America doesn't need 436 maternity stores
Hey Snackers,
It may WeWork out. A new deal might give the injured unicorn enough cash to survive, but would cut its valuation from $47B to $8B. Your Snacks team is following today's developments.
Markets kicked the week off with a win before a fresh round of earnings from Snap, Chipotle, and McD's arrive today.
Ford struggles with its botched 2020 Explorer launch
One of the profit puppies is sick... Ford makes nearly all its profit from SUVs and pickup trucks in North America. So when you're rolling out your first redesigned Explorer SUV (aka its best-selling SUV ever) in 10 years, you put top people on it. But Bloomberg now reports that the revamp was botched. And putting this thing in reverse is expen$ive.
This road trip is fun for nobody... Ford invested $1B to equip its Chicago assembly line with the right conveyor belts, hammers, heavy duty tools, and mojo needed to put a 7-passenger aluminum box on wheels together. The whole situation is now carsick.
- Defects: Details on what was wrong with the vehicles isn't totally clear, but the digital gauges that show the MPH and gallons of gas are reportedly glitchy.
- The fix: Some cars were already sent to dealerships and need to be hauled back.
- The root cause: The workplace environment sounds downright abusive, according to Bloomberg: "Roving groups of workers are intimidating other employees, creating a hostile environment."
Waiting until the news is official is often too late... Ford reports its quarterly earnings on Wednesday, and the CEO will probably be asked to explore this Explorer snafu. But plenty of investors on Wall Street have already acted by selling out of the stock — it's down 11% in the past 3 months.
Destination Maternity files for bankruptcy because, you know, Millennials and athleisure
What to expect when you're expecting bankruptcy... Destination Maternity just filed for it. Technically its 436 stores (including "A Pea In The Pod" and "Motherhood" brands) stay open while a judge decides what to do with this overly-indebted chain. Despite partnerships with Jessica Simpson and a hail mary promotion with the NFL, the pre-mom outfitter's sales still shrank 25% over the past 3 years.
Maternity clothing needs Lamaze breathing exercises... While ecommerce brings on the retail-pocalypse, maternity wear is especially primed for disruption. Here's what's blurred the line of whether you even need to buy a maternity wardrobe:
- Extended athleisure: Stretchy gear means postponing that maternity wear purchase another trimester because you've already got Lululemon.
- Digital stylers: Fashion subscription services like Stitch Fix already know your wardrobe, and their humans/algorithms suggest what you'll need pre/post-baby.
- Clothing rental: You'll only need that materni-romper for less than a year, making it perfect for rental businesses like Rent the Runway and Le Tote.
Adult milestones are hitting later... Marriage, babies, house-buying — all increasingly delayed by student loans, careers, and plenty of hefty cultural factors (we're tired of the “Millennials killed X” narrative, too). That social shift didn't just hit Destination Maternity — David's Bridal filed for bankruptcy this year and diaper sales in the US have dipped 0.3% annually from 2012 to 2017.
What else we’re Snackin’
- Swipe: Netflix adds $2B of debt by issuing corporate bonds to fund the next few seasons of binge-worthy content
- Plead: 4 big drug distributors settle an opioid lawsuit with the state of Ohio for $260M
- Planted: Dunkin' tested a Beyond Meat breakfast sandwich over the summer — now the plant-based option's going nationwide
- Cut: Bank of America jumps into the commission-free trading battle with unlimited free stock trades, but only for preferred members
- Headlines: Verizon is trying to slim down its media, putting the Huffington Post (inherited when it acquired AOL) up for sale
- Rescue: WeWork is expected to accept bailout funding from SoftBank, letting its biggest investor take control at a $8B valuation
Tuesday
- Earnings from Chipotle, Snap, P&G, Lockheed Martin, and McDonald's
Disclosure: Authors of this Snacks own shares of Beyond Meat and Lululemon.
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