The Best One Yet - Tinder’s new “Swipe Night” TV show, J. Crew’s Madewell IPO, and e-cigarettes are getting cancelled

Episode Date: September 23, 2019

J. Crew’s legendary denim brand is outperforming J. Crew — so it filed to IPO itself. Tinder-owner Match Group is getting an interactive TV show (welcome to “Swipe Night”) in a unique convergence of tech and media. And Juul’s e-cigarette issues keep piling up, which is a bigger pain for its latest investor: regular cigarette-maker Altria.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. September 23rd. How we feel in Jack? Do you know how to describe this pod in German? Can you talk to me about it? Give me an answer here. Das best best here and our guns and belt. No joke. This is the best snacks daily. We've ever done. Jack and I could not stop talking talking. Jack and I could not stop talking. Jack and I could not stop talking Chino's baby. We're talking J. Crew. Actually, it's denim-obsessed brand called Made Well. It's outgrown Jay Cruz's nest and is doing it. an IPO. It wants to walk around, try on the IPO, see how the markets feel, and then we'll take it from that. Made well, recommendation for your IPO, make sure you sit down and cross your legs before you start it to make sure it doesn't tear. So true, Jack, second story. The downfall of vaping is upon us. It's happening in front of our own very out. I'm smelling less like caramel-flavored vaping in the streets these days. So Altria's big e-cigarette investment might be its worst investment ever. We're talking about Jewel, third and final story, Jack. is going straight after Gen Z with a built-in,

create your own adventure, interactive video series. Jack, do you go into the burning boat? Or do you go right off the waterfall? I don't know, whichever one you swipe will affect whoever you end up with in the rest of your life. Unless you pick a really weird adventure, and there might be nobody there. That's so true. Now, Snackers, before we jump into all three of those,

we got to talk about a good friend of ours, Idris, from Amberg, Deutscheland, who's a snacker who alerted us to something critical this time of year. We are having a transatlantic connection on this pot. He actually submitted this as a snack fact of the day, but we want to kick it off right away and let you know. A lot of people think October Fest is celebrated in October, in Germany. That's a huge misconception. Majority of the festival is actually held in September, so if you're asking about it now, you may be a little bit too late.

So this is the only time of the year, according to Idris, that beer will be drank more than Whiteclaw, which is probably positive thing. Idris, it's a clever observation. but we wanted to make sure everyone here is prepared for October Fest, even if you're just catching the tailant. You guys might note, no big deal, that I was a double major in German in college. So let me tell you the words you need to know. Dunkel beer. That's dark beer. Helles beer.

That is light beer. Here's my favorite. Fleisch keza. Sounds like a made-up word. It's actually meat cheese, literally. That's a thing, and it's not plant-based. That's a thing. It's got its own section in the food pyramid in Germany.

All part of a balanced German breakfast. If you ever order Fleischkeza, make sure you get Zeus or Zenf. Jack, you don't order Fleischkesa. Fleischkesa chooses you and you end up eating it. Zusersvv, by the way, is sweet mustard. Nick's so excited about Fleischkazer you forgot. And then this last one, Jack, this one is critical. Sourkraut.

Which means sourcrow. Which means sourcrow. Snackers, let's in our stories. 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 rain food. It's air candy. They don't reflect the views of the rob.

The livelihood 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. Right. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Jay Cruz, Madewell just filed to spin off from its parent company and do its own IPO. That's right. Madewell will be a separate publicly traded company. separate from J-Crew. Jack, I heard this. I got chills.

Not in a good way. It's because when I touch jeans, it gives me the chills, and that's why I don't like wearing jeans. Snackers, Nick has denimophobia, fear of denim. He doesn't wear jeans ever. Cacky and Corderly all the way through. I borrowed a pair of Jack's jeans once

because I was going to a Vichie concert in 2012. And I just felt like I thought that was the thing to do. I don't know why you needed denim for an avici concert. Never been to an Avichi concert since and never worn denim since. Need this to say Nick Lee needed slimmer fit jeans. than I had to offer. So Jack and I heard that this was happening, and we checked out the SEC's website, but we couldn't find a filing for Madewell. No, we were looking for the S-1, which is the document every company must issue, to basically tell everything about itself to investors before the IPO.

But Jay-Crew is using the term Chino's Holdings when it comes to Madewell in its IPO filing paperwork. Sounds like a poor code name, something you'd see on Zoolander. It's like Darylique. If you don't know Madewell, then this is how you can think of Madewell based on all the pictures we've seen on the website. Yes, there are loads of filtered pictures, Instatastic pictures. And it's everybody like trying really, really, really hard to look like they don't care and that they're being casual. Right. It's mainly women. And they're basically like, it looks like they're thinking, should I go to Coachella? I don't know. I think there'll be too many people there. I think I'll just stay here and look like I'm thinking about things. So, Madewell grew up under Jay Crewe. It was founded in 2006 by J.

J.Crew. By the way, J. Crew is a privately held company, so there's no J.Cruh stock. But J.Cru has a problem, and it's that it's taken on a lot of debt, and it needs some cash to pay off that debt. So here's what it's doing. It's taking Madewell, turning it into a separate company, and selling all of those shares via this IPO so that J. Crew has money to pay down its debt. It's basically like packaging up with like a little bit of that tissue paper, maybe a sticker, putting it in the bag. Very nice for you. Now, here's the problem for J.Crew. Madewell represents 24% of its sales, about a quarter. And here's the other problem for Jay Crew.

Madewell is doing a lot better than Jay Crew is. Because Jay Crew sales fell 7% of the last year, Maidwell surged 15%. So the leftovers of Jay Crew is not going to look too good after Madewell's gone. Now, Jack and I have jumped in Snackstyle to a lot of IPO filing paperwork so far this year, from Uber all the way to Madewell. And we've got to tell you, there's one key theme we're noticing. Madewell customers are loyal customers.

If you're IPOing this year, you got to have something in there about loyalty, loyalty, and why people are loyally obsessed with you. Loyalty brings you back into stores, so it gives you more sales, but it also prevents you from having to discount because you love the brand. So we notice in this Madewell paperwork, they were focused on Madewell Insider, which is like their special club program for people who can't get enough of the jeans and want to the sleep in the stuff. And 60% of people who go to the checkout at Madewell and buy their jeans are members of this loyalty program. And 67% of Madewell sales are coming from those Madewell insider people, which means they're spending a little bit more. And then the Madewell hardcores, the ones who spend over $500 a year at Madewell, 90% of them are Madewell insiders. So Jack, what's the takeaway for our buddies who are looking casual and have a few small flowers on them over at Madewell? A Wall Street analyst said it best, there is an ongoing resurgence in the denim cycle that Nick is not taking part in.

Not at all. Now, he was referring to American Eagle, which happens to have a thing for denim right now. And he upgraded the stock of American Eagle because he thought this resurgence was going to help. But this denim resurgence, it also has to do with Levi's, which IPO this year, with Wranglers, which was spun off to IPO. An old Navy, which is being spun off from Gap so it can have its own publicly traded company. Now, Madewell, talking itself up in the S-1, said a substantial portion of population builds everyday wardrobes out of denim. And that's because Madewell knows jeans, denim, that's their loyalty leader. And they call it their anchor.

It gets you in the stores and it keeps you there buying more. You go in, you're looking for just a pair of torn and frayed mom jeans. You come out with leopard loafers, a pendant necklace. Throw in a t-shirt and boom, it's all because they match with the jeans. Jeans represent and are the best part of the casualization trend that lets you wear jeans at work, lets you wear jeans at home. And Madewell is that in a brand. For our second story, Walmart has ended e-cigarette sales, rendering vaping effectively canceled.

Yes. The e-cigarette news has gone from bad to batter to baddest to worstest. It sounds like a raw doll book. Jack, it all starts in 2018 when the FDA said teen vaping was becoming an epidemic. And then this summer, it's been like development after development after development. Yeah, something like a quarter of high schoolers in this country, vape. It's pretty crazy. But then San Francisco banned e-cigarettes.

All together. And then Michigan said, you know what? We're going to ban flavored e-cigarettes altogether. And then the FDA came out with a report a couple weeks ago saying people are dying from vaping. And they're not sure exactly why, but eight are dead so far. And then the entire country of China removed jewel products right after they started getting sold in China. And India, okay, so China news was Wednesday. Thursday, India banned e-cigarettes nationwide.

And then on Friday, Walmart said, hey, before the weekend, we're going to ban e-cigarettes too. We're going to keep selling tobacco, cigarettes, and chew, but we're going to get rid of the e-stuff. Oh, and by the way, Senator Mitt Romney from Utah is introducing a bill to ban, like, a lot of things. Now, a huge loser in this situation is Altria, which is the cigarette company that happens to own Marlborough. Yes, and there's a relationship between the e-cigarette queen, which is called Jewel, worth $39 billion. And then you got the cigarette king, which is Altria, which splurge to cool $12.8 billion for 35% of Jewel.

So to be clear, Jewel is a privately held company. There's no publicly traded stocks, but we know that Altria owns 35% of it. And that was a big, big investment. It's one of the biggest investments we've seen in a company, not even to own the whole thing, just a little bit of it. And Jack, what is that equivalent to? One lift. Exactly.

This is also interesting because there's a perfect correlation happening between bad news with vaping and the stock decline of Altria. Yes, Altria's stock we can see because that's publicly traded and it is down 35% since October 2018 when it made the investment in Jule. So Jack, take a deep breath and let us know what is the takeaway for our buddies over at Jewel in Altria? Thank you. I did need to work out those lungs.

Mission statements like Jules can be completely wrong. And this is Jules' mission statement. To get adults to stop smoking cigarettes to vape instead. because that's supposed to be less dangerous. Yeah, two epic failures slash just wrongness in that mission statement. The first one is that it is an adult. It's kids. And the second one, vaping, it might not be less dangerous than cigarettes.

We still need to figure that out. For our third and final story, this one is wild. Tinder just launched an interactive show and they're calling it. Wait for it. Wait for it. Swipe night. Swipe night. And not swipe right.

Swipe right. No. Exactly. And this is like a make-your-react. own adventure kind of a thing. Kind of brings me back to, like, I think goosebumps the book series had this when I was a kid? I think it was like the Hardy Boys or something. But basically, you get to like page 20 and then you're in some dangerous situation in the story. And it's like, will you follow the robber into the cave or blow up the dam and flood the cave? Go to page 67 to

find out. So we're talking about a four-episode video series. And it's going to premiere on October 6th on the Tinder app and just like Game of Thrones episodes come out on Sunday night at 6 o'clock. But unlike Game of Thrones, these episodes, they expire within six hours. Boom, they're gone forever like love. I don't know. So you have to go on Sunday night at 6 p.m. Tinder says this is for users of age 18 to 25. We know what you're thinking. It's a seven year age range. Seems kind of small. That is half of Tinder's user base. And it strikes the heart of Gen Z. Now this is, a first-person video series. You're going through your app and you're choosing your own adventure. And they didn't just like whip this thing up with like a few interns over the summer.

They got the director of Drake's music videos. We're talking Karina Evans here to shoot the whole thing. And Drake has been wildly successful with his viral videos. And Drake is Drake. Now, it's an apocalypse setting, these four episodes, and users have to pick which way to go by swiping left or swiping right every like 30 seconds during each episode. It's strange, because on the one hand, dating is kind of stressful, but like this seems to add a layer of stress to it. How do they, like, describe this thing? Straight from Tinder, as the story unfolds, you will face moral dilemmas and practical choices with only seven seconds to decide, and no going back. Right. This is the kind of thing where, like, if you're in the East Village trying to meet

someone for a drink and you have no idea who they are, it's stressful enough, but whatever. I'm captivated, though, and I think this is a brilliant idea. It's not just brilliant, it's extra brilliant in four different ways. First is, it actually gets people to sign up for Tinder. Just like when Netflix has, you know, Stranger Things Season 3, people could sign up just for this. And then it leads to better engagement once you're on Tinder. I'm excited about this Sunday night thing and my wife and I might have to like set up a joint account to do this thing. And then third, it actually may be a loneliness fixer. No matches?

You can still have an adventure with yourself. Yeah. Who cares? It's still something worth talking about at dinner. And then fourth, and finally, this could potentially lead to better connections. Bold claim. We'll see. Let's put a question mark on that one. The claim by Tinder is that the shared experience of the adventure will bring you together. Also, full disclosure here, Jack and I are completely married. We're just shocked at how cool this is and they should definitely build one for couples just to have fun and meet other couples. Absolutely.

So, Jack, what is the takeaway for the romantics over a Tinder who are about it? Media is a differentiator for tech. Tinder's got some big rivals. It's got Bumble and it's got Instagram. By the way, Tinder's owned by Match Group, which is a publicly traded style. but Instagram and Facebook dating, it differentiates itself from the pack because everyone has Instagram and Facebook. And then Bumble differentiates from the pack because they do these offline meetups where you can actually get to know the people in a comfortable setting. But Tinder is doing it with media, a bold new media, an interactive series on an app that we've never seen before. And here is the key about media. It engages users. It gives them a reason to join. It keeps them

around. It's worth talking about. You can bring it up at dinner even though you didn't meet your match. Other companies are engaging users with media too. Away, the suitcase company, has a magazine. So does Airbnb. Tinder has basically got a TV show. Jack, can you whip up the takeaways for us to start the week? Made well, which, by the way, has guys stuff too, is getting itself all tailored up for an IPO. And J. Crew needs the money badly.

Second story, Walmart is killing e-cigrats, and that is a nail in the coffin of e-cigarettes. Now, Altria is watching its 35% stake in jewel get less and less. Yes, valuable. Third and final story, Tinder is differentiating from Bumble and Facebook dating with adventures. Because dating was already an adventure, now it can be a minorly stressful, extremely entertaining one. Snack fact of the day. Brought by a great snacker living in San Jose, California. But from Bucharest, Romania, we're talking.

Very true. Gabriel heard our story about Corning Glass, which makes the glass that you're touching right now on your iPhone. Yes, and that specific product is called Gorilla Grass. Now get this. Gorilla Grass was developed by Corning in 1962, and it was just sitting on the shelf for like 40 years with no product. This was not developed for the iPhone. This has been just waiting for its match to be made, Tinder style. Finally. In 2006, the love of Gorilla Glass's life shows up in the form of the iPhone, and it's been a moneymaker profit puppy since.

It's a beautiful thing. We love that pair. We hope they get a New York Times announcement. Gabriel, thank you for that snack fact today. Snackers, thank you for joining us as always. We loved kicking off the week with you guys. You'll look fantastic. Keep doing what you're doing.

And let's do this 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, 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.