Black Rifle Coffee Company (SBEA) Added to the long list
We are adding Black Rifle Coffee Company to our long list. We will host a Black Book review on Friday at 12:30 PM ET.
Black Rifle Coffee Company (BRCC) is a veteran-founded coffee company. The company was founded in 2014 by Evan Hafer, a Green Beret. BRCC is a mission-focused company committed to supporting veterans, active-duty military, and first responders. BRCC has targeted the $28B coffee category as its serviceable addressable market. Our military is the most respected institution in the country, according to Gallup polls. Veterans are 7% of the population, while the active-duty military is less than 0.5%. Half of the company’s employees are veterans. BRCC gives preference to veteran-owned businesses as vendors and suppliers. The company also sends a bag of coffee to active-duty personnel for every coffee club subscription.
Black Rifle Coffee Company’s mission to support veterans gives employees and customers a shared purpose. The large base of veterans has helped recruit store employees in a tight labor market. New employees are often attracted by working with other veterans and the upward mobility from the store growth plans.
Black Rifle Coffee Company has a multi-channel growth strategy. The drivers in each channel provide visibility to exceed 20% top-line growth for the foreseeable future. Acceleration in the growth of outposts and wholesale doors will drive a lower mix of DTC in the future, as seen in the chart below.
Ingles Markets FQ4 takeaways (IMKTA)
Last week Ingles Markets reported sales growth of 11.6% in the quarter ended September 25. The weighted average sales per store grew 7.7% for the year, while SSS grew 5.4%. In the nine months ended June 26, SSS increased 5.2%, implying FQ4 SSS grew 6%, accelerating from -0.9% in the prior quarter. Gross margins contracted 150bps YOY in the quarter while operating expenses grew 4.5% YOY. For the year, salaries and wages deleveraged 26bps, while professional fees deleveraged 11bps, bank charges deleveraged 11bps, store supplies deleveraged 10bps, repairs and maintenance deleveraged 8bps. Vendor allowances increased 8.2% for the year and represented 3.2% of COGS, similar to the prior year. Ingles Markets has 198 supermarkets in six southern states. Ingles Markets competes with Kroger in many of its southern markets.
Grocery traffic & KR Q3 preview
Since April, visits to grocery stores and restaurants generally improved in tandem, according to Placer.ai’s consumer tracking data. Then the rise of the delta variant in August led to a drop in restaurant visits while grocery store visits continued to improve. Visits to grocery stores and superstores have been closely correlated this year. In October, restaurant traffic returned to flat to pre-pandemic levels. In comparison, traffic to grocery stores and superstores is 9% higher.
Kroger reports Q3 EPS on Thursday. Consensus expectations are for SSS to be up 0.8% YOY for the quarter ended October. For the same three-month period Walmart reported grocery sales were up 10% with MSD% inflation. That represented a 4% point acceleration for Walmart, while the consensus expectation for Kroger is for a 1.4% sequential improvement.
