🏠 WeWork, unleased

...and Weight Watchers should read the room
 

Team meeting in Women's Apparel section [Boogich/E+ via GettyImages]

 
Yesterday's Market Moves
 
Dow Jones
35,485 (+0.62%)		S&P 500
4,448 (+0.25%)		Nasdaq
14,765 (-0.16%)		Bitcoin
$45,862 (+0.71%)
Dow Jones
35,485 (+0.62%)		S&P 500
4,448 (+0.25%)
Nasdaq
14,765 (-0.16%)		Bitcoin
$45,862 (+0.71%)

Hey Snackers,

Another week, another streaming service: business software giant Salesforce is reportedly launching a biz-focused streamer called — wait for it... Salesforce+.

Stocks closed at fresh highs yesterday, despite news that consumer prices jumped 5.4% in July from last year (#more-flated). Investors were upbeat about the big infrastructure bill.

Unlease

WeWork partners with Saks for in-store working spaces — the "unleasing" has begun

Kombucha tap is running dry… And the WeWork saga continues. Two years ago, WeWork's planned IPO crashed and burned. Then, its controversial founder Adam Neumann stepped down as CEO. This year, WeWork plans to go public by merging with a publicly-traded SPAC called BowX. The merger's expected to value WeWork at $9B — down from $47B in 2019.

  • WeWork is a notorious money-loser, and the pandemic WFH life sure didn't help. In the first quarter of this year, WeWork's losses quadrupled to $2.1B.
  • WeWork's new leadership is trying to slow the cash-bleed. Part of that new strategy now involves Carrie Bradshaw's favorite department store.

Better than a coffee break... a Gucci break. WeWork is teaming up with Hudson Bay, the company that owns Saks Fifth Avenue, to add co-working spaces to department stores. The first five "SaksWorks" spaces are slated to open next month in NYC. WeWork will operate and staff them in return for a cut of sales. But here's the key part: it won't have to pay rent.

  • Old We = Renter: In its rush to grow-at-all-costs, WeWork signed a flurry of leases that could cost it $10B+ in the next four years. And it doesn't even get to keep the real estate.
  • New We = Property Manager: WeWork expects to open ~70% of its new spaces under arrangements that avoid leases. Like: the Saks revenue-sharing deal.
THE TAKEAWAY

"Unleasing" could make WeWork more of a tech company... and less of real estate company. Leasing real estate is pricey, and it's draining WeWork's non-existent profits — and its ability to scale. Without leases, WeWork could scale faster and cheaper. Uber doesn't buy cars, Airbnb doesn't buy houses, and Instacart doesn't buy grocery stores. In the same vein, WeWork doesn't need to pay for buildings — it can just provide the service.

Weighed

WW (aka: Weight Watchers) quarterly sales are shrinking faster than waistlines

A different kind of slimdown... is happening at WW — formerly known as Weight Watchers. WW expected an uptick in dieting this year, as people emerged from hybernation and planned for #hotvaxsummer. Turns out, it was WW's sales and subscriptions that slimmed down last quarter. WW shares plunged nearly 30% after yesterday's earnings.

Loose-fit jeans = the new sweatpants… Summers are typically WW's worst season, but this year WW expected a pandemic glow-up moment. That didn't materialize: despite the national reopening, WW's sales fell 7% last quarter from last year. Although four in 10 people in the US gained unwanted weight during the pandemic, they're not in a hurry to lose it.

  • Serving up connection: People are more focused on reconnecting with friends than toning their beach bods. Spending at restaurants and bars hit an all-time high in May.
  • Health, on your own terms: Consumers didn't abandon wellness, but they prioritized convenience. Health-focused companies like MyFitnessPal and HelloFresh added millions of users. And Atkins and SlimFast saw a boost in sales of their pre-made diet foods.
THE TAKEAWAY

Read the room... to reap the profits. After a year of pandemic restrictions and routines, consumers want options, experiences, and flexibility — not strict regimens and daily cauli rice. Companies that are responding to these demands are reaping benefits: Levi's sales more than doubled last quarter as it leaned in to baggier jeans and "balloon pants."

What else we're Snackin'
  • Rule: President Biden met with several CEOs to encourage worker vax requirements — McDonald's, Google, Uber, and Facebook have already mandated them.
  • Descend: Southwest Airlines said the Delta variant surge has dented bookings and boosted cancellations, which could put profits out of reach.
  • Coin: Coinbase reported $1.6B in profit for last quarter – nearly a 5,000% increase from a year earlier – thanks to an uptick in crypto trades.
  • Cut: Google will reportedly reduce salaries for employees who choose to WFH by as much as 25%, joining Facebook and Twitter in cutting pay for some remote workers.
  • Ghosty: Wendy's shares jumped ~4% yesterday after the company revealed plans to launch 700 ghost kitchens by 2025.
  • EV: Electric truck-maker Rivian might invest $5B in a new plant in Texas, according to a city doc — and could get ~$500M in tax breaks.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Thursday
  • Weekly jobless claims
  • Earnings expected from Disney, Airbnb, Baidu, DoorDash, Palantir, SoFi, GoodRx, and Oscar Health

Authors of this Snacks own shares of: Disney, Google, Twitter, and Uber

ID: 1757262

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