & Noble is growing, not shrinking. And the core reason here, we're living through a reading renaissance right now. Since COVID, we've all been crushing more chapters than before. Jack, a gentleman in Moscow, tomorrow, tomorrow, and tomorrow, our missing hearts, need I go on? Where's your library card, man? book sales are up 9% in the past year.

Oh, wait, no, no, no, no, don't say it. I know what you're going to talk about that Brooklyn Bridge book you keep talking about, Jack? Do you know how they built the towers of the Brooklyn Bridge in the East River in 1870? Well, if you want to know, Jack will tell you because he's been reading the book for like two years now. There were the tallest man-made structures outside of the pyramids. Oh, by the way, sorry, Daniel Craig. I didn't watch James Bond. I read every single Bond novel in the last two years.

Hashtag humble brag. But the best part of this story is the plot twist. Oh, the plot twist. Because Barnes & Noble's turnaround sounds a lot more like an Agatha Christie novel than it does a business story. If we back up 20 years when Amazon started e-commerceifying of the world, Barnes & Noble was victim number one of Amazon. Because Bezos started breaking bookstores, book-sales, book-by-book from cover to cover, hard-cover to soft. Now, Barnes & Noble tried to become a techie company like Amazon with its Nook e-reader, which I at one point. How did that go, Jack? It worked okay. Yeah, okay. There's no more software updates of them. But Barnes & Noble was losing money. They were in constant decline. So in 2019, after losing

over $100 million that year, they were bought by a private equity firm. And this is the plot twist. The new 23 Barnes & Noble stores that are being built. This is wild. Many of them are taking over former Amazon bookstores that are no longer. We repeat, Barnes & Noble was destroyed by Amazon, but now Barnes & Noble is taking over Amazon bookstores. The turns. My have they tabled. Oh, Amazon. They actually tried launching physical bookstores in 2015,

but now they're shutting them down because they can't pull them off. And Barnes & Noble is happy to replace them. Yeah, these, we haven't seen a revenge story this sweet since the Count of Monte Cristo. Dumas. Yeah. Dumas. Speaking of Dumas, how about this takeaway? Jack, what's the takeaway for our buddies over at Barnes & Noble?

Never underestimate the power. of do less. Yet these most private equity turnaround stories, they're about do more, like firing, revamping, rebranding, do more. Private equity firms buy struggling companies, cut workers, cut costs, and then manage, manage, manage to boost profits. But Jack and I noticed that the secret sauce to this Barnes & Noble turnaround, it appears to be due less. Instead of overmanaging, Elliott management, the PE company that owns Barnes Noble, is avoiding management altogether. Yeah, for example, this private equity firm let local Barnes and Noble managers choose their own books. They like didn't tell the stores what to do. And that's key because now the big box book chain kind of has the charm of your local

bookstore. So private equity is the hero in the Barnes and Noble drama, the hero that did less. It let the bookstore be a bookstore. Don't overdo it. For our second story, Lululemon stock just had its worst day since its last worst day. Yeah. It was, It was its T-Woy since its previous T-Y. We've got to make T-boy a thing. That kind of works. Because 2023 could be Lulu Lemon's discounting death spiral of death. All right, Jack, remember the last time we covered Lulu Lemon?

What was the last time we covered Lulu Lemon over there? It was after Black Friday when we learned that the belt bag was the fastest to sell out at Lulu Lemon stores. The Fanny Pack, the Lulu Lemon Fanny Pack. They brought back like a Richard Simmons piece. Yeah, they called the belt bag. I think they should have just called it Fanny Pack. It was just a fanny pack. Roll with it.

The name sells itself. But yesterday, Lulu Lemon stock dropped by 10% like it did a bad Utkatasana. Yeah, the issue isn't the fanny packs, though. It's the forecast. One analyst said this of Lulu Lemon. Dark clouds are forming. Now, Jack and I jumped on the Matt T-boy style, and here's the news. Lulu has just got too much stuff.

Lulu updated investors that it has twice the inventory of unsold stuff on hand compared to last year. Yeah, so then it warned that profits this holiday season, they may miss the mark. Not a good look. Lulu has twice as many extra crop tops. It is Lulu has twice as many extra aligned leggings. It has twice as many anti-ball crushing pants. Yeah, Ipso facto Lulu Lemon just has too much inventory, too much stuff. Like it carbol loaded with Feduccini Alfredo for a race, but didn't end up running.

It got ready for more spaghetti and then it's just sitting at home. It's not running a marathon. And too much stuff means that 20s. 2020 could be a year defined by sales and discounts at Lulu Lemon. 20203 could be the year of the sales rack. Now, management said that they wanted to avoid a supply shortage this past holiday season. So they carried extra sports bras in store compared to last year. So here's the situation.

Either they ordered too much stuff and just overdid it. Or Lulu Lemon's high-end customers are feeling the economic squeeze too and didn't buy as much product. Either way, sit down and stand up and sit back down. again when you hear these numbers about Lulu Lemons midwinter blowout. 41% of everything on sale at Lulu Lemon is a discount rate. Yeties, we repeat, four out of 10 cute tops over a Lulu are on sale right now. This, by the way, isn't an ad.

They do not want you to know this. They don't want this, yeah. They're not happy about this situation. They would much rather everything be full priced, but only six out of ten are full price right now. We're expecting an email from their PR team in like three, two, one kind of a situation. Is this typical so many discounts at Lulu Lemon? Yeah, that's what we were wondering. How typical is it that Lulu Lemon would discount 40% of their stuff? Well, we did the Athleisure, math leisure. That is one third more discounts than a typical Lou Lemon quarter. Lulu Lemon is

discounting a third more stuff than it ever has before. They're channeling Black Friday vibes, even though it's early January, and that's not good for business. Yeah, so sales will probably rise, but profits will probably fall. So Jack, what's the takeaway for our buddies? over at Lulu Lemon. Prepare for the discounting death spiral of death. Okay, Yetis, you know what caused the J-Crew bankruptcy?

It wasn't popped collar problems. It was actually the discounting death spiral of death. The discounting death spiral of death. It's a tongue twister. It's a feedback loop of negative forces that accelerates into a painful downward spiral. Here's how it begins.

First, they got too much stuff, so they got to discount that stuff they're selling. But discounts make shoppers expect more discounts in the future, and they'll even wait for discounts before buying. then leads to even lower sales of full-priced stuff, which then requires more discounts on that stuff. And around and around, it goes down and down and down. And once the discounting death spiral begins, it's very hard to stop until death.

Lulu Lemon stock just fell 10% yesterday. Not because of today's discounts. But because of tomorrow's discounting death spiral. Oh, death. Now a word about our sponsor, Robin Hood. You can do just about anything from your phone, but Some industries, they've just been slow to move. The finance industry was slow to move from phone to computer and then from computer to app.

Robin Hood wasn't. It's the Silicon Valley-based brokerage that's been updating app since it was born in 2015. Using the Robin Hood app for your stocks and crypto is almost as easy as downloading it. So you can invest to your pace on your terms by downloading the Robin Hood app. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's Robinhood.com slash T-B-O-Y limitation supply. Stocks are offered by Robin Hood Financial LLC, member SIPC.

Crypto offered through Robin Hood. All investments involve risk. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood. For our third and final story, Jack is going to give us a live reading of chapter three of that Brooklyn Bridge book he's been reading for the last two years. It's called the Great Bridge. I know you don't want to stop there. Yet he's third and final story for today. Uber, Lyft, and DoorDash stocks all jumped to start the week.

Because we now have a team of downturn divas. But first, to sprinkle on a little background here, Jack, one of our favorite quotes of all time, what is it? Necessity is the mother of invention. Necessity is the mother of invention. Because the greatest force for creative innovation is when you have your back against the wall. Yeah, for example, let's look at 2008, a time of recession. People were out of work and what ended up happening. Necessity of tight paychecks led to the creation of a new business model.

A new business model, the gig. economy. It led to the creation of Uber and Lyft and DoorDash. They were all founded within three years of the financial crisis and the Great Recession. And it's because all those tech platforms like had a value on each side of the platform, like they had a value for consumers. Consumers needed a cheaper alternative for taxis and for takeout. And they also provided value for the drivers. Cash strapped drivers who owned a car needed a side hustle to drive people or deliver takeout. So Yeties, Jack and I were looking at this potential story and we realized we kind of have a strategy here. We like to look backwards and forwards to see where history could repeat itself in the future. If consumers and drivers began using gig services

during the last recession, yes, Jack. What about this one if we end up having one this year? Well, that question was kind of answered yesterday by analysts who said, uh, yeah, they'll repeat it again. Uber stock got upgraded yesterday because it's a downturn diva. It's a downturn diva. These analysts are looking at the data and they're noticing car prices are still at all-time highs. Carolas are priced like Cyanne's used to be? Yeah, you're going to pay for that Rav 4? You're going to pay your rent, which one? So if you are a car owner, you might want to make more money with your car by doing a little Uber driver.

And if you're not a car owner, then you're even less likely to buy a car in this economy, which means what are you going to do, Jack? Hail an Uber instead. You're going to hail an Uber or a Lyft instead. Uber stock jumped 5% yesterday, and it's up 30% in the past. six months in this economy. Yeah, in this economy? Because Uber is a downturn diva. And so is Lyft, and so is DoorDash. So, Jack, what's the takeaway for our downturn divas over in the gig economy? For gig economy apps, changing demand probably means changing supply too. All right, yeties,

the gig platforms, they're all marketplaces. In fact, they're all two-sided platforms specifically. And a shift in one side is often connected to a shift in the other side in a good way. Uber Lyft and DoorDash could suffer fewer bookings if you choose to walk instead to save money. Yeah, if we're entering a recession, people are going to cook more at home instead of get takeout or delivered. Okay, but here's the key. That potential reduced demand is offset by increased supply of drivers. If more layoffs hit this economy, which of course we hope they don't. We don't want them to happen.

More layoffs will result in recently unemployed people probably becoming Uber Lyft and DoorDash drivers. Just like the 2009 recession. And that flood of new drivers could keep prices and fees for Uber and DoorDash. Which is why all three of these platforms are downturned divas. For gig platforms, shifting demand probably means shifting supply too. Jack, can you whip up the takeaways for us for T-Boy Tuesday? Barnes & Noble is adding 30 new stores this year, making a bookstore comeback. It's like there's CEO's Leo Tolstoy.

It's the revenge story of the year because Barnes & Noble did less. They did less. For our second story, because they didn't sell enough over the holidays, Lulu Lemon is slashing prices. And that could lead to the discounting death spiral of death. And our third and final story is Uber stock. It just got upgraded because Uber is a downturn diva. For all these gig platforms, both sides change during a recession. Now, time for the best fact yet.

This one, should we mix it up, Jack? Do you have a Brooklyn Bridge fact for us that you can whip up in real time off the top of your head? Kind of. Okay, talk to me. What do we got? Less fact, more of a story. To convince the New York, like, politicians and power people to build the Brooklyn Bridge. We haven't fact-checked it, but I love your momentum. Which was the biggest suspension bridge in the world at the time by like 50%.

I love this. John Robling, the engineer, took 20 New Yorkers on a grand tour of other bridges he had built and a bridge his competitor built to convince them it was possible. Pittsburgh, Cincinnati, Niagara Falls. I thought you were going to do the elephant fact. That is a great one. That's a great fact. Should I start over and do the elephant fact?

No, Jack, let's save the elephant fact for another pod. Yetis, you look fantastic today. Even if you're on the toilet right now, you look great. You're either on the toilet or you're lying about not being on the toilet. Either way, if you know, you know. And when you got to go, you got to go. And before we go, happy birthday to longtime Yeti, Wesley Carusi, celebrating in Kona, Hawaii, not too shabby.

Happy birthday to Dora Hastings, celebrating with a dirty martini and a sloppy burrito up on the Upper East Side. And Morgan Turner, happy birthday to a legendary Yeti turn in 33 in Newfoundland, Canada. And happy birthday to Jesse, the Chill Bay, down in San Francisco. And Jordan Tonsgaard, happy birthday in Lake Stevens, Washington. And a big shout out to Owen Beeson, who scored the winning goal in the All-American Golden Soccer Cup Championship. And also a shout out to a big bestie, Bethany Peters, who just got a full knee replacement, the whole knee, but she is back to kicking very soon. And happy wedding anniversary to Niro and Sinduli,

celebrating one year together in Gatorsburg, Maryland. A couple that tea boys together. And big congrats to Jess and Becca. Friends who are vets, they just celebrated their one year vetterversary together, working for pets in New York City. Yeah, because puppy. People ultimately prioritize puppies.

Yeah. And big shout out to Wilder. He's almost two. He was incredibly brave. What a trooper all week. Jack, I saw the pictures. the pod son, he behaved admirably. He was amazing. And Alex and I really became parents this weekend. Shout out to all the parents. Jack, it was a brutal weekend and you guys crushed it.

And to anyone else, celebrating something today, make it a tee boy. Celebrate the wins. This is Jack. I own stock of Amazon and Nick and I both own stock of Lulu Lemon and Robin Hood. Now a word about our sponsor, Robin Hood. Jack, rule number one about a kitchen renovation. Tell your friends about your kitchen renovation. We know the cabinets are expected. Well, in the pandemic, a lot of companies renovated their businesses focusing on apps and digital. Robin Hood didn't have to. It was built digital from the start. Robin Hood's mobile first and intuitive design makes investing a little easier for every stage of your investing journey. Whether you want to trade options, ETFs, or stocks through Robinto Financial, or buy some Bitcoin on

Robin Hood crypto, you can do all that right on the Robin Hood app. If you're not investing on Robin Hood yet to get started, go to Robinhood.com slash T-Boy and choose your free stock. That's robinood.com slash TBOI. Limitations apply. Robin Hood Financial LLC, member SIPC, all investments involved risk. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood. The turns. My, have they tabled.