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Will AI hit all jobs? We look at trade school stocks for clues. FedEx and castrated sheep. What they have in common and Urban Outfitters. Why Rent the Runway should run and Hide For Friday, August 29, it's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, Urban Outfitters Anthropologie Free people. These clothing brands are firing on all cylinders, driving parent company Urban Ticker urbn to over $1.5 billion in sales. The latest quarter reported just last night. And the jewel in its crown, Nuuly. Though it's just under 10% of the total Urban Outfitters business today, the clothes rental arm is soaring. This one division is now bigger than the whole company. Rent the Runway, the struggling clothes rental og. We're going to come back to that because we've got a lot to say. But let's take a look at Nuuly. Let's take a look at its growth chart. So for those of you listening, you can't see it. You basically see a pretty vertical rise in the number of subscribers over the last couple of years. Now hitting over 350,000 subscribers. Nuuly just reported over 50% revenue growth and record profit. So this chart, really steep, very impressive. Now Nuuly is doing so well that it's expanding its logistics operations in Kansas City to 1 million square feet. Let's hear what Urban Outfitters Chief Operating Officer Frank Conforti had to say about why.
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While the first quarter campaign focused on broad education around the value of clothing rental, this new campaign speaks specifically to our target audience. It positions Nuuly as the solution to common wardrobe challenges faced by our core demographic, like feeling overwhelmed with clothing options yet still having nothing to wear. Our first quarter campaign was instrumental in expanding awareness with 66% of new subscribers indicating they had never rented.
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So that's incredible marketing. Launched earlier this year and now making a real impact getting people who haven't rented clothes before to do so and to realize that it solves for their desire for constant newness, for cheaper options and for their focus on sustainability. And in amongst all that, the market loves one magic word in particular, and that is subscription. Nuuly's $98 per month fee means predictable recurring revenue. So let's go back to Rent the Runway. Its stock is down 99%. Yes, that is 99% over the past five years and it has burned through piles of cash. The company just restructured. And in another episode coming soon, I will break down why its model just cannot seem to make money. So look out and come back for that conversation. Meanwhile, Nuuly will, in my opinion, keep eating its lunch, helped by the fact that part of its inventory conveniently sits inside the stores of Urban Outfitters brands already. It's already out there. Now the retail market is competitive and it's threatened by tariffs, which is the reason urban stock is down today. So Urban Outfitters is heavily motivated to diversify to double down on subscription and invest in newly success. And with over $300 million in cash in the bank, it's certainly got the money to do so. Urban Outfitters valuation has been toppy because that stock's been up over 25% year to date. More on this whole topic to come now stick with us for more on AI and jobs. But first, if you want to do more in investing, check out public.com Brew Markets D is sponsored by Public and our producer John was telling us this morning about some of the random jobs he's had.
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That's right, Ann. I drove a city bus, a snowplow, I managed a golf course, and each one of these jobs left some money sitting in a different 401k. And those old accounts all add up and I'm excited to roll them over into one place.
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I had no idea about the city bus. I learned something new about our producer John every time we chat. Well, for a limited time, public users can earn an uncapped 1% match on all IRA transfers and rollovers. You can also earn a 1% match on your annual IRA contributions. That's 1% match. Plus, with a self directed IRA on, public users can access thousands of stocks, ETFs and bonds to align their investing style with their retirement goals. Users can even trade options in their ira, a feature many brokerages don't offer. So get started at public.com brewmarkets that's public.com BrewMarkets paid for by Public Investing.
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Full Disclosure in Podcast Description now there's.
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A steady drumbeat of doomsday headlines that AI is coming for our jobs, which makes it difficult to feel restful. And even as we head into the Labor Day holiday, which is meant to be our reward for working hard. But there is an investment play that may hedge against AI that you haven't yet considered. So we're going to get into it with John.
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Yeah, of course, there's so much speculation about what's going to happen with AI, and people are doing studies about it, they're trying to read the tea leaves. And over at Stanford, they just came out with a study this week and it was titled Canaries in the Coal Mine. And what they're talking about is the next generation of entry level workers and what effect will AI have on their employment prospects? And they're having a hard time, is the conclusion.
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Yeah, that ominous title actually completely jives with lots of headlines I've seen in places like the Wall Street Journal in recent weeks saying that unemployment levels amongst new college grads, for example, have been ticking upwards. Precisely this point, companies pausing on hiring, wondering if, if not, right the second, whether AI could actually be more cost effective even six months from now. Now, the reason that this is something that John and I spent so much time talking about is when we were in school, we were told, right, STEM education is the path of the future. And what's actually happened is when we take a look at big tech companies who have been employers putting out very lucrative contracts to hire people with STEM education, we've seen a little bit of a reversal happening in recent times. We keep hearing about massive pay packages for AI specialists. But when it comes to coding or when it comes to software engineering, we've been reading about layoffs in big tech. So it's been a bit of a mixed picture and it's tough because we're.
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Always looking to the future. What's. Where do I need to invest my time, my attention, my skill set? And so when I was coming up, it wasn't called coding yet, it was computer science. But it was also thinking, well, healthcare will always need nursing and, you know, you're looking, where am I going to invest? But now there's more questions, right, so.
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Where you invest your time, where you invest your talent, critically important. And we're going to talk about where you can use that same framework to think about where to invest your money. Because there's an interesting play, John, that caught our eye and that is thinking about which are the jobs that perhaps are not going to be displaced by AI so quickly. And what sprung to mind for us were physically intensive, highly skilled technical professions like plumbing and H vac technicians. And this really hit home literally for me this last weekend, because first my plumbing went down in my apartment and then my air conditioning broke just in time for the heat wave. And I was desperate to find skilled plumbers and technicians to come and fix it. And they were amazing, but they were expensive. And it was clear that no amount of AI was going to be able to fix what these teams were able, able to fix as quickly and as efficiently as they did. Well, just to take a big step back, there's actually been a shortage in the number of these skilled technicians in the United States for a while. So much so that we've seen wages increasing and outperforming for these sectors, particularly for young people who are taking up training in these areas, much more than in other places.
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So if you think these people need to be trained, the next generation of folks who are going to come and get your AC working, where are they training?
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Where do they go? Well, this is what, as a markets person, got me excited. Two companies that we spent some time digging into, Lincoln Educational Services, public company Market cap of $618 million. Universal Technical Institute Market cap of nearly 1 1/2 billion dollars. These aren't the biggest companies out there. We spend a lot of time talking about much, much bigger public companies. But they are in this niche and these schools are enjoying the booming enrollment.
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Right, and that never crossed my mind. You were the one that had this idea saying, well, people need to get their skills, where are they going to go? And looking into it, it's also interesting because some more traditional schools where people may live on campus, there's a lot of money spent on dormitories, dining halls, parking, things like that. But these schools can run more lean. People are not living there. They don't have all the trappings of maybe some more traditional schools. And so it keeps costs down and the markets are noticing because I've got this here, the share price for both of these schools is up 50% over the last year.
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That's exactly right. So lean operations typically means higher margin that share price performance year to date. To your point, John, impressive. But I couldn't help myself. I wanted to be cheeky. So I decided to see if I had invested in a quintessential AI stock five years ago, and if I'd invested in either of these stocks five years ago, how would they have compared? So just wait for it. Lincoln Educated Services. So again, that's one of these trade school stocks up 140 over the last five years. Google and Meta stocks up about 150%. So that's not a massive difference between the two. And now this one really blew my mind. If you'd invested in Universal Technical Institute's shares five years ago. Again, one of the trade schools stocks up 270% over the past five years, blowing away some of the big tech stocks that are in fact now the poster children for AI. Which just goes to show, if you poke around and find some of these niches early enough, there are some really fantastic investment ideas that you can find. So just on this One, we don't know where these trade school stocks are going to go in the future. We can only speak about how they've performed in the past. But again, looking for investing ideas wherever we can get creative. Now, this Labor Day, if you're looking to see some in the field action that brings all of this story to life, check out Out There, which is a series. You can find it on YouTube, you can find it on social media. Our very own colleague at Morning Brew reporter Macy, goes on the job running a hot dog cart, walking dogs, performing magic, and yes, training as a plumber. I love this episode. She finds out how these businesses work. And I actually think she's protecting herself from AI because a recent report from Microsoft, yes, from one of the bastions of AI itself recently came out suggesting which AI jobs are perhaps most at risk of disruption. And it ranks broadcast announcers and radio DJs as the profession's 10th most at risk of AI being obliterated. So, John, you and I had better watch out. And Macy's ahead of the game, learning all these new skills.
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This is the only time I don't want to be in the top 10.
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Let's take a quick break. And when we come back, what do FedEx, Caterpillar and JP Morgan have in common? John, we have a question from the audience. That's right.
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We heard from Teresa in Milwaukee, and she wrote, Ann, we have all this data coming in in the news that tells us how the economy is doing. There's gdp, there's job growth. But I keep hearing that quote, bellwether stocks also tell us how the economy is doing. What are they?
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So I love etymology. I can't help myself. I love literature. I love math. One of the reasons I went into investing was to find a home for both of those interests. Etymology, the study of the history of words. I love when it comes into the markets, when quirky words end up being used in finance. So thank you, Teresa, for the chance to go down the language rabbit hole. Well, the word bellwether dates back to the 15th century and refers to a castrated sheep. That's the weather. And that sheep would lead the flock with a bell hanging around its neck. So just as the bellwether would show where a flock of sheep was going, a bellwether stock is meant to describe a publicly traded company that's just so large and influential that its performance is seen as a sign of where an entire sector or even the whole economy might be heading. So let's talk about some examples of these big tech giants. Like Alphabet and Microsoft are considered bellwethers for the technology sector because they're just so ubiquitous. JP Morgan, the massive US bank with $3.6 trillion in assets, often watched as a bellwether for overall financial health. And then Caterpillar, which is the ticker cat, cat is seen as symbolic of construction activity. Now investors, analysts, even the Federal Reserve watch these stocks for clues. And they aren't perfect clues, of course, nothing is. But a positive earnings report from a bellwether might spark optimistic buying activity. Equally, a weak one can trigger sell offs on concerns that trouble will spread more broadly. Now, my favorite bellwether stock is FedEx and not because of its performance. It's down 18 year to date. I'm a disappointed shareholder, I'll disclose that. But I do find logistics businesses fascinating. And there's no denying the global significance of this shipping, shipping giant, 55 billion dollar market cap. FedEx serves over 220 countries and territories, which means it is absolutely everywhere. So if you're looking for insights into trade policy, including tariffs, where there are booms or recessions, where you can see consumer strength or business weakness, wherever in the world you might be looking, FedEx has some window into it. And that's why I always listen to the earnings call the nuggets on what the global vibe is. The, the, the numbers can tell you one thing, but it's the stories being told, the anecdotes being shared on these earnings calls by these bellwether stocks that really get my attention. Well, for FedEx, the next earnings report is September 18th, so we'll be breaking that one down when those results come through.
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And I'm looking forward to hearing that. Ann and I did not expect that that section would mention a castrated sheep. So you surprised me with your etymology and, and we've been getting a lot of questions in our inbox, which I love. We heard from Theresa and we're going to answer yours in the next show. So if you have a question for Ann, send an email or Voice Memo to BrewMarketShow Morning Brew.com well, Wall street.
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Is looking to wrap up a week that saw the S&P 500 touch an all time high push past six and a half thousand for the first time has since pulled back a bit. But the other indices were strong too. And the large driver of that is we're waiting for a heavily expected Fed rate cut coming in September. But a couple of things to catch our eye.
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Yes, that's right. Looking around the stock market before the Labor Day weekend, the Buy now, pay later. Fintech company Affirm saw its share price up over 13% today after the company reported that revenue rose 33% and earnings nearly doubled. Wall street forecasts and yesterday on the show we broke down the acquisition of Foot Locker by Dick's and what impact it might have on shoe brands like Nike. Well, today the market reacted to news that Nike is continuing its restructuring by laying off some of its corporate staff. Nike stock initially ticked up on that announcement. And finally, Pepsi is increasing its stake in Celsius holdings to 11% in a $585 million deal. Pepsi will distribute Celsius's female focused Aulani Nu brand and Celsius has bought Rockstar Energy brand. Shares in celsius were up nearly 5% in early trading.
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We've had a lot going on actually in the food space and the snack space, which brings me to a final thought. Just to frame this though. If you thought that the US Equity market had a concentration issue, just think about the Mag 7 at any point in time making up maybe 30 to 40% of the S P 500. Well, imagine if your economy had massive concentration. Denmark is so heavily dependent on the pharmaceutical business Novo Nordisk that it just halved its economic growth growth outlook because Novo Nordisk growth is slowing down. So there is a report out of Bloomberg and I'm just going to read some of the lines from it. Denmark cut its 2025 GDP growth forecast to 1.4% from 3% amid weaker prospects for giant Novo Nordisk and US tariff increased. Now the forecast cut comes off the Ozempic maker in July cut its guidance for sales and profit for the second time in a year, hurt by growing competition and the rise of copycat versions of its GLP1s. We actually talk a lot about GLP1s on the show, so we're going to keep watching this. More to come from Novo Nordisk More to come as there's news being expected on pills instead of injectables being the next version of these GLP1 products. So moving into September, this one's high on the watch list. That's it folks. That's all for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by Jacques Cotto, Tarkab Delatif and Emily Milire. Our tentacle director is Uchena Waoghu and the president of Morning Brew Inc. Is Devin Emery. If you'd like to get in touch, send an email or voice memo to.
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Brewmarketshoworningbrew.Com have a great weekend. And we will see you back here next week, same time, same place.