The Wrap – Vital's 'Turnaround'... And Evasion at Carvana, Post, HNI, and WillScot
Or as I like to call them: The Evaders... and why trouble could be headed their way.
▶If you missed it: My take on LeMaitre’s LMAT 0.00%↑ not-so-great quarter roughly two months after it was red-flagged here…
Summary: Its stock got clobbered.
Special thanks to Tenzing MEMO, Fiscal.ai, and ManagementTrack, whose tools were used as part of the research for this report.
▶Eggonomics: Vital Farms VITL 0.00%↑ has become a case study in how hubris can be humbled in just three years. The hubris…
The humbling…
The latest: Vital reported yet another dismal quarter, with management unable to dodge reality: that Q2 results “reflect the industry-wide oversupply and price gap pressure…” This chart tells that story, with sales growth tumbling 10%…
Not to worry: Management has embarked on a “turnaround plan,” and it says it has “high conviction that it’s working.”
Trouble is, that turnaround involves closing the price gap with competitors, who have easily undercut Vital’s ability to be the highest-priced brand in the egg case. That story is playing out in margins…
But eggs, after all, are eggs, and brilliant packaging such as Vital’s standout black cartons can only take a brand so far. When prices soared during the bird flu, consumers who weren’t brand loyal – but were hell-bent on pasture-raised eggs – flocked to other brands and private-label store brands that had moved into the pasture-raised space… some with equally colorful packaging.
The catch…