In this Placer Bytes, we dive into the recovery for two particularly interesting brands, Nike and Tuesday Morning. Then we break down four Darden restaurant chains to analyze their post-pandemic trajectories.
Can Nike Regain Form?
Nike is a critical retail trendsetter. One of the most important narratives that had been driving retail in late 2019 was the rise of product and DTC brands expanding their owned offline presence, and no brand exemplified this trend better than Nike. Online and offline were looking to focus their efforts on owned channels, and the results were impressive. In January and February of 2020, visits to stores were up 8.0% and 20.5% respectively, though February did get a boost from pre-pandemic surges. COVID-19 then obliterated Nike traffic, reducing it to none by April.
Yet, doubters should proceed at their own risk. In the week since reopening in early May, visits have rallied incredibly quickly. By the first week of June, visits to Nike locations were down just 52.0% year over year even though key states like New York, New Jersey, and California were still closed. And the pace isn’t slowing down. Looking at visits on Saturday, June 6th, saw a 33.0% increase on the Saturday that preceded it. Should similar leaps be triggered by reopenings in key states, the recovery could be surprisingly quick.
Tuesday Morning is in the midst of bankruptcy proceedings and will be closing more than 130 stores, but is there a silver lining? While the pandemic had a huge effect on several sectors, one that has been riding a period of strength is the wider home improvement and home goods sector. In fact, the overall category was up 20.1% year over year, the week of May 25th, though this was buoyed by impressive performances from Home Depot and Lowe’s, among others. Tuesday Morning not only occupies a significant place within this community but also aims for high value, something of particular importance during a period of economic uncertainty.
And visitors do seem to be responding to the value offering. Visits, while still down year over year, were just 6.2% down the week of June 1st. So, while there are clearly issues for the company to overcome, it could be situated for a rebound considering its value offering and the sharp uptick the wider segment is enjoying.
If you would’ve asked pre-pandemic which sector would be hit the hardest, one of the obvious places to point would have been sit-down restaurant chains. Fast food is cheaper and more value-focused, delivery is less built into their process and a pandemic recovery is not well-oriented for people to sit in a restaurant. Yet, four Darden restaurant chains do appear to be bucking the expected trend. Interestingly, they all have some form of takeaway or delivery mechanism to help during the restrictions as well.
Olive Garden moved to year-over-year declines of under 50% by the week of June 1st, while Longhorn Steakhouse and Cheddar’s saw declines of just 36.1% and 38.2% respectively. Regional distribution clearly has an impact here, so Capital Grille gets hit harder because of its orientation towards cities while Olive Garden benefits from a wider dispersion, and Longhorn steakhouse benefits from a larger number of its restaurants sitting in already reopened states. So, while this does not mean all is rosy for restaurants just yet, it does speak to a strength that many, including me, underestimated.
Will Nike’s offline dominance continue as states reopen? Will Tuesday Morning's post-bankruptcy situation turn out far better than many expected? Can Darden restaurants continue to impress post-pandemic?
Visit Placer.ai to find out.