Mamba

[Mamba @mambamatrix]

@ex_valuation Think the biggest proof point against the supply side argument is that they’ve been able to chase to some of the strongest rev trends in retail when industry inventory flow had theoretically already troughed earlier in the year

[Mamba @mambamatrix]

@MadThunderdome Think selloff a perfect storm of 1) positioning, 2) delta variant headlines, 3) growth stacks starting to fade on 2nd derivs (though still strong), 4) rates coming back down. Q is do you still double down on reacceleration when recovery plays in some cases near peak EVs

[Mamba @mambamatrix]

@MadThunderdome Agree, but plenty “reopening plays” are consumables / crappy services e.g. apparel / casual dining types of categories. Hard time believing elasticity or consumption/cap structurally changed for those. Folks playing for 1-2 qrtrs of pent-up demand though plenty priced in already

[Mamba @mambamatrix]

@MadThunderdome Not sure how many times ppl expect to get paid on reopening plays considering many of those sectors are fully (and more) recovered on enterprise value vs pre-COVID, following vaccine trials. Few are accrual categories (maybe travel / leisure). Could be good short setups in H2

[Mamba @mambamatrix]

@veeohcee @S_curvecap Alternative data in the first derivative space (e.g. YoY trends in card data) is commoditized. But there��s real value in informing a LT fundamental view by going layers deeper, which is not as common — cohorting analysis, cross shopping trends for nascent concepts, etc.

[Mamba @mambamatrix]

@IntrinsicInv That’s fair, he was definitely cordial. Though not a lot of cases where CEOs pick apart a short thesis in that level of specificity

[Mamba @mambamatrix]

@Ricksalin Bull case very much centered rev opportunity from the D-store share grab within prestige categories (in theory share gain supports LSD% comps). ULTA ~7% share vs d-stores ~9%. And 700 Sephora shop-in-shops at JCP. Plus masstige model less volatile, beauty defensive category, etc

[Mamba @mambamatrix]

@Retail_Guru Difference is concepts where demand / traffic is unknown and where it’s captive. TJX traffic actually never dipped when comps decelerated — likely lending credence to this really being a supply-side blip (I.e. people still coming to stores but shelves empty)

[Mamba @mambamatrix]

@nomad_cap Yeah it’s a good point on finished goods inventory days increasing over time (even on NTM COGS) and something I haven’t gotten a great answer on. Not sure if a function of seasonality and DTC mix increasing

[Mamba @mambamatrix]

@nomad_cap Yeah it’s a long lead time item with very high growth, and they build ahead of peak season. So ann. DIO can be misleading. It’s also moved up recently bc they’ve moved production in-house (used to be ~40% in-house and now 70%). Tough to compare to peers who aren’t vertically int.

[Mamba @mambamatrix]

@nomad_cap Sequential inventory growth is 4% vs normally 40% Q4 to Q1. Plus they’re producing PPE now (Parka production actually turned off). Seems relatively contained. Naturally inventory grows YoY, given historical growth / lead times. But it’s not like they’re cranking out more units

[Mamba @mambamatrix]

@digitallynativ But, point I’m making is that it’s only margin equivalent (or in some cases accretive) on incremental sales, not cannibalized while keeping same sq ft. With the exception of heavy owned real estate mix concepts that manage store staffing tightly (in theory)

[Mamba @mambamatrix]

@digitallynativ On #1: Legacy B&M who are vertically integrated. Lululemon, Carter’s, Children’s Place, Old Navy. In more traditional wholesale you have Foot Locker and Nordstrom Full Proce (though they’re margin equivalent bc of commission based store labor).

[Mamba @mambamatrix]

@digitallynativ Definitely varies by B&M retailer on extent of margin compression (some minimize compression well w/ high ASP, low return categories, bigger ecomm baskets). But still stands that you can’t have the retail sq ft we have in US while simultaneously shifting to a variable cost model

[Mamba @mambamatrix]

@Post_Market Not sure two are comparable? Would think cross-selling apparel opportunity is limited for the mirror acqn (and not why they bought it), and would imagine similar for Equinox. Mirror is more about their unique ability to scale that biz; tough to come at equinox with same angle.

[Mamba @mambamatrix]

@Post_Market What’s the revenue synergy / cross-sell opportunity? At least w/ Mirror it makes sense they are able to plug the product into distribution of 400+ high engagement stores / use ambassadors to lower CAC (even w/ lack of apparel cross sell opportunity). Equinox opp I’m not following

[Mamba @mambamatrix]

@Retail_Guru Yes but Q is what LT margins look like in the business if ecomm penetration change is sticky. Arguably DKS is worse off unless ecomm capabilities are an absolute op profit $ accelerant (I.e. negative store comps will break margins if demand moves online)

[Mamba @mambamatrix]

@CaffeinatedInv1 @CompGrady Very localized markets (since price / ton of aggregates, i.e. a pile of rocks, is cost prohibitive to ship long distances) that tend to be local oligopolies, coupled w/ LT depleting supply base (quarries)

[Mamba @mambamatrix]

@TSOH_Investing There’s no reason structurally they shouldn’t have a LDD% op margin. But their inability to drive full-price sell-through is disheartening. Pre-COVID thought we’d be at the point in NA where they can grow at least industry growth (considering they’re at distrubution point trough)