🛍️ Marshalls’ treasure-hunt win
Hey Snackers,
The latest victim of FTX’s fallout: Coachella. The music fest said nearly $1.5M worth of its NFTs (including 10 lifetime passes) are trapped on the exchange’s now disabled server.
Stocks inched down yesterday after Fed official James Bullard suggested rates might need to go much higher to tame prices. Investors had hoped for a slowdown after inflation cooled last month. In other bummer news: Ticketmaster said it’s canceling T. Swift sales for today.
As more shoppers bargain-hunt, TJ Maxx and Marshalls grow while “in-between” retailers suffer
Found a $30 Michael Kors bag… under a shoe rack. TJX — the discount retailer behind TJ Maxx, Marshalls, and HomeGoods — is humming along as consumers scour its aisles for cute deals. This week, TJX beat quarterly sales expectations and boosted its outlook, because there’s no better feeling than finding perfectly fitting Levi’s for $11 after hours of scavenging.
- The “exciting treasure-hunt shopping experience” is still resonating, TJX’s CEO said. Same-store sales at Marshalls and TJ Maxx were up 3%. And while the S&P 500 is down nearly 18% for the year, TJX stock is also up 3%.
- Dress for less: Yesterday, rival rack-rummaging destination Ross also delivered better-than-expected results, despite declining sales and profit. Shares popped 13% after it issued higher-than-anticipated guidance for the holidays.
It’s the “affordable splurge” vibes for me… and the unaffordable splurge for others. While discount retailers are banking on low prices, luxury retailers are enjoying resilient demand. Bloomingdale’s owner Macy’s raised its annual profit forecast as higher-income shoppers scooped up designer blazers and fancy beauty products. Macy’s isn’t the paragon of luxury, but it does stock more luxe goods than department rivals like Kohl’s. Interestingly:
- While Macy’s same-store sales were down for the quarter, its higher-end brands grew. Bloomingdale’s revenue was up 5%. Meanwhile…
- Its luxury beauty retailer, Bluemercury, enjoyed 14% sales growth as shoppers splurged on pricey serums and designer foundations.
The middle is an awkward spot… during an economic downturn. Lower- and middle-income consumers are moving downmarket to discount retailers like TJX and Walmart, while wealthier consumers are sticking with luxury brands. Meanwhile, more middle-of-the-road retailers are hurting: this week Kohl’s withdrew its annual forecast after sales fell 7% and Target cut its holiday outlook as demand slackened.
JPMorgan invests $1B in rental homes as pricey houses kick off an American rent-aissance
Big Banks join the rent-aissance… Fewer people are buying houses, so banks are shifting their focus from home loans to rental properties: this week JPMorgan said it’s teaming up with property giant Haven Realty Capital to build $1B worth of single-family homes for renters. As US homes sales continue sliding, JPM is preparing for a rental surge:
- Bettin’ on the ’burbs: JPM and Haven plan to buy 250 “built to rent” homes in the Atlanta area, and then develop entire communities of new suburban rental homes.
- Renting, revamped: Last month, JPM started testing a platform that aims to help landlords digitize monthly rental payments — 78% of which are still paid by check.
Renting is the new buying… because many can’t afford to buy right now. Mortgage rates have more than doubled in the past year, making the long-term cost of homeownership prohibitive for many. While banks are earning higher interest, mortgage demand has plunged 40% from a year ago.
- It’s bad for buyers… and for banks: JPM issued $15B of mortgage loans last quarter — 46% less than a year ago. JPM laid off mortgage workers this year as slumping revenue dented profits.
- Rival Wells Fargo’s mortgage volume has fallen 90% since last year, and it’s also laid off mortgage workers. Rocket Mortgage, Redfin, and Better.com have also cut staff, and some mortgage startups have gone bankrupt.
It pays to be pragmatic… JPM could capitalize on America’s housing-affordability crisis by capturing a new generation of renters. Builders first popularized the build-to-rent model during the Great Recession as a way to keep building even when people weren’t buying. Now builder confidence is at its lowest level since 2012, thanks to soaring rates and construction material costs. By shifting strategy banks could see another build-to-rent boom.
The Crypto Catch-Up…
- 🧹Messy… Former FTX CEO Sam Bankman-Fried apparently cursed regulators in a DM-based interview with Vox and said his "biggest" mistake was filing for bankruptcy. Meanwhile, FTX's new CEO called the mess "unprecedented" (and he oversaw the Enron bankruptcy).
- 🌶️ Spicy… An FTX investor is suing Larry David, Tom Brady, and Steph Curry, among others, alleging their paid promotions for the now bankrupt crypto exchange lured "unsophisticated investors" into a "Ponzi scheme."
- 🤖 Techy… Crypto hardware wallet makers Ledger and Trezor saw booming sales last week after FTX froze customer withdrawals. Hardware wallets let crypto “hodlers” self-custody their coins (no exchange required).
What else we’re Snackin’
- Capex: Corporate giants like Meta and Tyson are still upping capital spending (think: buildings, tech) and might set a quarterly record. That’s typically a vote of confidence, but recent layoffs muddy the waters.
- Unfarm: The FDA said lab-grown chicken from Upside Foods is safe to eat, in a regulatory first for lab-grown meat. There are 100+ companies in the booming field, and Upside Foods is valued at $1B+.
- Drip: Workers at 100+ Starbucks spots went on strike yesterday — on "Red Cup Day," one of Starbs’ busiest days of the year — to protest the chain’s alleged union busting. In the past year, 260 locations have voted to unionize.
- Auto: Lyft said it has partnered with driverless-tech company Motional, which also has a deal with Uber, to bring robotaxis to LA (ETA unknown). Commercial self-driving adoption has hit regulatory speed bumps.
- OnlyMerch: OnlyFans is collabing with ecomm biz Spring to let creators sell merch directly to fans. TikTok, Meta, and YouTube have launched similar efforts to attract and retain creators.
Friday
- Earnings expected from JD.com, Foot Locker, Spectrum Brands, and Twist Bioscience
Authors of this Snacks own: shares of Google, Starbucks, Uber, and Walmart
ID: 2600619