I spent a chunk of this past week at the ICR conference in Orlando, where I saw presentations by many public and private companies. A few disclaimers: the conference is structured in such a way that I missed seeing some companies that are likely of interest. Also, while I am no longer in the stock-picking business, sometimes things jump out at me (in last year’s recap I noted that the Amer Sports story seemed very compelling and underappreciated, and the stock did have a good run, especially if you bought it on “Liberation Day”), but I didn’t see anything this week that prompted that sentiment. (Fabletics gave an excellent presentation — comps were up 18% last year and they have only 52% brand awareness — but the company is private.) There was a lot of positive buzz about Five Below’s presentation, which I did not see. This article is a good quick summary of the company’s strategy, which indeed does sound very sensible.
Several topics came up incessantly: the tone of the consumer (robust), tariffs (very annoying for companies), AI (transformative) and GLP-1s (huge knock-on effects). Obviously none of these topics is novel, but I learned both takeaways and nuances that I think are worth sharing.
The general vibe was that the consumer is definitely spending. There is meaningful selection bias in the speaker lineup, as had either Target or Saks (RIP?) spoken, we might have heard a different tune. Still, the positive tone was seemingly uniform. It was striking to hear On talk about the lack of resistance to price increases on their already premium-priced shoes.
Regarding tariffs, I really don’t envy the executives who have to deal with this recently added layer of uncertainty and complexity. On the first day, managements were questioned about what they would do if the Supreme Court reversed tariffs on Wednesday (which obviously it didn’t), and they responded, wearily, that they would deal with it. Companies are in a coping mode, moving around sourcing if possible and holding their collective breaths in the hope that at some point there will be at least stability regarding where tariffs will set relatively permanently. In most cases tariffs are just starting to cycle through companies’ costs, and the question of how much they will have to absorb seems to be “as little as we can.”
Walmart made a presentation about AI, and the topic was mentioned in, it seemed, every other presentation. Daniel Danker, Walmart’s recently hired EVP of AI Acceleration, gave a useful basic AI primer and discussed the company’s just-announced partnership with Gemini. Here’s a quote from the presentation: “On the app, [people] will be doing less scrolling, as products understand the scroller.” Far be it from me to criticize Walmart’s effort in this or any other area, but I was not alone in noting afterwards that I feel like the Amazon app already understands me all too well. In any case, all this does seem like very expensive table stakes, and it remains to be seen whether companies with less money can compete successfully as the effects of this use of AI improve both the customer experience and profitability of big companies.
And then there are GLP-1s, which are basically a meteorite for the food, beverage, supplement and (obviously) diet businesses. Apparel companies talked about the benefit from people who don’t just need new clothes but are now more excited about dressing up, and fitness companies discussed the users’ need to build muscle. My favorite morsel on knock-on effects is that sales of carbonated beverages are being adversely affected by people feeling full so quickly, and wanting to save space for food. Next month I’ll be at CAGNY, where I’ll have the opportunity to hear from the big food companies (AKA Big Food) about how the products they sell are not as processed as they seem, people on GLP-1s who formerly may have eaten many cookies a day still like treats, etc. Meanwhile this past week it was all convincingly rosy, though I do wonder who the real winners will be, as it seems like just about anyone who knows how to use TikTok can start a protein or supplement company.
I’ve written about protein a lot, which is a key beneficiary from GLP-1s as well as biohacking and the longevity craze, and now the new food pyramid. The barrier to entry seems quite low. At the conference I tasted some truly vile protein products – I’ve sworn off pea powder forever. I can’t time when we’ll hit peak protein, but my contrarian view is that I do think it will happen. I am familiar with all the pro arguments, but I’ve lived through enough food pendulum swings to keep my clock handy.
Separately, I’m sharing some articles that I think you might enjoy. The first is a wonderful piece about WhatsApp, which is not strictly speaking a consumer company, but is a product that a staggering number of consumers use. It states: “if you exclude China, where WhatsApp is banned, the app serves approximately half the human population older than fourteen” and it has flattened the world to the extent that until its inception would have seemed inconceivable. The piece is on the wonky side, with more discussion of classical anthropology than most people have ever encountered or want to, but I think you’ll enjoy it.
Also, I recently started rewatching Friday Night Lights. The show holds up extremely well, and there are only two egregious anachronisms — the use of flip phones and the wearing of Under Armour clothing. Seeing both makes me a touch sad. The brand was in the news a few months back when it parted ways with Steph Curry, after years of disappointing results from what seemed like a layup endorsement deal. Was the implosion of Under Armour preventable? The Baltimore Banner has a great recap and analysis of the company’s history and missteps, which is relevant to investors and sneakerheads, and perhaps especially to Baltimoreans, where “the company’s [canceled FL] new headquarters on the peninsula was expected to anchor the largest public financing project in city history.”
Faye Landes is a veteran stock analyst who covered apparel, footwear and retail at leading brokerage and investment firms and is widely recognized for her ability to anticipate far-reaching consumer trends. She advises executives in emerging consumer companies, including some of the most recognizable brands to have been created in the past 20 years, and teaches in the Introduction to Entrepreneurship course at Princeton University. To join her Weekend Reading mailing list, sign up at faye@landesadvisors.com.
