Millennials are popping up in earnings calls this season
Wall Street has millennials on its mind this earnings season.
At least 12 companies fielded questions from bank research analysts about their business with the generation, according to transcripts available on FactSet. The U.S. Census defines millennials as those born between 1982 and 2000, putting the oldest at 35 and the youngest at 17.
This generation, which is bigger than the baby boomers who are in their mid-50s through retirement age, has entered the workforce over the last decade in the aftermath of the financial crisis. Millennials' embrace of mobile technology for shopping, financial transactions and communication is transforming the economy. It is also a generation facing heavy student debt.
Many of the companies questioned about millennials this week are in the finance or student-loan market. But others, especially motorcycle maker Harley-Davidson (NYSE: HOG), have products and brands Wall Street sees as threatened by changing consumer behavior.
Alliance Bernstein downgraded Harley-Davidson shares earlier this month following survey results that suggest millennials don't like motorcycles.
Wells Fargo (NYSE: WFC) analyst Tim Conder asked Harley's CEO Matt Levatich to describe the trends they are seeing in millennial buyers, such as gender or ethnic demographics as well as whether they were buying new or used motorcycles. Levatich avoided giving a specific number, saying only there are "plenty" of millennial riders.
"Our quest to build 2 million riders in the United States is going to come from millennials, it's going to come from Gen X'ers, it's going to come from Gen Z, it's going to come from generations yet to come," Levatich said. "And yes, it's even going to come from baby boomers."
Online brokerage TD Ameritrade (NASDAQ: AMTD)'s CEO Tim Hockey took a question from Raymond James & Associates (NYSE: RJF) analyst Patrick O'Shaughnessy about how they are competing to attract millennial clients. Investment firms have been under pressure to court younger customers, who have shown a tendency not to invest in the markets.
"And as you alluded, you have to balance the profitability of the existing clients with large assets and large trading levels versus those that are just starting out," Hockey said. "So my view is, we have to continue to offer those things that will continue to be appealing to investors at all ages."
First Republic Bank (NYSE: FRC), which caters to wealthy customers, talked about its purchase last year of Gradifi, which makes software that companies use to make direct contributions to their employees' student loan balances, a growing benefit area. CEO James Herbert II said it links into the company's millennial strategy "virtually perfectly."
And, he said, the hope is that some of those workers who received the benefit through Gradifi from their company will ultimately be a fit with First Republic.
"And remember that at least one in probably six or eight members, student member clients of Gradifi is a likely qualified client for this bank. And so it's a feeder mechanism for that business," Herbert said. "And to the extent that we invest in Gradifi, we're actually investing in the whole millennial strategy, not just Gradifi."
John Remondi, the CEO of student loan servicer Navient (NASDAQ: ISM), told analysts the company's federal and private student loan portfolios were strong and continued to improve. He said they are benefiting from rising employment and pay for millennials.
JPMorgan analyst Richard Shane asked Raymond Quinlan, CEO of student lender Sallie Mae (NASDAQ: SLM), about millennial behavior, specifically the percentage of applications Quinlan expects to come through mobile apps this year. Quinlan said electronic channels are an "evolving piece" that affects all generations, not just millennials.
American Express (NYSE: AXP) CFO Jeff Campbell, who didn't face any questions about millennials, dropped a statistic about them anyway: Of the 2.7 million customers the credit card company added in the second quarter, 35 percent were millennials.
Johnson & Johnson (NYSE: JNJ) CEO Alex Gorsky deflected Morgan Stanley (NYSE: MS) analyst David Ryan Lewis' question about brand risk from millennials or Amazon. Gorsky said the company remains "very bullish" on the brands it currently has because they are "rooted in science." The company sells household products such as Johnson's Baby Lotion, Clean & Clear, BandAid and Tylenol.
"And then that, of course, helps translate into very strong brand images," Gorsky said. The company has seen a slowdown in some markets, he acknowledged, but "we think at the end of the day, we're still going to need products to fill all these channels. And having great innovation and innovative products is going to be essential."
With earnings season still underway, more companies are likely to field similar questions.
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