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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Lululemons, that's up three point two percent today. That's a

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Speaker 2: good news. The bad news it's down twenty percent year

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Speaker 2: to date. It's down fifty percent over the trailing twelve months.

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Speaker 2: I understand they don't have a CEO either, so I'm

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Speaker 2: not sure what's going on there. Big fan of Lululemon,

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Speaker 2: don't get me wrong, but I think there's a little

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Speaker 2: bit of them.

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Speaker 3: What was the last Lululemon item you bought?

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Speaker 2: Not one, but I'm a big admirer.

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Speaker 3: Okay, yep?

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Speaker 4: Put them.

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Speaker 2: Goyle, Senior US e Commerce and Retail Story Intelligence joins

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Speaker 2: us from Princeton.

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Speaker 4: Put them.

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Speaker 2: I note Lululemon reported some results here. A what did

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Speaker 2: you see in the results? And B what's the latest

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Speaker 2: on their CEO search?

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Speaker 4: Absolutely on their CEO searches that it's still undergoing and

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Speaker 4: we don't know where they are as far as the

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Speaker 4: results are. Concerned. They posted respectable for Q numbers last night.

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Speaker 4: A one percent increase in revenue was better than the

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Speaker 4: one percent roughly declined that we expected, so a little better.

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Speaker 4: The concern was really the guidance the outlook for the

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Speaker 4: next quarter, which is one queue and the full year

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Speaker 4: was still very light. Now, I don't know if it's

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Speaker 4: that they're being conservative because clearly the turnaround hasn't begun

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Speaker 4: to take hold, or that things are still soft as

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Speaker 4: they continue to mark down product to get rid of

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Speaker 4: some of that inventory and bring in new product. So

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Speaker 4: I'd say mixed results overall, Still cautious on the turnaround.

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Speaker 4: We're not confident that it's beginning to take hold just yet,

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Speaker 4: but we can somewhat say that, you know, maybe we've

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Speaker 4: hit the bottom.

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Speaker 3: Okay, I have a seventy five dollars credit at Lululemon

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Speaker 3: every quarter because I have an American Express Platinum card.

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Speaker 3: Of course you do, and this is one of the

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Speaker 3: benefit of it. But I struggle to use it because

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Speaker 3: I haven't found anything that I want to spend it on.

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Speaker 3: And I go and Reddit and a lot of people

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Speaker 3: feel this way. They do, or they did talk about

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Speaker 3: having a new designer and some new product, but that

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Speaker 3: has not made its way into stores just yet. What

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Speaker 3: is the latest in terms of just innovation, new design,

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Speaker 3: freshing up their lineup?

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Speaker 4: You know, Yeah, so you're starting to see some of

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Speaker 4: that trickle through. We were just at stores last week

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Speaker 4: and we did see some new styles come through. I'd

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Speaker 4: say the bulk of it, though, we'll be in the

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Speaker 4: spring and summer, so that is when you will start

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Speaker 4: to see some of the new product flow through and

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Speaker 4: hopefully more exciting lineups that you will feel excited to

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Speaker 4: spend your seventy five dollars credit on. I'd say on

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Speaker 4: the women's side, that's where most of the work is needed.

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Speaker 4: For men's though they've done really really well. Their men's

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Speaker 4: lineup is pretty solid. They're doing really well internationally. I

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Speaker 4: do agree that in women's in North America specifically, they

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Speaker 4: need to show more and deliver more, and we expect

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Speaker 4: to see some of that in spring summer and we'll

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Speaker 4: know more if they'll resonate to see if the turnaround

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Speaker 4: can actually take hold.

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Speaker 3: So the other thing that Lula Lemon has to contend

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Speaker 3: with is Chick Wilson, the founder. As far as I know,

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Speaker 3: he doesn't actually have an operating role in the company.

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Speaker 3: He's not on the board, but he is kind of

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Speaker 3: in the peanut gallery agitating for changes overhauls. What kind

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Speaker 3: of influence does this have on the existing board and

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Speaker 3: on investors' expectations.

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Speaker 4: Yeah, he's been advocating for change for quite some time now.

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Speaker 4: We did see some change come through just recently where

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Speaker 4: they did appoint a new board of director and one

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Speaker 4: of the current board of directors will not be renewing,

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Speaker 4: so you're starting to see some shake up. I think

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Speaker 4: he's still calling for more rightfully. So you know, lul

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Speaker 4: Lemon has definitely lost its mojo over the last three

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Speaker 4: years and it's given up a lot of the upside

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Speaker 4: to competition. So I think change is coming, especially as

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Speaker 4: we wait for the new incoming CEO to see who

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Speaker 4: that will be. I think that'll be the key inflection

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Speaker 4: point to say, you know, can this new person bring

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Speaker 4: Lulu Lemon back on board kind of reignite the double

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Speaker 4: digit gains that we're used to because quite frankly, a

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Speaker 4: low single legit increase is not what you expect to

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Speaker 4: see at a Lula Lemon.

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Speaker 2: So I'm looking at the an R function on the

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Speaker 2: Bloomberg terminal for Lululemon. I got three buys, one cell

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Speaker 2: and thirty holds. What are those thirty analysts waiting for putam.

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Speaker 4: And new ceo, new direction? Do we want to see

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Speaker 4: the new product?

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Speaker 2: I mean I can go out there and go to

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Speaker 2: LinkedIn and find them somebody.

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Speaker 4: Well, Paul, you're applying, you know it has to be

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Speaker 4: the right person, right, you have to get the right person.

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Speaker 4: We need to make sure that we get a person

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Speaker 4: who understands the DNA of Little Lemon, who understands the

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Speaker 4: athletic work space, and really is a product led a

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Speaker 4: person like for me, it's important to see that someone

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Speaker 4: comes through who understands that retail one on one is

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Speaker 4: about the product first and everything else after.

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Speaker 3: Okay, But Calvin McDonald, the CEO who has just left

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Speaker 3: and who's come under pressure because things started to kind

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Speaker 3: of slide at the end of his tenure, he was

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Speaker 3: that person initially because when he first joined sales took

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Speaker 3: off and he came over from Sephora. So he clearly

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Speaker 3: has a merchandising background.

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Speaker 4: He does, but it's in beauty if you remember. As

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Speaker 4: soon as he came on, I think the first big

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Speaker 4: pressures he had was let's launch a skincare line, you know,

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Speaker 4: the deodorant and some of the lotions, etc. That didn't

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Speaker 4: go too well. It was a nice idea very high

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Speaker 4: gross margins eighty percent, so in theory sounded great, but

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Speaker 4: it didn't really resonate and get a Little Lemon anywhere.

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Speaker 4: I think what we need is someone who understands the

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Speaker 4: apparel and the at leisure space. Someone who knows that

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Speaker 4: you need style with performance, because that is what this

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Speaker 4: brand demands. And constant newness, like a Little Lemon, has

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Speaker 4: to outshine the broader competition, and that's become harder with

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Speaker 4: just technologies being almost available to everyone.

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Speaker 3: Right now, stay with us. More from Bloomberg Intelligence coming

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Speaker 3: up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: All right, it is still earning season, believe it or not,

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Speaker 3: and the retailers are reporting results. We heard about Lulu

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Speaker 3: Lemon earlier. Let's talk about Macy's. The stock is up

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Speaker 3: about five percent. In this morning's trade. Mary Ross Gilbert

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Speaker 3: is our senior equity analyst covering retail and she joins us. Now, Mary,

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Speaker 3: what do we learn from Macy's.

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Speaker 5: What we learned from Macy's is that Macy's has inflected

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Speaker 5: to positive comp sales. They were looking to achieve sustainable growth.

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Speaker 5: We think they're there, and for this year they're providing

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Speaker 5: i think, very tepid guidance. They want to kind of

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Speaker 5: budget where you know, do higher gas prices have an impact,

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Speaker 5: But overall, the consumer is very resilient and they're attracting

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Speaker 5: more of the middle income to higher income consumer, you know,

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Speaker 5: across their brands, primarily you know, the Macy's name plate.

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Speaker 5: So they're expecting comp sales though they're guiding to be

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Speaker 5: down half a percent to up half a percent, but

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Speaker 5: we think they'll easily beat that. And of course for

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Speaker 5: the first quarter they're already seeing strong traction and at

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Speaker 5: the high end they're guiding for comp sales to rise

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Speaker 5: one and a half percent. So what we're seeing is

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Speaker 5: that the name plate looks like it has inflected to

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Speaker 5: positive comps, and we certainly see the changes when we

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Speaker 5: go in the store.

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Speaker 2: What do you see when you go in the store,

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Speaker 2: Mary that that that's different or maybe positive in general.

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Speaker 5: Yeah, So what we're seeing is the stores are constantly evolving.

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Speaker 5: I mean every time I go in there, I'm seeing

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Speaker 5: something new. So I'm seeing new brands, and what the

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Speaker 5: company reported on the calls, they've added sixty brands. So

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Speaker 5: when I go in there and I'm you know, obviously

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Speaker 5: focused on women's wear, but I did kind of take

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Speaker 5: a look and I saw Roden Gun in our local store,

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Speaker 5: so that was kind of a nice addition. And the

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Speaker 5: stores are just the merchandising is so strong, and the

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Speaker 5: sales people. This has been the best encounter that I've

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Speaker 5: had with sales associates. When I went in the store

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Speaker 5: just yesterday, I encountered at least three associates. They were

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Speaker 5: well appointed, absolutely charming and engaging. And because they have

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Speaker 5: some of these new labels, I actually tried something on.

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Speaker 5: I'm really a Bloomingdale's person. I really love the premium brands,

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Speaker 5: but I did see some really good brands in there.

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Speaker 5: My favorite is a Vec lo Fee and I tried

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Speaker 5: on some of those genes and they're oh, they were amazing,

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Speaker 5: absolutely amazing. So I really think that Macy's has come back.

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Speaker 5: They're bringing in all the brands that consumers care about,

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Speaker 5: They're attracting younger consumers. So I really see very good

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Speaker 5: execution here with the company.

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Speaker 3: What about execution at Bloomingdale's, And I bring this up

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Speaker 3: particularly with Sax's issues. SAX of course in bankruptcy protection

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Speaker 3: right now and trying to find a way to get

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Speaker 3: through all of its step problems.

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Speaker 5: That's all been a benefit for bloomingdale. So Bloomingdale's has

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Speaker 5: been executing, you know, for the last few years, and

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Speaker 5: it's an ongoing process. So just in our local store

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Speaker 5: just opened was the Christian Lubaton shoe boutique. And of

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Speaker 5: course these are licensed businesses, but it doesn't matter. You know,

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Speaker 5: they're not reporting comp sales on all these different basis.

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Speaker 5: It's just comp sales. So it does include the benefit

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Speaker 5: of licensed brands. But so they now have a Chanelle boutique,

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Speaker 5: and they now have the Christian Lubaton. But they're always

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Speaker 5: if you go to Ready to wear, you're seeing constantly,

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Speaker 5: you know, new labels coming in. So it's very exciting.

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Speaker 5: I love Bloomingdale's and that explains why their comp sales

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Speaker 5: were up ten percent. Essentially in the fourth quarter. I

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Speaker 5: think that is some of the gains coming from Sachs

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Speaker 5: and Neiman Marcus customers given the bankruptcy lack of product

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Speaker 5: during that time. So they're they're the beneficiary, and that's

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Speaker 5: why they really emphasized how they're focused on expanding the

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Speaker 5: chain this year and the company, one of the executives

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Speaker 5: did indicate probably a month ago that they would look

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Speaker 5: at some of the stores that might be closing if

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Speaker 5: it's relevant. So they're they're looking to see what opportunities

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Speaker 5: are out there because they're only in fourteen markets, so

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Speaker 5: there's a there's a great uh, I think expansion opportunity

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Speaker 5: to with Bloomingdale's right.

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Speaker 2: Well, Scarlett Mary, she shops in only the best locations.

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Speaker 2: Westfield Century City, that's where she goes to. The race

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Speaker 2: is there, and that you think the short Holds mall

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Speaker 2: is nice, The Westfield Century City Mall is spectact there

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Speaker 2: and by the way, Lolover's offices are right there. Oh,

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Speaker 2: so that's how it works. It's good on lunch to

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Speaker 2: them all and that's that work. We love it. What's

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Speaker 2: makes you say about their store count in general? Here,

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Speaker 2: because there was a decade or more of the department

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Speaker 2: store industry really reducing store count.

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Speaker 5: Yeah, so they're they're closing fourteen stores that's probably mostly

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Speaker 5: closed at this point, and then going forward, there's about

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Speaker 5: sixty five more to gore to go and those will

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Speaker 5: close through twenty twenty eight. They're not in a hurry

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Speaker 5: to close them. They want to make sure they maximize

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Speaker 5: the real estate value. And it's okay because those stores

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Speaker 5: are profitable. But the go forward store base continues to

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Speaker 5: be the three hundred and fifty stores, and so they

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Speaker 5: will get there. Like I said, by twenty twenty eight,

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Speaker 5: they'll have gotten rid of the last of the sixty

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Speaker 5: five stores they plan to close. So I think, you

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Speaker 5: know what, once we move past that, you know, the

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Speaker 5: overall top line should look good.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening the Bloomberg Intelligence Podcast. Catch us live weekdays

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Speaker 1: at ten am Eastern on Apple, Cocklay, and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's get back to the market. Talk about an individual

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Speaker 2: name here, Unilever. What we've seen in the package goods

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Speaker 2: sector is a lot of companies trying to figure out

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Speaker 2: a way to jump start growth as inflation has eroded

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Speaker 2: some of their pricing power and cause some challenges for

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Speaker 2: the stocks. One of them is Unilever. We want to

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Speaker 2: get the latest on what they may be thinking about

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Speaker 2: in terms of maybe changing up the company and strategies.

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Speaker 2: We're joined by Diana Gomes, Bloomberg Intelligence senior equity analysts. Diana,

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Speaker 2: what can you tell us about Unilever? I mean, we

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Speaker 2: kind of know the brands, there's a million brands underneath

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Speaker 2: a Unilever umbrella, but what are they doing to think

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Speaker 2: about juicing growth at that company?

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Speaker 6: Yes, thank you for having me so. Nil Ever is

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Speaker 6: really coming through a few years of transformation where they

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Speaker 6: split the Magnum ice cream for instance, to really focus

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Speaker 6: more in their core business, which is personal care and

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Speaker 6: beauty as central stage. That's where the company has been

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Speaker 6: really refocusing their premium and innovation and really getting the

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Speaker 6: marketing machine behind that segment in order to get to

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Speaker 6: that four to six percent organic sales growth target in

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Speaker 6: the medium term. However, we see some challenges, especially in

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Speaker 6: the near term to get there, and the guidance for

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Speaker 6: two twenty six was already quite cautious, partly because the

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Speaker 6: food business has been seen quite weak demand, particularly in Europe,

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Speaker 6: even though they have very strong brands, so Almans and

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Speaker 6: no are the leading stars in that unit. But obviously

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Speaker 6: with the geopolitics uncertainty that that's some level of additional risk.

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Speaker 3: Right And when it comes to its food business, Unilever

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Speaker 3: has been consistently reducing its exposure. It's sold off its

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Speaker 3: spreads business, the part of the business that contains I

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Speaker 3: can't believe it's not butter. Last year it sparat off

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Speaker 3: its ice cream division into Magnum ice Cream. It still

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Speaker 3: holds a twenty percent stare, it is steadily selling that down.

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Speaker 3: Is the goal here to shrink foods into something that's

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Speaker 3: not meaningful because the CEO is at the end of

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Speaker 3: the day, really a beauty and wellness guy rather than

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Speaker 3: a food sky.

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Speaker 6: That's an interesting question when when asked about it, ever,

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Speaker 6: keeps defending that they are very behind the main brands

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Speaker 6: of the foods business. But obviously they are in the

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Speaker 6: middle of that program to divest about one and a

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Speaker 6: half billion euros in what they call non core brands

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Speaker 6: food brands, and this would include some European local brands,

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Speaker 6: where probably the effort to to really pull up that

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Speaker 6: growth is seen as too much for the return and

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Speaker 6: it can be distracting for for management as well. But

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Speaker 6: this food business is still quite margin creative for the

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Speaker 6: whole UNI level group now without Magnum ice cream also

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Speaker 6: cash a creative, so it still makes sense to to

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Speaker 6: have it in the portfolio to some extent. But I

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Speaker 6: do see why, especially in this background, why there could

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Speaker 6: be some vision to try and accelerate the that split

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Speaker 6: and considering different options as as they have been saying

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Speaker 6: that they are, but just a reiteration of that in

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Speaker 6: the last in the last day or so.

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Speaker 2: So I look at the A n R function Diana

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Speaker 2: for a Unilever and I see eleven buys, eleven holes

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Speaker 2: and four cells. It shows to me the street has

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Speaker 2: no idea what to do with this dock. What do

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Speaker 2: you think the bulls want out of Unilever today?

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Speaker 6: So it is about where people would be, I guess

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Speaker 6: in terms of not wanting to put words into their mouths.

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Speaker 6: But the way I look at it, it depends where

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Speaker 6: we see their journey to get to accelerate that growth further.

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Speaker 6: The main goal is really to drive volume growth, and

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Speaker 6: Unilever already showed that they can get to the two

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Speaker 6: percent at least two percent mark in the fourth Q

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Speaker 6: results in the back of some of the fixes they

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Speaker 6: had been doing also in emerging markets. So it is about,

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Speaker 6: I would say, where people's confidence is in terms of

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Speaker 6: where it goes from here versus where it's already and

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Speaker 6: the very the drive really is on the premium innovation

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Speaker 6: and that focus. And we saw already a lot of

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Speaker 6: the transformation bringing in benefits already in last year in

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Speaker 6: twenty twenty five, So can they do better in the

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Speaker 6: new term?

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Speaker 2: Stay with us More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am. EA is done on Apple, Cocklay

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Speaker 1: and Android Auto with the Bloomberg Business App. Listen on

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Speaker 1: demand wherever you get your podcasts, or watch us live

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Speaker 1: on YouTube.

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Speaker 2: General Mills Cheerios right, yes, that's how I start my

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Speaker 2: day with the bullet cheeriers. What happened with General Mills?

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Speaker 2: What did they report?

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Speaker 7: So basically it was mixed. Results were mixed compared to consensus.

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Speaker 7: They they seem to be doing better obviously, there were

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Speaker 7: some puts and takes, some tatwinds, but they seem to

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Speaker 7: be a little bit more quarter dense rather than something

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Speaker 7: that we can extrapolate into next quarter. So yeah, I mean,

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Speaker 7: obviously I think the stock is down and it's because

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Speaker 7: you know, while volume underneath underlying volume is improving, it's

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Speaker 7: still it's still weak and to get volume growth it's

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Speaker 7: still very expensive.

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Speaker 2: Just looking at the PGeo function that breaks down kind

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Speaker 2: of where they get their revenue whore they break it

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Speaker 2: down pretty finally baking mixes and ingredients, dough, super premium

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Speaker 2: ice cream, cereal, convenient meal, snacks, yogurt, pet other way

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Speaker 2: they break it down. So what are there certain segments

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Speaker 2: that are doing better than others? Are Are they one

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Speaker 2: of these consumer product companies that are saying, if something's

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Speaker 2: not working, we'll sell it and will try to invest

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Speaker 2: in the areas that are growing.

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Speaker 7: That is, you know, all of these companies have done

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Speaker 7: some portfolio reshaping. You know, yogurt has been a headwind

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Speaker 7: because they spin it off, so that is obviously one

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Speaker 7: of the things the latest you know spin offs that

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Speaker 7: they have done. But yeah, they are very sharp in

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Speaker 7: terms of their portfolio. You know, reshaping, but it seems

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Speaker 7: that now they're investing more on making the brands that

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Speaker 7: they have grow, and some of them are growing and

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Speaker 7: some of them are not.

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Speaker 2: Stock is year to date down about seventeen percent, hit

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Speaker 2: a fifty two week low today. Here, how are the

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Speaker 2: General Mills of the world, the Proctor and the gammeles,

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Speaker 2: How are they dealing with the consumer facing particularly the

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Speaker 2: bottom end of the K shaped economy, facing economic pressures

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Speaker 2: now it's more money to fill up your car with gas.

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Speaker 2: How are they dealing with that?

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Speaker 7: Yes, so this company, in particular General Mills, they actually

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Speaker 7: reduced guidance during Cagney last month, and it was basically

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Speaker 7: because volume growth is just not there and they're trying

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Speaker 7: to increase marketing. They're not necessarily trying to rely on

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Speaker 7: price cuts, but it seems that that is going to

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Speaker 7: have to start happening. More competition they're seeing, for example,

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Speaker 7: for snacking, they seem to be a little bit more

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Speaker 7: competitive then the category used to be dog seems to

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Speaker 7: be still a little bit of a headwind for them.

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Speaker 7: So we're seeing, you know, there seems to be a

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Speaker 7: little bit more of cautionary tail for the consumer and

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Speaker 7: definitely with prices spiking for gas, it's not necessarily helping.

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Speaker 2: You know, I don't know if it's just me, but

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Speaker 2: I mean when I go to a supermarket now, I

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Speaker 2: see many more store brands in more categories, and they're

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Speaker 2: also getting better placement in the shows, which it's important

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Speaker 2: for you guys. Yes, talks about just the competitive landscape

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Speaker 2: of brands, name brands versus kind of the store brands.

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Speaker 7: Yes, So basically retailers have been investing on their private

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Speaker 7: label portfolio. Uh, it's about a quarter of of their

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Speaker 7: revenue at this point. They're trying to obviously navigate. They

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Speaker 7: don't necessarily want to anger the national brands, but they

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Speaker 7: tend to fill out certain white spaces that are not

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Speaker 7: necessarily cater by by these national brands. And at some point,

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Speaker 7: you know, sometimes they're competitive more competitive. They have tiers

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Speaker 7: of of you know, pricing for for this private label,

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Speaker 7: and you know some people actually go to these stores

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Speaker 7: to buy their private label.

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Speaker 2: What's the we're now, I guess, you know, roughly a

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Speaker 2: year into these teriffs, what are the consumer project companies are?

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Speaker 2: What are they saying these days about tariffs and passing

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Speaker 2: it along versus taking into their margin. Where are we

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Speaker 2: knowing at.

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Speaker 7: Yes, so some of a lot of it has gone

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Speaker 7: through the P and L. They they're very hesitant about

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Speaker 7: increasing prices again, they're thinking it's more on the price competition.

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Speaker 7: They're going to be more price competitive going forward. So

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Speaker 7: we're seeing headwinds on the on the margins rather than

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Speaker 7: you know, just passing through.

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Speaker 2: I'm looking at this company, General Mills, and they have

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Speaker 2: a six point three percent dividend yield.

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Speaker 6: That's pretty good.

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Speaker 2: Yes, How safe is that? How do they committed? What's

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Speaker 2: their policy on all that?

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Speaker 7: Well, they usually try to grow it at the same

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Speaker 7: rate of earnings, so we don't necessarily see them as

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Speaker 7: as you know, being a little bit you know, increasing

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Speaker 7: share repurchases are probably like spiking the dividend. We're probably

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Speaker 7: going to see a lot of the same, you know,

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Speaker 7: just dividend growing at the same pace of earnings.

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