JaguarConsumer Weekly Callouts – April 23 (ELF, HLT, MAR, OLLI, PEP)
Another week and another mention of e.l.f. Beauty (ELF), which was up 7.26% on the week. On April 7th, Oppenheimer notes that the company launched its Halo Glow Beauty Wands product on elfcosmetics.com and followed up with a launch on April 9th at Ulta Beauty (ULTA). The products are priced at $9 vs. similar, prestige products from brands such as Charlotte Tilbury and Tarte selling for $42 and $35, respectively. “Based on store checks and a review of social media platforms, it appears the launch has gone very well, with the product unavailable at the Wayne Towne Center ULTA location in Wayne, NJ and out of stocks on both elfcosmetics.com and ulta.com.”
In BMO Capital’s Gaming & Lodging note this past week, analyst Ari Klein highlights that U.S. web traffic rose in March, with combined Marriott International (MAR) + Hilton Worldwide (HLT) up 20.1% M/M to a new record. Based on SimilarWeb data, March web traffic increased 22.0%/17.4% M/M at MAR/HLT.
Meanwhile, according to Sensor Tower, HLT+MAR combined downloads of 1.4M in March increased +35.9% Y/Y and +19.2% M/M, better than the +17.0%/+7.0% M/M increase in March 2022/2019. While weekly trends tend to be volatile, and HLT+MAR downloads the week of 4/3 fell -12.8% W/W and were the lowest since early February, trailing four-week downloads were the second highest on record. In Q1, Marriott app downloads were 31.8% above HLT’s vs. +13.9%/+33.3% in Q422/Q122.
Finally, BMO reiterates that China’s travel recovery is gaining momentum, already returning to 2019 RevPAR levels. They expect further RevPAR improvement on rising domestic travel within China and increased outbound international travel beginning with APAC and broadening to other region through 2023 and into 2024 as airline capacity improves. “Reflecting better travel trends, March HLT+MAR app downloads within China were the highest since September 2020, albeit still 48% below March 2019 and downloads the week of 4/3 were the highest since January 2020. In 1Q, HLT+MAR app downloads increased +84.7% Y/Y and +36.6% Q/Q and were -62.1% below 1Q19.”
On April 21st, JPMorgan analyst Matt Boss said his flyer/promotional tracker uncovered a near 70% Y/Y increase in the number of deals hitting Ollie’s Bargain Outlet (OLLI) stores starting Thursday April 20th totaling more than $135M of retail value at “Fancy Store” prices. In JPMorgan’s upgrade note on April 17th, they cited robust deal flow as a key supporting factor to 2023’s same-store-sales guidance, with CEO John Swygert on March 22nd stating “deal flow is pretty strong all the time, but right now it’s extremely strong and the merchants are being very selective with their buys out there.”
Breaking down the $135M of retail value in this week’s flyer: (1) $73.4M closeout deal of Armstrong Flooring, representing the biggest flooring buyout in Ollie’s history, (2) $38M closeout deal consisting of “Famous Maker Bed & Bath Buyout” discretionary merchandise, (3) over $14.5M of merchandise at the Fancy Big Box Sporting Goods Stores, (4) $5.3M Pet Toy deals, (5) $3.5M Gildan’s Men undershirt/underwear deal, and (6) $2.7M ArmorAll Autocare buyout.
“Putting this into context – the collection of deals in this week’s flyer is even larger than the $100M+ closeout deal of Target discretionary merchandise we uncovered back in September, which at the time management cited as the “biggest deal in Ollie’s 40 year history” with 10,000+ SKUs across 450+ stores. Furthermore, this week’s flyer offers a more than 70% Y/Y increase in the number of deals to ~55 (vs. 32 LY), including 6 “buyouts” (vs. 4 LY), 8 standout deals (vs. 3 LY), and 9 items listed at $49.99+ (vs. 3 LY).”
In 2022, celebrity YouTubers Logan Paul and KSI launched a sports drink called Prime Hydration, which has now reached 4.1% of sports drinks volume share, up from 0.5% in July 2022. RBC Capital adds that distribution has been the main driver of Prime’s growth with ACV ramping to 32% in the first 8 months and reaching 40% by end of year one. Since the start of the year, Prime’s ACV has ramped further, gaining approximately 25pts and now up to 66% in April.
Analyst Nik Modi, in his Picture of the Week note, commented on how so far this year, the ramp in Prime’s ACV has had a greater impact on the categories largest player Gatorade, relative to other players like Bodyarmor/Powerade. Gatorade’s share of sports drinks was recovering following its recent issues, up on average 130 bps Y/Y on a monthly basis from July – December 2022. However, to start the year Gatorade’s monthly volume share has sequentially slowed down 200-300 bps in the last 2 months (See Exhibit 1). “Based on our channel work, we understand that Prime is currently on allocation at many major retailers (due to demand). However, our field work suggests Prime has recently secured co-packing capacity that would increase its supply by 30-40% (starting in May). While Prime is nowhere close to unseating the major players (and could prove to be a fleeting competitor – as we have seen with Bang), it is an important brand to monitor given how important Gatorade has been to PepsiCo (PEP) Beverage’s North American revenue growth.”
