It wasn't the numbers that cooked shares of Starbucks after hours last night. Not that Starbucks didn't turn in a "disappointing" (their words) quarter last night. They did. But the stock was hanging in there just fine well into last night's call. China comps were flat(!), The US was weak but not a disaster and the rest of the world comped positively. Margins were a trainwreck. EPS wasn't even close to estimates, but Starbucks pulled guidance over 6mo ago. No one owned Starbucks for last night's EPS.

What killed $SBUX (or at least sent shares from flat to down ~8%) was Starbucks shifting spending plans from machinery to labor. Under prior management, Starbucks was somewhat obsessed with rolling out Machines and Food, committing to spending $450 million on machinery starting in 2022. Say goodbye to the cold brew systems and elaborate food prep systems. Only heavy-traffic drive-thru-based stores were getting the elaborate coffee-making systems.

Niccol, who seemed confident if a little disdainful of prior initiatives he's now having to unwind, is young(er) blood but old school. He's spending on employees. Not throwing money at them but absolutely spending more on labor...

Starbucks set to report tonight and if you aren't nervous you haven't been paying attention. 

Shares of the worlds largest coffee shop are trading at levels first hit in 2019, a depressing run of mediocrity that has included 4 CEOs, a national controversy over the use of store bathrooms and the COVID lockdown. The lockdowns were particularly notable for Starbucks because ~20% of its revenues (and much less of its earnings) are generated in the Chinese market, which was something of a career-long hobbyhorse of longtime leader Howard Schultz. 

The company pulled all guidance last fall, one of the first orders of business under CEO Brian Niccol. Suffice it to say the business outlook hasn't gotten more transparent since October.

Same store sales were likely down in the US last quarter, though likely with improved tickets but weaker traffic. FWIW analysts are looking for EPS of 50c on about $8.8b of revenue. There will be currency noise and, as just mentioned, Starbucks itself isn't giving any guidance and has no particular incentive to stretch numbers or paint a rosy international picture. Niccol arrived with a well-earned reputation and he's...

Spotify is down 8% pre-market on missing the EPS estimate for Q4. The subscription numbers were good with monthly usage and premium subscriber numbers coming in better than expected. The guidance for FY subs was light, which seems more on the side of prudent than a red flag.

As I wrote about ahead of earnings, $SPOT had become a crowded long as shares tacked on 20% and $100 heading into the earnings release.

There are companies you want to own for a steady earnings stream. Spotify isn't one of them. 

SPOT into the quarter with too many people needing a huge beat. I was hoping for something more like this. 

Here's how I'm planning to trade it for the Macke Consumer portfolio.

Spotify ("The Swedish Netflix") reports, essentially while we are sleeping tonight. The Podcast King is expected to to report revenue growth of about 20% at $4.6b and earnings of $2.52-ish or more, which is a growth rate too large to really delve into here. Not because it isn't impressive but  because I don't think it matters all that much what Spotify reports as much as how they guide.

Spotify isn't cheap for the best reasons. 1. The company is now printing money and utterly indispensable to ~265 million people worldwide. 2. There isn't (yet) a tariff on steaming stuff 3. Spotify is a global brand, generating more than half its revenues from "other countries" (there are apparently consumers in non-America, I'm having a team look into it).

While we're pie-charting let's add this:

That's Spotify's revenue breakdown on advertisements vs subscribers. Combine those two ChatGPT-generated charts and my hand-written efforts and you know why Wall Street was comfortable bidding SPOT up 33% YTD while the rest of the world burns:

• Ads are flaky but Subs stick around. This is a big part of a lot of my investment thesis this year. I think...

As the dust settles on Liberation Day the Street is starting to pick through the rubble and getting long stocks just in case the world doesn't end.

Consider On Holdings, the Swiss shoe and athletic concern. Shares are popping on a down day thanks to a couple upgrades. The gist of both is something I wrote about the company last March; On is taking market share, expanding across the globe and generally speaking the hottest brand going, at the moment.

That's the view of me, Citi, UBS and about 75% of the fashionable people I run into at our over-priced health club. It's also something noticed by Mrs. JC Parets, and Mrs Jeff Macke; two solid sources on such matters.

On vs Skechers

Being hot is the ultimate tailwind for a consumer brand. Given the headwinds of the moment (tariffs based on trades between the US and anywhere else), it doesn't hurt On to be a Swiss based company doing a lot of business in Europe and on the other side of moving a good portion of production from China to Indonesia and Vietnam.

Skechers,...

Every month, I do a monthly Town Hall for my premium members at Macke's Retail Roundup+. This is meant to be a chance for my members to interact directly with me. I'll go over my portfolio, talk about my recent trades, and answer your questions. 

Watch the video and talk to me in chat below.

Enough raging against the machine. In the 2 weeks since Liberation Day we've seen the stated rate of tariffs change at least 5 times. Just last weekend we saw a seemingly tech-saving exclusion on chips first announced then denied then largely just dismissed as more noise. From a 4% gap higher in the futures to a tepid Monday morning rally which has now given in to the endless pressure we've seen on the Consumer plays we've seen all year.

We're approaching acceptance. There's no one walking through that door to save companies relying on the kindness/ sanity of this administration. Earlier this week I pointed to Best Buy and Nike as two companies that should go higher on a deal. Both are now trading below the Friday close, down ~30% YTD and unable to hold a bid for more than a moment:

Recession is just an economic term. It's most useful in studying periods of history after the fact in search of clues as to timing the natural ebbs and flows of what used to be called the Economic Cycle but for the last 15 years is more accurately thought of as occasional world-threatening catastrophes and the stimulus that follows.

Downturns Cull the Herd when it...

A "tell" is an observable, consistent, unwitting behavior in reaction to a known stimulus. Which is a fancy way of stating something you already understand intuitively. 

Examples: You try on a new, hot outfit to model for your partner. You twirl before them, asking for an opinion. The love of your life looks you over squinches up their nose almost, but not quite imperceptibly. "You look amazing, babe" they offer with what is intended to be a sincere tone but is in the same tone they use to compliment your mom. This is the love of your life. The words mean nothing compared to the signals given off by the Tells of tone and expression. You change.

Example Two (The Point): Three stocks, all dominant in their respective corners of the consumer world, all beaten down mercilessly. All three had what should have been, could have been and in a better tape would have been bullish catalysts over the weekend.

Best Buy, Dicks and Nike are all down over 20% in the last 2 months. They are companies of varying quality in terms of execution but Supply Chain positioning but they dominate consumer segments which have been beaten like Government Mules over the ever-changing...

Are we having fun yet?

No. No, we are not.

Stocks are getting hammered after President Trump's Reciprocal Tariffs were larger and broader than economists anticipated. Retailers and tech are leading the way lower early, which has been the case since this sell-off started to pick up steam in late January.

The immediate impact will hammer the margins of companies importing and/or manufacturing which, in the market consumer world is almost anything you can think of, to one degree or another. The declines in the pre-market tends to reflect worse-case back of the envelope calculations for how hard companies will be hit based on the announced tariffs which, it should be noted repeatedly, are "immediate", "permanent" and "open to negotiation". Three words not typically used to describe the same action, yet here we are.

Take Nike. Please. Nike produces 50% of its shoes in Vietnam, 18% in China and 27% in Indonesia. 

Going into the news conference Nike had probably been planning to shift some production around to whichever countries got the best terms. If so, this was a very bad moment in Beaverton:

Is it worth it for Nike to move...

I was busily preparing for the post-close rantings of a polarizing lunatic (by which I mean the RH earnings report and conference call) when it came across the wire that Amazon could be in the running to buy TikTok.

Amazon spiked on the news, as well it should have. As mentioned almost too often, Amazon is exceptional at deploying capital. Amazon convinced America to put what amounts to spyware-capable microphones in bad speakers, call it Alexa and sell about a billion of them. Amazon started selling Prime memberships in exchange for 2 day delivery on select items. Now Prime generates $50b in membership sales per year.

The company started as a bookstore. 

If Amazon buys TikTok and hotlinks weirdly specific targeted advertising to America's preferred hub for impulse shopping chains like Target might as well stop trying to build out online retail and focus on going viral. I'm only half kidding. 

Merging social media and retail seamlessly has been a dream since the first pop-up ad. In September of 2020 Walmart and Oracle announced a "Tentative" deal to...

Every month, I do a monthly Town Hall for my premium members at Macke's Retail Roundup+. This is meant to be a chance for my members to interact directly with me. I'll go over my portfolio, talk about my recent trades, and answer your questions. 

Watch the video and talk to me in chat below.