Lululemon wants you to be its 'guest'
Hey Snackers,
Is USPS Ground shipping Aunt Anna's rando stocking stuffer? The deadline is tomorrow. We got your holiday shopping/shipping deadlines right here.
Markets barely budged up Wednesday — Britons head to the polls today to elect a new government and figure out how to Brexit (or not).
Lululemon isn't expecting a peaceful holiday shopping season
Feel free to go back to child's pose anytime... Investors aggressively dropped shares of Lululemon after Wednesday's earnings report — they're blaming the future, not the peaceful past:
- The 3rd quarter: Sales rose 17% at existing stores, and 23% overall because it added 53 new Lulus over the past year. All that, plus its profits, beat expectations.
- This quarter, aka this holiday season: Lulu gave investors a heads-up that it's expecting fewer sales than they do: $1.3B.
- The unhelpful clarification: The CEO blamed a late Thanksgiving, awkwardly reminding us that there are 6 fewer holiday shopping days this year than last.
Return to the top of your mats... where Lululemon's stock was enjoying a record high earlier this week. The brunch-worthy athleisure industry is fiercely competitive, but sizing up Lulu to Nike has begun (investment bank Cowen compares Lulu's growth to Nike's) — and since Nike is currently 5x as valuable as Lulu, shareholders appreciate the aspirational side-by-side.
Here's the secret to becoming the next Nike... Be a lifestyle brand. Lulu patented "Luon" and "Luxtreme," the technical fabrics that make yoga pants stretchy and sweat-proof. Now it's focusing on some serious lifestyle moves to differentiate itself:
- Stores with built-in yoga studios (like this 20K-square-foot giant in Chicago).
- Personal care products from deoderant to shampoo for post-shavasana shower routines.
- More focus on including guys, whose sales jumped 38% last quarter.
- And it calls its customers "guests" — seriously, CTLR + F this earnings report to prove it.
Saudi Arabia’s profit puppy (finally) goes public: Saudi Aramco
More 200-pound Great Dane than puppy... If oil is king, then Saudi Aramco is the king of oil — and the most valuable company to IPO, ever. It went public Wednesday on Saudi Arabia's stock exchange (not the NYSE or Nasdaq) and shares jumped 10% on Day #1 of trading. Let's peep the key numbers:
- $1.9T: That's Trillion with a "T." It's Saudi Aramco's record-breaking valuation after that surge in its stock price (Apple, the most valuable US company, enjoys a $1.2T valuation).
- 1.5%: The tiny-ish percentage of Aramco shares that were actually publicly listed — the Saudi government is keeping the other 98.5% (at least for now).
- $111B: Aramco's profit last year, making it the most profitable company in the world, by far.
Keeping it gassy (at a low-cost)... Saudi Aramco squeezes so much profit out of every oil barrel because the cost of producing each one is relatively small. It's not just the oil reserve real estate Saudi Arabia sits on — it also extracts the fossil fuel at a super low cost.
- As of 2016, the UK has to drop $44 to produce a single barrel of oil.
- The US shells out $23 per barrel.
- Saudi Arabia spends less than $9. That's less than a Sweetgreen salad. And today oil is selling for $58 per barrel (that's some thick profit margin).
Aramco is a unique combo of risks and rewards... Saudi oil is close to home — they don't have to dig deep into the earth as the US does, or go to ocean depths like the UK. But this natural competitive advantage doesn't mean there's no risk... The world's pivot to sustainable energy could speed up, depriving Aramco of oil sales sooner than expected. Or political instability could mess with its largest shareholder: The Saudi government. Bigger isn't perfect.
What else we’re Snackin’
- Meta: Brex, a startup that provides credit cards to startups, just earned some financial street cred by snagging a $200M credit line from Credit Suisse
- Syrupy: IHOP whips up its own fast casual chain (pancake bowls included)
- GameDrop: GameStop stock tanks after (another) quarterly loss as gamers are waiting for the next gen of consoles to hit shelves
- Couple Goals: Walgreens and Kroger will start buying products in bulk together to reduce costs (next, Walgreens will start leaving a toothbrush at Kroger's)
- Ditched: Facebook and Google dropped out of their long-held place on Glassdoor's annual "10 best places to work" list
Thursday
- UK voters hit the polls for a general election
- Earnings from Oracle and Adobe
Disclosure: Authors of this Snacks own shares of Google and Lululemon
ID: 1035008