Facts from the Week: May 15, 2022
Highlights from $V $RICK $BOOT $AFRM $XPEL $HQI $ZIP $TBI $BLDR $RDFN $RILY
Consumer
Visa - $V
So there is clearly a lot of talk and fear of recession around the world. But in terms of what we see actually day in and day out on our network, the consumer remains very strong in the U.S. and around the world and spending remains robust. -President, 5/11/22
RCI Hospitality - $RICK
Well, it looks like if there's any type of recession coming, we're lagging it because we are not seeing any slowdown. In fact, like I said, we've seen increases month after month, week after week. We've been very, very excited about the way it's looking. May doesn't seem to be any difference right now. Like I said, we've got the big convention. We've got some great conventions coming up in June as we move into early summer. I mean, I don't see anything negatively affecting us at this point.
I don't think 1 or 2 points in the mortgage rate is changing anybody's decisions right now. I think demand is too high. And I think that the reality is that a lot of this inflation is supply-side driven. And as soon as the supply comes in, the prices will come back down some, especially with oil, especially with cars, furniture, some of the big ticket items.
But I see no signs at all of any type of recession at this point, I mean, every week we just keep getting stronger. -CEO
Boot Barn - $BOOT
Consolidated same-store sales grew 33% on top of 27% same-store sales growth in the prior year period, which benefited from 2 rounds of stimulus payments. Our consolidated same-store sales growth was comprised of an increase in e-commerce sales of 50% and retail store same-store sales growth of 31%. Consistent with our third quarter, the growth in same-store sales was driven primarily by an increase in transactions.
While there was some concern that would be -- it would be difficult to wrap the strength of last year's business, our consolidated same-store sales growth through the first 6 weeks of fiscal '23 is approximately 12%, with both the stores and e-commerce channels posting strong comps. Once again, sales are being driven by strengthened transactions with minimal help from inflation and no change in our promotional posture. We are now 6 weeks into the quarter and feel great about the strength of the current trend, further bolstered by the sequential improvement we have seen in May relative to an already very strong April business. -CEO
If you were to pull apart the business on a 3-year basis, Q3 into Q4 got better, Q4 into Q1 is also better once again, and amazingly, May is better than April. In terms of what's driving that -- I mean, first, I'd like to start with, many people thought, including some of us occasionally around the table internally, that we weren't going to be able to cycle the business that really took a step function change up essentially a year ago, right, mid-March of last year. So we're thrilled to be able to report that we've been able to grow on top of that.
Affirm - $AFRM
Credit performance was better than expected across all credit segments. As small optimizations across our Split Pay and large enterprise programs yielded very favorable outcomes, this led to lower allowance rates on new originations across a large percentage of our GMV. Allowance for losses as a percentage of loans held for investment declined for the second consecutive quarter to 6.4%.
$XPEL
Our company-owned installation facilities in the U.S., which really, they act as surrogates for what our customers are seeing, generally saw record sales in March. In fact, almost all of them did, all-time records. And given this, we expect continued strong performance in the U.S. in Q2. And this -- the results we see in those locations are really a proxy for many of our aftermarket customers, so we expect the same from them.
Labor
HireQuest - $HQI
System-wide sales for the quarter were $101 million compared to $56.1 million for the same period in 2021, an increase of 80.1%. Organic system-wide sales grew 35% for existing franchisees.
We have a lot more demand than we do people. And I haven't candidly really seen much of a slackening of that. As you can tell from our numbers, clearly, we're filling more orders, and we're focusing really hard on various avenues of recruiting. But to -- 5 months, 4.5 months into the year, I would still say that we're not that much different than what we were, let's say, in last October or November. It kind of when I was reading GDP dropped 1.4% in the first quarter, I'm thinking, gosh, that's like the best downward trajectory in the GDP that I've ever experienced. So I don't know. For us, it's still all systems go at this point. -CEO
ZipRecruiter - $ZIP
We finish the first quarter of 2022 as the U.S. labor market continues its record-setting run. The U.S. economy added over 400 thousand 1 new jobs for the past eleven months in a row. We are also experiencing the tightest labor market in history - with approximately one unemployed person for every two job openings 2 . Employers are struggling to find talent and need all the help they can get to widen the reach of their job postings and find great matches. We are also witnessing high turnover in the U.S. labor force, with over 4 million 3 workers quitting their jobs every month for the past nine months. Job seekers are looking for better matches, higher wages, and more flexible schedules, in a market with over 60% more job openings 4 than before the pandemic. This creates an opportunity for employers who use the best technology to find talent. While rising labor costs, inflation rates and global tensions remain a concern among employers, we believe that the combination of surging demand for talent, high turnover, and low unemployment means hiring will remain a top priority for employers in the months to come. Employers’ willingness to pay has never been higher, and reflects the ever-increasing value ZipRecruiter continues to deliver.
True Blue - $TBI
As summer approaches, the job market is red hot in Indianapolis and the surrounding metropolitan area, with nearly 40,000 new jobs being posted in the last seven days, according to a new analysis being released today by staffing firm PeopleReady. This addition brings the total number of active open jobs in the region to 150,000, a 12% increase in job openings from the same time last year.
Tech Cruch: https://techcrunch.com/2022/05/06/startup-tech-layoffs-in-may/
Over the past week, we’ve witnessed an alarming amount of layoffs across the startup ecosystem, from buzzy, big names like Cameo, On Deck and Robinhood, to B2B platforms like Workrise and Thrasio. The common thread between most of these layoffs, according to founders, is that there’s been a shift in the market and a serious pivot in business is required. A pivot, that is, that hurts the employees that built your product up after high demand.
Housing
Builders Firstsource - $BLDR
Lately, many industry headlines expressed uncertainty and concern. From what we have seen across the thousands of customers and homesites that we serve, I can affirm that this industry remains strong, underbuilt and resilient. I believe the homebuilding industry will continue to grow this year and that we will outperform our peers as our platform delivers for our customers and our shareholders. Despite persistent supply chain challenges and rising interest rates, we are not expecting a significant downturn in housing because we are far healthier and more prepared industry than the last time we saw a significant downturn.
Our beliefs are supported by 3 key facts: first, the significant underbuilding of homes that has occurred over the last 12-plus years; next, the improvement in underlying demographic demand; and finally, the credit quality of that demand.
We continue to believe that the U.S. housing market is significantly underbuilt. And while I acknowledge higher mortgage rates will likely represent a near-term headwind to satisfying that demand, we continue to see tremendous momentum and long-term growth for the industry. In the first quarter, single-family homes under construction increased 27.5% versus the prior year to 789,000 units.
Redfin - $RDFN
The typical home for sale found a buyer in 15 days, the fastest pace on record, during the four-week period ending May 8. Meanwhile, pending sales fell 6%, the largest year-over-year decline since June 2020 when the initial pandemic shock to the housing market was just wearing off. Many of the buyers who haven’t yet been priced out by skyrocketing housing costs have been rushing to snag homes before they become even more expensive. The typical homebuyer’s monthly mortgage payment is now $2,427, a record high and up 44% from $1,685 a year earlier.
“Rising mortgage rates have taken a notable bite out of demand,” said Redfin Chief Economist Daryl Fairweather. “But still, homebuyers who remain in the market are facing stiff competition, especially for the most desirable homes. Given the lack of homes for sale, it would take a much larger drop in demand for buyers to really feel like the market has truly turned in their favor.”
Lumber
Odds and Ends
B. Riley - $RILY
“Since 2017, insiders have bought over 1.8 million shares, representing about 7% of the shares outstanding,” Bryant Riley wrote in an email to Barron’s. “In a time where I feel like a lot of [other] board members are collecting fees and checking the box, our board has put their money where their mouth is.”
“In many ways, our first quarter is personally as gratifying as any quarter we have reported since going public in 2014.”
https://www.barrons.com/articles/b-riley-stock-buying-spree-51652457585?mod=md_stockoverview_news
May 2022 month-to-date insider open market purchases = $21m: