Facts from the Week: Sept 18, 2021
Highlights from $MA $BBW $HNNMY $YUMC $VAC $RYAAY $PANW $AMKBY $AMZN $KR Consumer 🛒Travel ✈ Gaming 🎰 Inflation 💸
Summary
Consumer data remains strong in August with US Census retail sales up 14% year-over-year and Mastercard reporting retail sales up 8% versus last year and versus 2019
Travel in Europe appears to be rebounding with RyanAir raising their 5-year goals and travel restrictions lifted in some countries
Betting on the NFL’s opening weekend looks strong with GeoComply reporting transactions up 126% year-over-year
Inflation continues with Amazon raising starting wages to $18/hour and AP Moeller Maersk raising guidance on higher freight rates
Retail
US Census Retail Sales Data for August 2021
Mastercard - $MA
In August, U.S. retail sales excluding automotive and gasoline increased 8.1% year-over-year, and 7.7% compared to August 2019. Online sales in August grew 8.1% and 82% respectively, compared to the same periods. This momentum was particularly evident in key gifting categories, which have experienced strong year-over-year growth, including: Apparel (+75.2%), Electronics (+12.4%) and Department Stores (+28.7%). View the full August SpendingPulse figures here.
According to Mastercard SpendingPulse™, which measures overall retail sales across all payment types including cash and check, this holiday season U.S. retail sales are anticipated to grow 7.4% excluding automotive and gas. Consumers are expected to spend online at even higher rates (+7.6%) than last year, while in-store sales excluding automotive and gas are also expected to see a rebound—growing 6.6%** compared to 2020.
Build A Bear - $BBW
H&M - $HNNMY
Net sales in local currencies increased by 14 percent in the third quarter 2021, i.e., in the period 1 June 2021 to 31 August 2021, compared with the corresponding period in 2020. Converted to SEK, net sales increased by 9 percent to SEK 55,585* m (50,870).
The H&M group’s strong recovery continues with more full-price sales and good cost control. Sales development continued to be affected by the ongoing pandemic, with considerable variation between markets. Lockdowns and restrictions have continued to hamper development, particularly in Asia. However, as restrictions have been eased, sales in store have picked up in many markets while online sales have continued to increase. Excluding Asia and Oceania, sales in local currencies were back at the same level as before the pandemic.
Yum China - $YUMC - Impact of the Delta Variant Outbreak
In our second quarter 2021 earnings release, we mentioned that the latest COVID-19 outbreak of the Delta variant, which started in late July in Nanjing, was evolving quickly. Since then, this outbreak has become the most widely spread regional outbreak since the national outbreak in 2020, impacting 16 provinces. A large number of areas were identified by the government as medium to high risk. As a preventative health measure, several major cities were locked down. For example, Nanjing and Yangzhou, key cities in eastern China, the most vibrant economic region and the most important market for us, were the most affected. Zhengzhou and Wuhan, the capital cities of Henan and Hubei provinces respectively, were also significantly affected. Strict public health measures were implemented across the country, including closures of many tourist locations. These actions led to substantially lower travel volume, cancelled summer holiday trips and fewer social activities, which significantly impacted the restaurant industry.
At the peak of the outbreak in August 2021, more than 500 of our stores in 17 provinces were closed or offered only takeaway and delivery services. Same-store sales in August 2021 declined by mid-teens percentage year over year, or close to an approximately 20% decline compared to August 2019. This was mainly due to a same-store dine-in sales decline in that month of approximately 20% to 30%, and a sharp drop in sales at our transportation and tourist locations of approximately 40% to 50% year over year, also on a same-store basis.
While the outbreak has subsided in recent days and restaurant traffic is gradually recovering, our operations continue to be heavily impacted. As we have previously noted, our business recovery remains to be uneven and nonlinear, as regional outbreaks occur and corresponding public health measures are implemented. The Company expects a recovery of same-store sales to take time.
Moreover, as we have previously discussed, our restaurant margins are further pressured by the diminishing favorable impact of commodity prices, by wage inflation of mid to high single digits, and as we step up value promotions to drive traffic.
Travel
Marriot Vacation Club - $VAC
In its Vacation Ownership business, the Company continues to experience strong occupancies at most of its resorts, despite modestly elevated cancellation trends in certain markets due to the COVID-19 delta variant and the fires impacting Lake Tahoe. As a result, the Company expects contract sales for the third quarter of 2021 to be towards the lower end of original guidance of $380 million to $410 million, continuing to illustrate the resiliency of its leisure-focused business model.
"With our product offerings resonating with customers more than ever, we expect our Adjusted EBITDA in the third quarter to approach 2019 levels," said Stephen P. Weisz, chief executive officer.
Ryanair - $RYAAY
Ryanair Group airlines now expect to deliver more rapid traffic growth over the next 5 years, and have raised their 5 year growth forecast from 33% to 50%. As a result, Ryanair's pre-Covid traffic of 149m is expected to grow to over 225m guests by March 2026, which is 25m passengers p.a. higher than the previous target of 200m.
Other
The Dutch authorities have announced that some entry restrictions imposed on arrivals from very high-risk countries, including the United States and the United Kingdom, will be abolished from September 22, as the government gradually facilitates entry restrictions and regulations. SOURCE
Kayak
Gaming
NFL opening weekend from GeoComply
A company that most of the legal U.S. sports betting industry uses to verify that its customers are where they say they are reports a record number of transactions over the first weekend of the NFL season. That helps confirm an expected a big increase in the level of online betting as football season got under way in a nation with many more places to bet this year.
GeoComply Solutions, the Vancouver, Canada-based tech company, said Monday it recorded 58.2 million geolocation transactions across 18 states and Washington, D.C. from Thursday night, when the NFL season began, through 7 p.m. EST on Sunday.
That represents a 126% increase from the same period of the 2020 NFL season, when GeoComply processed 25.8 million transactions. SOURCE
Arizona, which launched on the first day of the NFL season, has seen more than 6.1 million geolocation transactions from more than 271,000 newly-created accounts since Thursday, when the state-regulated sportsbooks first went live.
“Arizona is showing that there is pent up demand for sports betting in the western part of the U.S. The state has catapulted near the top as the 4th largest state for transactions, in just its first weekend. We haven’t seen anything quite like it,” -Geocomply
Cybersecurity
Palo Alto - $PANW
Inflation
A.P. Møller - Mærsk - $AMKBY
for the first two months of Q3 2021 recognised a financial performance significantly ahead of our previous expectations and now expects for Q3 2021 an underlying EBITDA close to USD 7bn and an underlying EBIT close to USD 6bn. The strong result is driven by the continuation of the exceptional market situation within Ocean, which have led to further increases in both long- and short-term container freight rates.
Given the persistent congestions and bottlenecks in the supply chains, APMM now expects the second half year 2021 to be stronger than previously anticipated, both Q3 and the full year 2021. Consequently, the full year guidance for 2021 has been revised upwards with an underlying EBITDA now expected in the range of USD 22-23bn (previously 18-19.5bn) and underlying EBIT expected in the range of USD 18-19bn (previously USD 14-15.5bn).
Amazon - $AMZN: hiked its average starting wage to $18 per hour on Tuesday and said it plans to hire more than 125,000 warehouse and transportation workers in the United States. The world's largest online retailer also said it would pay a sign-on bonus of $3,000 in some locations and the hourly wage could go up to $22.50. Amazon was among the first few retailers to set a $15 an hour minimum wage in 2018.
Kroger - $KR
While difficult to predict with precision, as we shared last quarter, we believe inflation for the full year will be higher than originally contemplated in our 2021 business plan. For the second half of 2021, our guidance now is to use inflation of between 2% and 3%. -CEO
Odds and Ends
WSJ on BNPL: Alexis Luedtke got her first “buy now, pay later” plan in 2019 after she was rejected for a credit card. She has used at least five more since to buy face cream, T-shirts and birthday gifts.
One reason: shoppers like Ms. Luedtke who don’t qualify for credit cards. Buy-now-pay-later companies say they rely less on—and in some cases bypass altogether—traditional credit scores and reports. Doing so allows them to approve more consumers. Shoppers gain the ability to buy things even without cash on hand—translating to higher sales for retailers.
https://www.wsj.com/articles/amazon-is-doing-it-so-is-walmart-why-retail-loves-buy-now-pay-later-11631784601?mod=hp_lead_pos10
Federal Reserve Balance Sheet
Thanks for reading and have a great weekend!
@RationalResear