#699 -😱 Victoria’s secret is out – The Average Joe


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    #699 -😱 Victoria’s secret is out


    May 21, 2024

    Good morning. Social media is becoming increasingly anti-social, but tech giants have a solution: turning it all into a game. (Sure, that’ll definitely work.) Instagram is trying to attract and retain younger users who are feeling burnt out from social media by offering virtual badges for those who post regularly and increase their follower engagement. Not to be outdone, Reddit ($RDDT) is bringing back its old points system — where users can win “awards” and buy “Reddit gold.”

    After all, the stakes are high for Reddit now that it’s publicly traded — where the best upvote of all is a bump in stock price.


    Victoria’s Secret Is Relying On Nostalgia To Revitalize Its Stock, Bringing Back Its Decades-Long Fashion Show

    Victoria’s Secret ($VSCO) has a dirty little secret — it was founded by a man, for men. Since 2020, the company has struggled to shake its sexist, out-of-touch reputation — and efforts to grow into a woman-run, feminist, inclusive brand have been rocky, leading to the departure of its first female CEO and accusations of being “too woke.” This has pushed its stock down nearly 50% since it split from L Brands ($BBWI) in 2021 — and now the company is hoping a little nostalgia can help turn things around.

    Bringing sexy back: Six years ago, Victoria’s Secret canceled its famous Fashion Show amid criticism of the brand and its famous Angel supermodels. Shortly after, the company’s sales decreased steadily — now it’s on track for its fourth straight year of decline. And to remedy that, they’ve announced the return of the Fashion Show this fall.

    • Last year, Victoria’s Secret management declared they were done putting ‘wokeness’ over ‘sexiness,’ signaling a shift away from their recent focus on female empowerment and back towards their traditionally male audience.

    • This came after the stock had its worst day ever in March, plunging 26% due to disappointing holiday sales.

    Can glamour boost the bottom line?

    The Victoria’s Secret Angels might have been novel years ago, but today, they face stiff competition. Almost every major competitor has launched their own show, often with a more modern and progressive approach. This raises a key question for investors: can the Angels really help $VSCO maintain its top spot in the lingerie market?

    • American Eagle’s ($AEO) Aerie and Urban Outfitters ($URBN) have successfully taken market share from VS by appealing to women without being overtly political.

    • Other fast-growing brands have even tested the markets, with Rihanna’s Savage X Fenty lining up an IPO, while shapewear giant SPANX sold a majority stake to Blackstone ($BX).

    Will it stun or flop on the runway? A Victoria’s Secret rep says the new show will be more inclusive than in the past, directed by women, and designed to appeal to a wider audience. But with lingerie sales down industry-wide for four consecutive quarters, it’s unclear if skeptical shoppers will be interested in what Victoria’s Secret offers.


    This Texas Retiree Used Trading Income To Pay For His New Ranch. Could It Work For You Too?

    Veteran Wall Street insider, Dave Aquino, who’s worked at Merrill-Lynch and Vanguard, argues that the traditional route of saving via 401(k) and IRA isn’t the only or best way to retirement.

    Instead, he’s mastered a smarter strategy that turns the market into an "ATM" that disburses funds on Mondays, Wednesdays, and Fridays.

    • One of Dave's students, a Texas retiree named Jim Haas, used this strategy to earn $10,803 in just 14 days, enough to purchase his dream ranch.

    • This isn't about long-term bets on dividends or bonds; it's about active income from smart, simple trades that anyone can execute with a basic brokerage account.

    Learn the "steps to collect income"


    🦞 Red Lobster files for bankruptcy after years in the red

    Red Lobster, the famous seafood chain known for its endless shrimp, has fallen like an anchor to the bottom of the sea — and its only way out is Chapter 11 bankruptcy. After closing several locations and laying off hundreds in recent weeks, the company hopes Sunday’s filing will help the casual dining staple get back on track.

    • The trouble started in 2014 when Darden Restaurants ($DRI) sold Red Lobster to private equity investors — which acquired the company’s land and raised the rent to levels “above market rates,” putting a strain on the company.

    • Things got worse when the number of customers dropped 30% since 2019 — especially with the costly “all-you-can-eat shrimp” promotion.

    What happens now? Red Lobster is owned by its lenders, including Fortress Investment Group, who are owed a healthy portion of the company’s $1B to $10B in liabilities. Fortress is lending the company $100M to keep it afloat during the bankruptcy process. The restaurant plans to sell billions in assets to pay back its debts — and the hope is that with less debt and a well-known brand, Red Lobster can find new life.

    🏗️ Homeowners are pulling back on renovations

    The home remodeling market has been on a hot streak for over a decade — but the boom is ending… for now. After homeowners spent a record $481B on home renovations last year, experts say that number could drop to $449B this year and keep falling into 2025. Why the change? High interest rates make folks hesitant to spend on home projects — and limited inventory isn’t helping.

    • High mortgage rates mean fewer people are buying or selling homes, so fewer sellers are trying to spruce up their homes before listing them, and fewer buyers are fixing things up after moving in.

    • Many building-supply stocks are underperforming the S&P 500 — including Home Depot ($HD), which is down 2% year-to-date after missing revenue expectations last quarter.

    Trex bets big: Even with the gloomy predictions, deck maker Trex ($TREX) is expanding by building a massive $450M factory in Arkansas — with hopes that homeowners locked into mortgages might want to build a deck to enjoy their backyards while they’re there. Plus, homeowners have $31.8T saved up in home equity — so if rates come down soon, renovations might boom. But that’s a solid “if” — the chance of a September rate cut is only ~70%.


    🔗 Bumble / Hims & Hers Health

    Gold is shining and it’s difficult to ignore its massive run: Gold has outperformed both the Nasdaq and S&P 500 this year— and with interest rate cuts coming this year, Bank of America’s Head of Commodities Research expects prices to soar past $3K. Get the free report to learn how to add gold to your portfolio →*

    Markets & Economy

    Yellen opposes global billionaire tax: Some countries like Brazil and France want to tax billionaires everywhere, making it harder for the megarich to duck taxes by storing wealth overseas. Treasury Secretary Janet Yellen says the US supports progressive taxation — but won’t consider a billionaire tax. [Read]

    Iran’s President Raisi dies in helicopter crash: Raisi’s helicopter went down amid foggy weather, leaving Iran’s already-tense political picture even more uncertain. For now, the VP is in charge and must hold an election within 50 days. [Read]

    Europe wants to boost its military machine: The Russian invasion of Ukraine was a wake-up call to increase defense spending — but coordinating EU member states around a unified vision for defense comes with plenty of political and logistical hurdles. [Read]

    Business & Wealth

    Sonos ($SONO) to unveil its “most requested product” today: Most expect wireless headphones, which customers have wanted for years. A TV streaming app and a new soundbar are also possibilities, though we might have to wait a bit longer for those. [Read]

    Plane tickets could be cheaper this summer: Flight prices fell 5.8% from April last year to this April and are down another 1% in the last month. But if you’re headed to popular spots like Tokyo, Thailand, or South America, expect to pay more. Booking ahead can save you money (1-3 months for domestic, 3-4 months for international). [Read]

    Is staging your home worth it? It costs~18% more to stage your home now than it did before the pandemic. Realtors generally say it’s worth it if you want to sell your home faster, especially if it’s empty or has flaws you’d like to distract from. [Read]

    *Thanks to our sponsors for keeping the newsletter free.



    CEO Paychecks Are Getting Bigger, and Some Are Worth $50M or More

    CEOs are raking in the big bucks, and it’s not just a few outliers. Ever since Elon Musk got a jaw-dropping $55B executive pay package in 2018, more and more CEOs are seeing massive increases in their compensation. This trend, called the “Musk Effect,” is largely due to bigger stock options. Companies can’t write off executive cash pay over $1M anymore, so stock options are a tax-savvy way to tie executive pay to company performance.

    • In the last five years, 36 CEOs of companies in the S&P 500 landed pay packages worth $50M+ — way up from just nine CEOs before Musk’s big payday — with the total cost of these packages quadrupling since then.

    • Last year, Broadcom's ($AVGO) Hock Tan took home $162M, while Nikesh Arora of Palo Alto Networks ($PANW) received $151M — placing them among the top earners in the S&P 500.

    The great divide: Americans are pushing back against exorbitant CEO pay — with a whopping 80% of likely voters supporting taxing companies where the CEO makes 50x or more than their median worker. The Institute for Policy Studies and Americans for Tax Fairness are on board with this, too. They found that from 2018 to 2022, top execs at many major US companies made more money than their companies paid in federal taxes. They argue that corporate tax cuts and excessive executive pay are worsening income and wealth inequality.

    Read: Proxy Elections Could Change Corporate America — But Most Americans Don’t Even Know About Them


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