Crocs (CROX -0.17%) and Domino's Pizza (DPZ 2.82%) hit new all-time highs after their second-quarter reports. Southwest Airlines (LUV 1.77%) drops after second-quarter revenue comes in lower than Wall Street was expecting. In this episode of MarketFoolery, Motley Fool analyst Maria Gallagher analyzes those stories and the pizza landscape in NYC.

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This video was recorded on July 22, 2021.

Chris Hill: It's Thursday, July 22nd. Welcome to MarketFoolery, I'm Chris Hill. With me, from the financial capital of the United States of America, Maria Gallagher. Thanks for being here.

Maria Gallagher: Thanks for having me.

Hill: I'm not looking for extra credit for saying the correct date at the start of this show. That should be table stakes. But there's a couple of people, nicely pointed out on Twitter yesterday, I opened the show by saying that it was Wednesday, July 28th. No, it was not a show we recorded in the future. Part of my brain is just still on vacation. Today, however, we have a restaurant stock hitting a new high, an airline stock that's losing a little bit of altitude, but we're going to start with comfortable footwear. Crocs put up record revenue of $640 million in the second quarter. They also raised revenue guidance for the full fiscal year. Shares of Crocs were up 7%, hitting a new all-time high. For anyone who thought, "Oh, this is just a pandemic story," it's like no, it looks like it's going to continue for a while.

Gallagher: Well, I don't know if you own Crocs, I don't own Crocs, but I know a lot of people I worked with. John Rotonti is a big proponent. He bought Crocs in the pandemic, and says he never wants to wear another type of shoes. Since Crocs began in 2002, they've sold over 720 million pairs of shoes, which makes it one of the world's 10 largest non-athletic footwear brands. Like you said, they had revenue of $641 million, up 93%. In America, that was up over 136%, in Europe, it was up about 63%, and in Asia, it's up about 36%. Sandals revenue was up almost 60% to represent 20% of their total footwear sales and digital sales. Like most consumer companies in the past year, digital sales were up and are now about 36% of their revenue. I think people are buying Crocs, they're realizing how comfortable they are, and they're sticking with Crocs.

Hill: To answer your question, no, I don't own Crocs. I do, however, own Allbirds, which I believe is preparing to go public at some point later this year. I'm all in on comfortable footwear. You were pointing something out this morning when we were chatting a little bit that surprises me a little bit, which is how sustainable from an environmental standpoint this business is and aspires to be?

Gallagher: Yeah, I was also surprised and also quite impressed by it, so that they are committing to net zero emissions by 2030, by the end of 2021, Crocs will be 100% vegan brand. 45% of the material in their shoes are recycled, 85% of all of their products last year in 2020 were sold without shoe boxes. They are really decreasing their waste in packaging as well. I think it's really interesting they're talking about creating more of a closed loop system for sustainability in their supply chain. They have increased their hourly workers wage above $15 an hour. They have saved over 90,000 pairs of Crocs received from landfills in 2020. They are really working toward a sustainable goal with their ESG metrics. I was surprised by this and impressed by it.

Hill: Just because, I mean, to go back to the landfill, they look like comfortable shoes. They also look like shoes that are going to be around in 250 years and won't have degraded at all. But clearly, that's priority for them.

Gallagher: Yeah, and I mean, they won't degrade, you are going to wear them until you're done wearing them. Then maybe somebody else can wear them quite easily because they won't degrade at all. An interesting potential recycling plan for them.

Hill: Southwest Airlines' second quarter loss was wider than expected. Shares of Southwest down a little bit today. They do look like they are trending in the right direction. I mean, I get why the stock is down today. But I was watching Gary Kelly, the CEO on CNBC this morning. It's just a reminder, among other things, that the way he and his leadership team run this business, and the way Southwest has been run as an airline for decades is just different from the others. All you have to do is just look at the balance sheet. The balance sheet of Southwest Airlines is just so much better than that of other airlines.

Gallagher: Yeah, I agree, and you know people will talk about the leadership at Southwest and the way they treat their employees as just really a gold standard. But I will say that two things give me a little bit of pause and I'm thinking about airplanes. There has been an increased demand for travel, things are coming back. But 60% of Americans plan to travel more in 2021 than in 2019. That's important and impressive. But 69% of people say they won't really get on a plane. More people are comfortable going on a car trip or in an RV. There are more and more people saying they're going to national parks and mountains and less people saying they're going to big cities. That I think it's going to continue to be a trend for at least another couple of quarters. That's something that gives me a little bit of pause. Then the other thing is that while there is an increased demand for leisure travel, there has actually decreased demand for business travel, which Southwest talks about. That's really profitable for a lot of airlines because traffic patterns are predictable. Those customers are generally less price sensitive and they tend to be loyal to a specific airline. I think that those two factors and that macro sense makes me a little bit nervous about the airlines bouncing back in the way I might think of an Airbnb might bounce back in situations and how they've been affected in the next year, and how fast that recovery can happen in the next year in two years.

Hill: I agree with you on that, and you mentioned Southwest reputation for how they treat their employees. It is striking to me that despite that good reputation, one of the things Kelly talked about was they're having trouble hiring. The hiring process is taking longer than it normally does. They are getting fewer applicants than they normally do. There are times when you look at the airline industry and planes are the problem or the cost of fuel is the problem. That's not the case with Southwest, staffing right now is the challenge.

Gallagher: Yeah, and they did talk a lot about that, about how as demand comes back, they're trying to reach that demand. They are trying to make sure that they are able to fly as many people as they need to and they are having some problems with that. I wonder how that's going to affect them in the next couple of quarters and how they'll be able to come back. They ended the quarter with 736 Boeing 737 aircrafts, and that capacity increased about 86%. But they still have a good amount of aircrafts waiting to be deployed as they are able to.

Hill: Don't you have to think that whatever they negotiated with Boeing over the last couple of years really worked out in Southwest saver? You think about everything that happened with the Boeing and the MAX plane that they had, all of those problems, and Southwest basically stood by Boeing the whole time. But I have to believe that whatever deals that Gary Kelly and his team have struck over the last, let's call it two years, have been better than they would've been otherwise.

Gallagher: Yeah. I think that's a fair bet. Boeing and Airbus essentially run all of the planes, so I think Boeing does still have a good amount of power in that conversation, but I would hope Southwest got a good deal.

Hill: If you're looking for more stock ideas and recommendations, just to remind you, you can always checkout Stock Advisor. It's our flagship service. You get stock recommendations every month, Best Buys Now and a lot more and you get 50% off just for being one of the dozens of listeners. Go to

Shares of Domino's Pizza were not surprisingly up today, up 11%, hitting a new all-time high. Second quarter profits in revenue came in higher than expected, same-store sales were up in the U.S. Never bet against pizza, Maria. As always, never bet against pizza.

Gallagher: I think you should never bet against pizza. I would say that I learned today that they had the grand opening of their 18,000th store in La Junta, Colorado. They grew their store count by about 5,100 stores in the past five years. That's just the scale of Domino's is not surprising since I feel like everywhere I go I see a Domino's and every college campus is basically giving Domino's a way to get them to join any club. But like you said, their U.S. same-store sales growth was 3.5% and their international same-store sales growth was about 14%, which marks the 110th consecutive quarter of international same-store sales growth and the 41st consecutive quarter of U.S. same-store sales growth, and they had the total growth in the store count of 238 stores in the last quarter or so. Domino's is just continuing to open stores. They're continuing to be profitable both in the U.S. and internationally, and it doesn't seem like that's going to slow down anytime soon.

Hill: Let me just hit that point one more time because for retail, for restaurants, same-store sales is one of the most important metrics an investor can look at. 10+ years of same-store sales growth in the United States is unbelievable. One other thing, I do want to get to your own personal experience with Domino's because I am curious about this. But you mentioned the store openings and one of the many exemplary things about the way this business is run is the locations that they choose for new stores. I get that it is slightly easier for a business like Domino's as opposed to other restaurants, like sit-down restaurants, because location is important. You don't have to nail the location because almost all of it is delivery, but still, they do such a good job of nailing the location of where they open new stores and they close so few. I think over the last few years, they've closed fewer than 100 locations.

Gallagher: Yeah. Domino's is very, very good at technology and making their experience really interactive. I think anyone who's ordered a Domino's Pizza has had that experience of trying to track your order and getting that fun message. They've also done some research and are working on figuring out autonomous driving. I think that Domino's leadership is very impressive and they have a really good vision for what they need to do. You can even trace that back in 2010, where they basically made ads saying, "Our pizza was bad, but we're working to make it better." I think that that was a risky thing that they did and it really paid off. I think that their vision for the future is very, very smart and I'm always impressed by what they're doing.

Hill: So, you're in New York City, are there a lot of Domino's in New York City or is the pizza environment such that Domino's can't really thrive in the same way that it does in other cities? I don't want to get emails from people in Chicago who are like, "You're saying New York pizza is better." It's not that.

Gallagher: It is. I'm saying that. You can email me that.

Hill: [email protected]. Go ahead, go ahead, send all the emails you want. When I say the pizza environment in New York City, I think of New York City as a slice environment. It's like, yeah. If you have a lot of people or you're looking to feed your family you get an entire pizza. But it's also so easy to just get a slice of pizza. Are there a lot of Domino's just in your neighborhood? How many are there? They can't be that many.

Gallagher: There's at least one a couple of blocks from me. I walk past it all the time and I have a pizza place across the street from me and then another pizza place two blocks up for me. So there's a lot of pizza around. But I do think there are lots of colleges in New York and I really think that the Domino's in colleges is just when you're doing a club meeting, when you're doing anything, it's so easy, it's so reliable. Most people will probably like it, and so there are still a lot of those kinds of larger meeting places in New York. I don't know that many businesses are getting Domino's, but I think a lot of high-schools and colleges will still be. Domino's is going to be their first idea of a place to get pizza for a while at least.

Hill: That reliability is part of their success, isn't it? There are absolutely people who are pizza snobs and they go, "I would never eat Papa John's or Domino's or anything like that." But I remember years ago, Matt Koppenheffer being on this podcast and I was asking him, because he's a serious runner. "I run," but Matt is someone who does marathons under three hours. I remember asking him on the podcast one time, "Hey. When you want to treat yourself after a big race, what do you do?" He said, "I get Domino's." I was like, "Really?" He said, "You always know what you're getting with Domino's. You always know what you're going to get."

Gallagher: You do internationally as well. Like I said, that there is so much growth internationally, but I studied abroad in Australia and there was the same exact thing which is kind of funny, the things that are the same but also so different places. But every time we went to a club meeting, there was Domino's Pizza and it was just good. It was a fine pizza. I ate it and I enjoyed it moderately, which is what I usually feel when I have Domino's, but I'm never that upset about it.

Hill: Maria Gallagher, always great talking to you. Thanks for being here.

Gallagher: Thanks so much for having me.

Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery. This show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see on Monday.