JaguarConsumer Weekly Callouts – March 31 (BBWI, BC, DNUT, FOXF, MBUU, MCFT, ULTA)
Bath & Body Works (BBWI) – Back on March 12th, BBWI announced a year-long partnership with Netflix (NFLX). The first product collaboration is inspired by the Netflix drama series, “Bridgerton.” As BMO Capital wrote, these products are available online and in-stores, nationwide, spanning all categories and also includes four new fragrances (BMO observed approximately 40 items on the website). “We believe this partnership underscores management’s focus on driving newness and excitement to customers aiming to create reasons to shop beyond holiday catalysts. We continue to favor BBWI.”
Krispy Kreme (DNUT) – In case you missed it, Krispy Kreme and McDonald’s (MCD) announced a nationwide partnership to offer the former’s fresh doughnuts at participating MCD locations, following an over one year test that had been ongoing in Kentucky. This will be a phased rollout beginning in the 2H of this year aiming for national availability by the end of 2026. Three doughnut varieties will be offered throughout the day, sold individually or in boxes of six. Based on company comments from DNUT lately, Morgan Stanley had largely assumed this expansion would proceed at some point.
How many MCD locations will actually participate? Doubling DFD doors would mean about half of MCD’s ~13,500 U.S. locations sign on. “We don’t view that as conservative per se and assume there will be hurdles for each store to keep offering donuts, and that market reception will vary.”
How additive is this to DNUT sales? “We don’t really know given DNUT doesn’t give regular detail on sales by channel or per door, though they have previously commented on roughly $600 per week per DFD door, or ~$30k per year – for ~7k stores, an over $200M+ sales layer (eventually) on $1.1B of US revenue in FY23. Though we’d also add that our own math has suggested a potentially higher contribution for QSR locations, and DNUT has also echoed that view, but it’s hard for us to handicap at the moment.”
Ulta Beauty (ULTA) – BMO Capital highlighted that ULTA’s Semi-Annual Spring 21 Days of Beauty Sale began on March 8th and was set to run through March 28th (21 days) versus last year’s sale which ran from March 12th to April 2nd (22 days). Out of the nine categories they’ve tracked during the sale thus far, Makeup, Tools/Brushes, and Hair saw the greatest Y/Y % increase in items on Sale, while Nails, Men’s, and Fragrance saw the greatest percentage declines. In the aggregate, total items on sale are up approximately 27% Y/Y thus far, versus the +12% Y/Y trend rate a week ago. “FWIW, by our math, total sale items on ULTA’s website have increased ~52% since the start of the sale on March 8th, a notable divergence from last year’s sale where total sale items actually decreased ~7% in the comparable time period.”
L Catterton – L Catterton, a Connecticut-based private equity company, recently announced a significant investment in Storyteller Overland, which manufactures Class B RV and expedition vehicles designed for overlanding. Storyteller Overland was founded in 2018, and in 2022 acquired Global Expedition Vehicles, the leading manufacturer of expedition vehicles and Adventure Trucks. B. Riley notes L Catterton is experienced in the space. They currently own RealTruck and Taxa Outdoor.
“In the years leading up to COVID, private equity was active in the off-road auto space, and surging consumer demand in the early COVID years drove this interest significantly higher. At the 2022 Overlanding Expo West (largest annual overlanding show globally), brand reps even commented about the high attendance from private equity investors, with several even noting existing offers from either financial or strategic buyers. In 2023, however, amid demand slowdown, acquisitive interest waned and the competitive landscape saw some consolidation. As a result, we see L Catterton’s investment as a potential positive signal that the backdrop is stabilizing, and also as a positive signal on the longer-term opportunity within the overlanding space. Within our coverage, CLAR (Rhino-Rack), FOXF (auto aftermarket components, Outside Van), and to a much lesser extent VSTO (QuietKat) have direct exposure to the overlanding space.”
Boating – Statistical Surveys (SSI) released preliminary February 2024 new boat registration data on Monday, March 25th. In case you are not familiar, SSI captures registration data in early reporting states, typically comprising more than half of the U.S. boat market (with preliminary February data coming from 32 states, or ~58% of the market). Now, it should be noted that the month of February historically only represents 5% of annual boat industry retail sales. Nevertheless, SSI reported a Y/Y decline in registrations for February of 6.9%. In terms of company-specific metrics: Brunswick Corporation (BC) Monthly registrations declined 2.7% Y/Y, Malibu Boats (MBUU) Monthly registrations declined 15.9% Y/Y, MasterCraft Boat Holdings (MCFT) Monthly registrations increased 1.8% Y/Y.
