WEBVTT - Lululemon’s Disappointing Outlook Adds Urgency to CEO Search 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.520 or watch us live on YouTube. 0:00:24.280 --> 0:00:27.440 Lululemons, that's up three point two percent today. That's a 0:00:27.480 --> 0:00:30.840 good news. The bad news it's down twenty percent year 0:00:30.880 --> 0:00:34.320 to date. It's down fifty percent over the trailing twelve months. 0:00:34.320 --> 0:00:36.360 I understand they don't have a CEO either, so I'm 0:00:36.400 --> 0:00:38.760 not sure what's going on there. Big fan of Lululemon, 0:00:38.800 --> 0:00:40.920 don't get me wrong, but I think there's a little 0:00:40.920 --> 0:00:41.319 bit of them. 0:00:41.320 --> 0:00:43.280 What was the last Lululemon item you bought? 0:00:43.760 --> 0:00:45.159 Not one, but I'm a big admirer. 0:00:45.240 --> 0:00:45.840 Okay, yep? 0:00:46.040 --> 0:00:46.400 Put them. 0:00:46.440 --> 0:00:50.720 Goyle, Senior US e Commerce and Retail Story Intelligence joins 0:00:50.760 --> 0:00:51.559 us from Princeton. 0:00:51.560 --> 0:00:51.879 Put them. 0:00:51.920 --> 0:00:55.240 I note Lululemon reported some results here. A what did 0:00:55.240 --> 0:00:56.880 you see in the results? And B what's the latest 0:00:56.920 --> 0:00:58.240 on their CEO search? 0:00:59.320 --> 0:01:02.880 Absolutely on their CEO searches that it's still undergoing and 0:01:02.920 --> 0:01:05.160 we don't know where they are as far as the 0:01:05.200 --> 0:01:09.520 results are. Concerned. They posted respectable for Q numbers last night. 0:01:09.920 --> 0:01:12.679 A one percent increase in revenue was better than the 0:01:12.720 --> 0:01:16.160 one percent roughly declined that we expected, so a little better. 0:01:16.280 --> 0:01:19.000 The concern was really the guidance the outlook for the 0:01:19.040 --> 0:01:21.160 next quarter, which is one queue and the full year 0:01:21.280 --> 0:01:24.240 was still very light. Now, I don't know if it's 0:01:24.280 --> 0:01:28.120 that they're being conservative because clearly the turnaround hasn't begun 0:01:28.160 --> 0:01:31.120 to take hold, or that things are still soft as 0:01:31.120 --> 0:01:34.720 they continue to mark down product to get rid of 0:01:34.760 --> 0:01:37.319 some of that inventory and bring in new product. So 0:01:37.360 --> 0:01:42.240 I'd say mixed results overall, Still cautious on the turnaround. 0:01:42.280 --> 0:01:45.960 We're not confident that it's beginning to take hold just yet, 0:01:46.360 --> 0:01:49.320 but we can somewhat say that, you know, maybe we've 0:01:49.400 --> 0:01:50.120 hit the bottom. 0:01:51.200 --> 0:01:54.560 Okay, I have a seventy five dollars credit at Lululemon 0:01:54.720 --> 0:01:57.840 every quarter because I have an American Express Platinum card. 0:01:57.840 --> 0:01:59.600 Of course you do, and this is one of the 0:01:59.640 --> 0:02:03.160 benefit of it. But I struggle to use it because 0:02:03.240 --> 0:02:05.200 I haven't found anything that I want to spend it on. 0:02:05.240 --> 0:02:07.559 And I go and Reddit and a lot of people 0:02:07.600 --> 0:02:10.680 feel this way. They do, or they did talk about 0:02:10.720 --> 0:02:13.000 having a new designer and some new product, but that 0:02:13.040 --> 0:02:15.560 has not made its way into stores just yet. What 0:02:15.639 --> 0:02:18.320 is the latest in terms of just innovation, new design, 0:02:18.520 --> 0:02:19.520 freshing up their lineup? 0:02:19.520 --> 0:02:22.680 You know, Yeah, so you're starting to see some of 0:02:22.720 --> 0:02:24.959 that trickle through. We were just at stores last week 0:02:25.000 --> 0:02:27.919 and we did see some new styles come through. I'd 0:02:27.919 --> 0:02:29.560 say the bulk of it, though, we'll be in the 0:02:29.600 --> 0:02:31.520 spring and summer, so that is when you will start 0:02:31.560 --> 0:02:33.680 to see some of the new product flow through and 0:02:33.760 --> 0:02:37.000 hopefully more exciting lineups that you will feel excited to 0:02:37.000 --> 0:02:39.800 spend your seventy five dollars credit on. I'd say on 0:02:39.840 --> 0:02:42.160 the women's side, that's where most of the work is needed. 0:02:42.240 --> 0:02:46.640 For men's though they've done really really well. Their men's 0:02:46.680 --> 0:02:50.800 lineup is pretty solid. They're doing really well internationally. I 0:02:50.840 --> 0:02:54.240 do agree that in women's in North America specifically, they 0:02:54.280 --> 0:02:57.200 need to show more and deliver more, and we expect 0:02:57.240 --> 0:03:00.519 to see some of that in spring summer and we'll 0:03:00.520 --> 0:03:02.679 know more if they'll resonate to see if the turnaround 0:03:02.720 --> 0:03:04.200 can actually take hold. 0:03:04.440 --> 0:03:06.480 So the other thing that Lula Lemon has to contend 0:03:06.520 --> 0:03:09.640 with is Chick Wilson, the founder. As far as I know, 0:03:09.800 --> 0:03:12.960 he doesn't actually have an operating role in the company. 0:03:13.000 --> 0:03:15.680 He's not on the board, but he is kind of 0:03:15.760 --> 0:03:20.240 in the peanut gallery agitating for changes overhauls. What kind 0:03:20.240 --> 0:03:23.040 of influence does this have on the existing board and 0:03:23.080 --> 0:03:24.480 on investors' expectations. 0:03:25.360 --> 0:03:28.640 Yeah, he's been advocating for change for quite some time now. 0:03:29.000 --> 0:03:32.480 We did see some change come through just recently where 0:03:32.480 --> 0:03:35.360 they did appoint a new board of director and one 0:03:35.400 --> 0:03:38.280 of the current board of directors will not be renewing, 0:03:38.520 --> 0:03:41.560 so you're starting to see some shake up. I think 0:03:41.600 --> 0:03:44.920 he's still calling for more rightfully. So you know, lul 0:03:45.040 --> 0:03:49.360 Lemon has definitely lost its mojo over the last three 0:03:49.440 --> 0:03:52.200 years and it's given up a lot of the upside 0:03:52.200 --> 0:03:57.040 to competition. So I think change is coming, especially as 0:03:57.040 --> 0:03:59.440 we wait for the new incoming CEO to see who 0:03:59.520 --> 0:04:02.880 that will be. I think that'll be the key inflection 0:04:03.040 --> 0:04:06.400 point to say, you know, can this new person bring 0:04:06.480 --> 0:04:10.160 Lulu Lemon back on board kind of reignite the double 0:04:10.200 --> 0:04:13.040 digit gains that we're used to because quite frankly, a 0:04:13.080 --> 0:04:15.880 low single legit increase is not what you expect to 0:04:15.880 --> 0:04:16.880 see at a Lula Lemon. 0:04:17.680 --> 0:04:19.760 So I'm looking at the an R function on the 0:04:19.839 --> 0:04:24.000 Bloomberg terminal for Lululemon. I got three buys, one cell 0:04:24.440 --> 0:04:28.920 and thirty holds. What are those thirty analysts waiting for putam. 0:04:29.520 --> 0:04:32.240 And new ceo, new direction? Do we want to see 0:04:32.240 --> 0:04:32.960 the new product? 0:04:33.120 --> 0:04:34.719 I mean I can go out there and go to 0:04:34.760 --> 0:04:36.000 LinkedIn and find them somebody. 0:04:37.080 --> 0:04:40.520 Well, Paul, you're applying, you know it has to be 0:04:40.560 --> 0:04:42.920 the right person, right, you have to get the right person. 0:04:43.040 --> 0:04:44.960 We need to make sure that we get a person 0:04:44.960 --> 0:04:48.200 who understands the DNA of Little Lemon, who understands the 0:04:48.240 --> 0:04:51.480 athletic work space, and really is a product led a 0:04:51.520 --> 0:04:54.279 person like for me, it's important to see that someone 0:04:54.360 --> 0:04:57.520 comes through who understands that retail one on one is 0:04:57.520 --> 0:04:59.760 about the product first and everything else after. 0:05:00.080 --> 0:05:03.520 Okay, But Calvin McDonald, the CEO who has just left 0:05:03.560 --> 0:05:05.720 and who's come under pressure because things started to kind 0:05:05.720 --> 0:05:07.760 of slide at the end of his tenure, he was 0:05:07.800 --> 0:05:10.880 that person initially because when he first joined sales took 0:05:10.880 --> 0:05:13.520 off and he came over from Sephora. So he clearly 0:05:13.560 --> 0:05:15.440 has a merchandising background. 0:05:16.440 --> 0:05:18.680 He does, but it's in beauty if you remember. As 0:05:18.680 --> 0:05:20.560 soon as he came on, I think the first big 0:05:20.600 --> 0:05:24.680 pressures he had was let's launch a skincare line, you know, 0:05:24.720 --> 0:05:28.920 the deodorant and some of the lotions, etc. That didn't 0:05:28.960 --> 0:05:31.520 go too well. It was a nice idea very high 0:05:31.520 --> 0:05:34.960 gross margins eighty percent, so in theory sounded great, but 0:05:35.040 --> 0:05:37.560 it didn't really resonate and get a Little Lemon anywhere. 0:05:37.760 --> 0:05:40.520 I think what we need is someone who understands the 0:05:40.640 --> 0:05:44.440 apparel and the at leisure space. Someone who knows that 0:05:44.520 --> 0:05:48.120 you need style with performance, because that is what this 0:05:48.360 --> 0:05:52.279 brand demands. And constant newness, like a Little Lemon, has 0:05:52.360 --> 0:05:55.800 to outshine the broader competition, and that's become harder with 0:05:56.480 --> 0:05:59.479 just technologies being almost available to everyone. 0:05:59.560 --> 0:06:03.000 Right now, stay with us. More from Bloomberg Intelligence coming 0:06:03.080 --> 0:06:03.680 up after this. 0:06:07.360 --> 0:06:11.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:11.160 --> 0:06:14.200 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:14.240 --> 0:06:17.560 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:17.600 --> 0:06:20.719 you get your podcasts, or watch us live on YouTube. 0:06:21.400 --> 0:06:23.479 All right, it is still earning season, believe it or not, 0:06:23.640 --> 0:06:26.599 and the retailers are reporting results. We heard about Lulu 0:06:26.640 --> 0:06:30.080 Lemon earlier. Let's talk about Macy's. The stock is up 0:06:30.080 --> 0:06:34.000 about five percent. In this morning's trade. Mary Ross Gilbert 0:06:34.040 --> 0:06:37.760 is our senior equity analyst covering retail and she joins us. Now, Mary, 0:06:37.800 --> 0:06:39.560 what do we learn from Macy's. 0:06:40.880 --> 0:06:44.440 What we learned from Macy's is that Macy's has inflected 0:06:44.800 --> 0:06:49.760 to positive comp sales. They were looking to achieve sustainable growth. 0:06:49.839 --> 0:06:53.080 We think they're there, and for this year they're providing 0:06:53.880 --> 0:06:56.440 i think, very tepid guidance. They want to kind of 0:06:56.920 --> 0:07:00.240 budget where you know, do higher gas prices have an impact, 0:07:00.440 --> 0:07:04.360 But overall, the consumer is very resilient and they're attracting 0:07:04.480 --> 0:07:08.640 more of the middle income to higher income consumer, you know, 0:07:08.760 --> 0:07:12.800 across their brands, primarily you know, the Macy's name plate. 0:07:13.200 --> 0:07:16.680 So they're expecting comp sales though they're guiding to be 0:07:17.360 --> 0:07:20.200 down half a percent to up half a percent, but 0:07:20.360 --> 0:07:22.880 we think they'll easily beat that. And of course for 0:07:22.960 --> 0:07:26.040 the first quarter they're already seeing strong traction and at 0:07:26.080 --> 0:07:28.440 the high end they're guiding for comp sales to rise 0:07:28.480 --> 0:07:30.760 one and a half percent. So what we're seeing is 0:07:30.800 --> 0:07:33.920 that the name plate looks like it has inflected to 0:07:34.040 --> 0:07:38.200 positive comps, and we certainly see the changes when we 0:07:38.240 --> 0:07:39.040 go in the store. 0:07:39.360 --> 0:07:40.800 What do you see when you go in the store, 0:07:40.920 --> 0:07:44.000 Mary that that that's different or maybe positive in general. 0:07:45.240 --> 0:07:48.280 Yeah, So what we're seeing is the stores are constantly evolving. 0:07:48.960 --> 0:07:51.160 I mean every time I go in there, I'm seeing 0:07:51.200 --> 0:07:53.320 something new. So I'm seeing new brands, and what the 0:07:53.360 --> 0:07:57.160 company reported on the calls, they've added sixty brands. So 0:07:57.200 --> 0:07:59.520 when I go in there and I'm you know, obviously 0:07:59.560 --> 0:08:02.360 focused on women's wear, but I did kind of take 0:08:02.360 --> 0:08:04.880 a look and I saw Roden Gun in our local store, 0:08:05.280 --> 0:08:07.320 so that was kind of a nice addition. And the 0:08:07.440 --> 0:08:11.280 stores are just the merchandising is so strong, and the 0:08:11.480 --> 0:08:15.040 sales people. This has been the best encounter that I've 0:08:15.040 --> 0:08:17.840 had with sales associates. When I went in the store 0:08:17.960 --> 0:08:22.280 just yesterday, I encountered at least three associates. They were 0:08:22.320 --> 0:08:29.400 well appointed, absolutely charming and engaging. And because they have 0:08:29.520 --> 0:08:32.040 some of these new labels, I actually tried something on. 0:08:32.120 --> 0:08:37.640 I'm really a Bloomingdale's person. I really love the premium brands, 0:08:37.760 --> 0:08:40.520 but I did see some really good brands in there. 0:08:40.760 --> 0:08:45.439 My favorite is a Vec lo Fee and I tried 0:08:45.520 --> 0:08:48.880 on some of those genes and they're oh, they were amazing, 0:08:49.000 --> 0:08:52.360 absolutely amazing. So I really think that Macy's has come back. 0:08:52.360 --> 0:08:55.680 They're bringing in all the brands that consumers care about, 0:08:55.720 --> 0:09:00.439 They're attracting younger consumers. So I really see very good 0:09:00.480 --> 0:09:01.959 execution here with the company. 0:09:02.120 --> 0:09:04.400 What about execution at Bloomingdale's, And I bring this up 0:09:04.440 --> 0:09:09.120 particularly with Sax's issues. SAX of course in bankruptcy protection 0:09:09.240 --> 0:09:11.920 right now and trying to find a way to get 0:09:11.920 --> 0:09:13.880 through all of its step problems. 0:09:14.880 --> 0:09:17.600 That's all been a benefit for bloomingdale. So Bloomingdale's has 0:09:17.640 --> 0:09:20.720 been executing, you know, for the last few years, and 0:09:20.760 --> 0:09:24.120 it's an ongoing process. So just in our local store 0:09:24.640 --> 0:09:28.840 just opened was the Christian Lubaton shoe boutique. And of 0:09:28.840 --> 0:09:32.280 course these are licensed businesses, but it doesn't matter. You know, 0:09:32.320 --> 0:09:35.760 they're not reporting comp sales on all these different basis. 0:09:35.840 --> 0:09:38.560 It's just comp sales. So it does include the benefit 0:09:38.640 --> 0:09:41.880 of licensed brands. But so they now have a Chanelle boutique, 0:09:42.120 --> 0:09:45.760 and they now have the Christian Lubaton. But they're always 0:09:45.840 --> 0:09:49.240 if you go to Ready to wear, you're seeing constantly, 0:09:49.320 --> 0:09:52.800 you know, new labels coming in. So it's very exciting. 0:09:53.320 --> 0:09:56.280 I love Bloomingdale's and that explains why their comp sales 0:09:56.280 --> 0:09:59.560 were up ten percent. Essentially in the fourth quarter. I 0:09:59.600 --> 0:10:03.199 think that is some of the gains coming from Sachs 0:10:03.480 --> 0:10:07.360 and Neiman Marcus customers given the bankruptcy lack of product 0:10:07.440 --> 0:10:11.440 during that time. So they're they're the beneficiary, and that's 0:10:11.480 --> 0:10:16.600 why they really emphasized how they're focused on expanding the 0:10:16.679 --> 0:10:20.120 chain this year and the company, one of the executives 0:10:20.160 --> 0:10:24.880 did indicate probably a month ago that they would look 0:10:24.920 --> 0:10:28.960 at some of the stores that might be closing if 0:10:29.040 --> 0:10:32.000 it's relevant. So they're they're looking to see what opportunities 0:10:32.000 --> 0:10:34.720 are out there because they're only in fourteen markets, so 0:10:34.800 --> 0:10:39.240 there's a there's a great uh, I think expansion opportunity 0:10:39.280 --> 0:10:41.000 to with Bloomingdale's right. 0:10:41.000 --> 0:10:44.800 Well, Scarlett Mary, she shops in only the best locations. 0:10:45.040 --> 0:10:48.120 Westfield Century City, that's where she goes to. The race 0:10:48.240 --> 0:10:50.160 is there, and that you think the short Holds mall 0:10:50.240 --> 0:10:53.520 is nice, The Westfield Century City Mall is spectact there 0:10:53.679 --> 0:10:56.480 and by the way, Lolover's offices are right there. Oh, 0:10:56.559 --> 0:10:58.760 so that's how it works. It's good on lunch to 0:10:58.800 --> 0:11:00.800 them all and that's that work. We love it. What's 0:11:00.840 --> 0:11:03.440 makes you say about their store count in general? Here, 0:11:03.520 --> 0:11:07.559 because there was a decade or more of the department 0:11:07.520 --> 0:11:09.680 store industry really reducing store count. 0:11:10.600 --> 0:11:14.920 Yeah, so they're they're closing fourteen stores that's probably mostly 0:11:14.920 --> 0:11:19.400 closed at this point, and then going forward, there's about 0:11:19.440 --> 0:11:22.880 sixty five more to gore to go and those will 0:11:22.880 --> 0:11:25.680 close through twenty twenty eight. They're not in a hurry 0:11:25.720 --> 0:11:28.199 to close them. They want to make sure they maximize 0:11:28.240 --> 0:11:31.520 the real estate value. And it's okay because those stores 0:11:31.600 --> 0:11:35.000 are profitable. But the go forward store base continues to 0:11:35.040 --> 0:11:38.440 be the three hundred and fifty stores, and so they 0:11:38.440 --> 0:11:40.640 will get there. Like I said, by twenty twenty eight, 0:11:40.679 --> 0:11:43.080 they'll have gotten rid of the last of the sixty 0:11:43.120 --> 0:11:47.080 five stores they plan to close. So I think, you 0:11:47.120 --> 0:11:49.280 know what, once we move past that, you know, the 0:11:49.360 --> 0:11:52.240 overall top line should look good. 0:11:53.080 --> 0:11:55.920 Stay with us. More from Bloomberg Intelligence coming up after this. 0:11:59.280 --> 0:12:03.560 You're listening the Bloomberg Intelligence Podcast. Catch us live weekdays 0:12:03.559 --> 0:12:06.560 at ten am Eastern on Apple, Cocklay, and Android Auto 0:12:06.559 --> 0:12:09.640 with the Bloomberg Business App. Listen on demand wherever you 0:12:09.679 --> 0:12:12.680 get your podcasts, or watch us live on YouTube. 0:12:13.520 --> 0:12:16.079 Let's get back to the market. Talk about an individual 0:12:16.240 --> 0:12:18.640 name here, Unilever. What we've seen in the package goods 0:12:18.640 --> 0:12:21.360 sector is a lot of companies trying to figure out 0:12:21.360 --> 0:12:24.280 a way to jump start growth as inflation has eroded 0:12:24.320 --> 0:12:26.840 some of their pricing power and cause some challenges for 0:12:26.880 --> 0:12:29.319 the stocks. One of them is Unilever. We want to 0:12:29.320 --> 0:12:31.520 get the latest on what they may be thinking about 0:12:32.080 --> 0:12:35.160 in terms of maybe changing up the company and strategies. 0:12:35.600 --> 0:12:39.920 We're joined by Diana Gomes, Bloomberg Intelligence senior equity analysts. Diana, 0:12:39.960 --> 0:12:42.520 what can you tell us about Unilever? I mean, we 0:12:43.000 --> 0:12:45.200 kind of know the brands, there's a million brands underneath 0:12:45.200 --> 0:12:47.800 a Unilever umbrella, but what are they doing to think 0:12:47.800 --> 0:12:49.439 about juicing growth at that company? 0:12:51.520 --> 0:12:54.760 Yes, thank you for having me so. Nil Ever is 0:12:54.960 --> 0:13:00.480 really coming through a few years of transformation where they 0:13:00.520 --> 0:13:04.160 split the Magnum ice cream for instance, to really focus 0:13:04.200 --> 0:13:08.680 more in their core business, which is personal care and 0:13:08.720 --> 0:13:12.320 beauty as central stage. That's where the company has been 0:13:12.360 --> 0:13:17.280 really refocusing their premium and innovation and really getting the 0:13:17.720 --> 0:13:21.719 marketing machine behind that segment in order to get to 0:13:22.520 --> 0:13:25.559 that four to six percent organic sales growth target in 0:13:25.960 --> 0:13:32.280 the medium term. However, we see some challenges, especially in 0:13:32.320 --> 0:13:37.120 the near term to get there, and the guidance for 0:13:37.200 --> 0:13:41.920 two twenty six was already quite cautious, partly because the 0:13:41.960 --> 0:13:49.000 food business has been seen quite weak demand, particularly in Europe, 0:13:49.320 --> 0:13:52.120 even though they have very strong brands, so Almans and 0:13:52.440 --> 0:13:57.439 no are the leading stars in that unit. But obviously 0:13:57.520 --> 0:14:05.960 with the geopolitics uncertainty that that's some level of additional risk. 0:14:06.080 --> 0:14:09.320 Right And when it comes to its food business, Unilever 0:14:09.360 --> 0:14:12.160 has been consistently reducing its exposure. It's sold off its 0:14:12.200 --> 0:14:15.280 spreads business, the part of the business that contains I 0:14:15.280 --> 0:14:18.240 can't believe it's not butter. Last year it sparat off 0:14:18.240 --> 0:14:20.600 its ice cream division into Magnum ice Cream. It still 0:14:20.600 --> 0:14:23.520 holds a twenty percent stare, it is steadily selling that down. 0:14:24.040 --> 0:14:28.000 Is the goal here to shrink foods into something that's 0:14:28.040 --> 0:14:31.640 not meaningful because the CEO is at the end of 0:14:31.640 --> 0:14:34.640 the day, really a beauty and wellness guy rather than 0:14:34.680 --> 0:14:36.560 a food sky. 0:14:37.200 --> 0:14:43.000 That's an interesting question when when asked about it, ever, 0:14:43.080 --> 0:14:48.680 keeps defending that they are very behind the main brands 0:14:48.720 --> 0:14:51.960 of the foods business. But obviously they are in the 0:14:52.000 --> 0:14:55.160 middle of that program to divest about one and a 0:14:55.200 --> 0:14:59.760 half billion euros in what they call non core brands 0:15:00.000 --> 0:15:04.320 food brands, and this would include some European local brands, 0:15:04.560 --> 0:15:10.400 where probably the effort to to really pull up that 0:15:11.040 --> 0:15:15.640 growth is seen as too much for the return and 0:15:16.000 --> 0:15:18.960 it can be distracting for for management as well. But 0:15:19.160 --> 0:15:23.720 this food business is still quite margin creative for the 0:15:23.840 --> 0:15:29.160 whole UNI level group now without Magnum ice cream also 0:15:29.240 --> 0:15:32.800 cash a creative, so it still makes sense to to 0:15:32.840 --> 0:15:35.600 have it in the portfolio to some extent. But I 0:15:35.680 --> 0:15:40.240 do see why, especially in this background, why there could 0:15:40.240 --> 0:15:46.360 be some vision to try and accelerate the that split 0:15:47.080 --> 0:15:50.720 and considering different options as as they have been saying 0:15:50.760 --> 0:15:54.560 that they are, but just a reiteration of that in 0:15:54.680 --> 0:15:56.720 the last in the last day or so. 0:15:56.720 --> 0:15:59.040 So I look at the A n R function Diana 0:15:59.120 --> 0:16:03.160 for a Unilever and I see eleven buys, eleven holes 0:16:03.520 --> 0:16:06.400 and four cells. It shows to me the street has 0:16:06.440 --> 0:16:08.000 no idea what to do with this dock. What do 0:16:08.000 --> 0:16:12.360 you think the bulls want out of Unilever today? 0:16:13.200 --> 0:16:18.840 So it is about where people would be, I guess 0:16:18.920 --> 0:16:22.160 in terms of not wanting to put words into their mouths. 0:16:22.160 --> 0:16:25.840 But the way I look at it, it depends where 0:16:25.840 --> 0:16:31.160 we see their journey to get to accelerate that growth further. 0:16:32.360 --> 0:16:36.880 The main goal is really to drive volume growth, and 0:16:38.200 --> 0:16:40.880 Unilever already showed that they can get to the two 0:16:40.960 --> 0:16:45.160 percent at least two percent mark in the fourth Q 0:16:45.440 --> 0:16:49.000 results in the back of some of the fixes they 0:16:49.280 --> 0:16:54.960 had been doing also in emerging markets. So it is about, 0:16:55.160 --> 0:16:58.840 I would say, where people's confidence is in terms of 0:16:59.080 --> 0:17:03.680 where it goes from here versus where it's already and 0:17:05.160 --> 0:17:10.160 the very the drive really is on the premium innovation 0:17:10.359 --> 0:17:13.959 and that focus. And we saw already a lot of 0:17:14.000 --> 0:17:19.560 the transformation bringing in benefits already in last year in 0:17:19.600 --> 0:17:23.840 twenty twenty five, So can they do better in the 0:17:23.880 --> 0:17:24.960 new term? 0:17:25.280 --> 0:17:28.440 Stay with us More from Bloomberg Intelligence coming up after this. 0:17:32.320 --> 0:17:36.040 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:17:36.119 --> 0:17:38.680 weekdays at ten am. EA is done on Apple, Cocklay 0:17:38.680 --> 0:17:41.639 and Android Auto with the Bloomberg Business App. Listen on 0:17:41.720 --> 0:17:44.960 demand wherever you get your podcasts, or watch us live 0:17:45.040 --> 0:17:45.680 on YouTube. 0:17:46.480 --> 0:17:49.840 General Mills Cheerios right, yes, that's how I start my 0:17:49.920 --> 0:17:52.560 day with the bullet cheeriers. What happened with General Mills? 0:17:52.560 --> 0:17:53.280 What did they report? 0:17:53.880 --> 0:17:59.960 So basically it was mixed. Results were mixed compared to consensus. 0:18:00.119 --> 0:18:04.280 They they seem to be doing better obviously, there were 0:18:04.280 --> 0:18:07.960 some puts and takes, some tatwinds, but they seem to 0:18:08.000 --> 0:18:13.000 be a little bit more quarter dense rather than something 0:18:13.040 --> 0:18:17.080 that we can extrapolate into next quarter. So yeah, I mean, 0:18:17.119 --> 0:18:20.760 obviously I think the stock is down and it's because 0:18:21.000 --> 0:18:25.720 you know, while volume underneath underlying volume is improving, it's 0:18:25.760 --> 0:18:29.400 still it's still weak and to get volume growth it's 0:18:29.400 --> 0:18:30.560 still very expensive. 0:18:31.040 --> 0:18:33.919 Just looking at the PGeo function that breaks down kind 0:18:33.920 --> 0:18:35.600 of where they get their revenue whore they break it 0:18:35.640 --> 0:18:40.520 down pretty finally baking mixes and ingredients, dough, super premium 0:18:40.560 --> 0:18:44.640 ice cream, cereal, convenient meal, snacks, yogurt, pet other way 0:18:44.680 --> 0:18:47.080 they break it down. So what are there certain segments 0:18:47.119 --> 0:18:49.199 that are doing better than others? Are Are they one 0:18:49.240 --> 0:18:51.919 of these consumer product companies that are saying, if something's 0:18:51.960 --> 0:18:54.879 not working, we'll sell it and will try to invest 0:18:54.920 --> 0:18:56.080 in the areas that are growing. 0:18:56.400 --> 0:18:59.720 That is, you know, all of these companies have done 0:18:59.720 --> 0:19:04.320 some portfolio reshaping. You know, yogurt has been a headwind 0:19:04.359 --> 0:19:07.720 because they spin it off, so that is obviously one 0:19:07.760 --> 0:19:12.000 of the things the latest you know spin offs that 0:19:12.040 --> 0:19:15.879 they have done. But yeah, they are very sharp in 0:19:15.960 --> 0:19:21.560 terms of their portfolio. You know, reshaping, but it seems 0:19:21.560 --> 0:19:24.600 that now they're investing more on making the brands that 0:19:24.640 --> 0:19:29.239 they have grow, and some of them are growing and 0:19:29.280 --> 0:19:30.040 some of them are not. 0:19:30.920 --> 0:19:34.359 Stock is year to date down about seventeen percent, hit 0:19:34.400 --> 0:19:37.920 a fifty two week low today. Here, how are the 0:19:38.200 --> 0:19:40.320 General Mills of the world, the Proctor and the gammeles, 0:19:40.320 --> 0:19:43.399 How are they dealing with the consumer facing particularly the 0:19:43.400 --> 0:19:47.040 bottom end of the K shaped economy, facing economic pressures 0:19:47.119 --> 0:19:49.920 now it's more money to fill up your car with gas. 0:19:50.640 --> 0:19:51.639 How are they dealing with that? 0:19:51.960 --> 0:19:56.280 Yes, so this company, in particular General Mills, they actually 0:19:56.520 --> 0:20:01.240 reduced guidance during Cagney last month, and it was basically 0:20:01.240 --> 0:20:05.720 because volume growth is just not there and they're trying 0:20:05.760 --> 0:20:09.919 to increase marketing. They're not necessarily trying to rely on 0:20:10.000 --> 0:20:12.600 price cuts, but it seems that that is going to 0:20:12.640 --> 0:20:17.120 have to start happening. More competition they're seeing, for example, 0:20:17.160 --> 0:20:20.160 for snacking, they seem to be a little bit more 0:20:20.160 --> 0:20:25.240 competitive then the category used to be dog seems to 0:20:25.240 --> 0:20:27.920 be still a little bit of a headwind for them. 0:20:28.000 --> 0:20:31.359 So we're seeing, you know, there seems to be a 0:20:31.440 --> 0:20:36.040 little bit more of cautionary tail for the consumer and 0:20:36.119 --> 0:20:41.479 definitely with prices spiking for gas, it's not necessarily helping. 0:20:42.040 --> 0:20:44.159 You know, I don't know if it's just me, but 0:20:44.200 --> 0:20:46.159 I mean when I go to a supermarket now, I 0:20:46.160 --> 0:20:51.040 see many more store brands in more categories, and they're 0:20:51.040 --> 0:20:53.760 also getting better placement in the shows, which it's important 0:20:53.800 --> 0:20:56.280 for you guys. Yes, talks about just the competitive landscape 0:20:56.280 --> 0:20:59.959 of brands, name brands versus kind of the store brands. 0:21:00.240 --> 0:21:04.720 Yes, So basically retailers have been investing on their private 0:21:04.760 --> 0:21:09.160 label portfolio. Uh, it's about a quarter of of their 0:21:09.240 --> 0:21:13.240 revenue at this point. They're trying to obviously navigate. They 0:21:13.280 --> 0:21:18.080 don't necessarily want to anger the national brands, but they 0:21:18.680 --> 0:21:21.720 tend to fill out certain white spaces that are not 0:21:21.760 --> 0:21:25.720 necessarily cater by by these national brands. And at some point, 0:21:26.560 --> 0:21:31.840 you know, sometimes they're competitive more competitive. They have tiers 0:21:32.000 --> 0:21:36.000 of of you know, pricing for for this private label, 0:21:36.119 --> 0:21:40.240 and you know some people actually go to these stores 0:21:40.280 --> 0:21:41.840 to buy their private label. 0:21:42.480 --> 0:21:44.639 What's the we're now, I guess, you know, roughly a 0:21:44.720 --> 0:21:49.359 year into these teriffs, what are the consumer project companies are? 0:21:49.400 --> 0:21:52.480 What are they saying these days about tariffs and passing 0:21:52.480 --> 0:21:54.840 it along versus taking into their margin. Where are we 0:21:54.920 --> 0:21:55.560 knowing at. 0:21:55.480 --> 0:21:58.320 Yes, so some of a lot of it has gone 0:21:58.359 --> 0:22:01.280 through the P and L. They they're very hesitant about 0:22:01.320 --> 0:22:06.240 increasing prices again, they're thinking it's more on the price competition. 0:22:06.440 --> 0:22:10.240 They're going to be more price competitive going forward. So 0:22:10.520 --> 0:22:14.000 we're seeing headwinds on the on the margins rather than 0:22:14.240 --> 0:22:15.520 you know, just passing through. 0:22:16.040 --> 0:22:18.000 I'm looking at this company, General Mills, and they have 0:22:18.040 --> 0:22:19.760 a six point three percent dividend yield. 0:22:20.200 --> 0:22:21.000 That's pretty good. 0:22:21.280 --> 0:22:24.040 Yes, How safe is that? How do they committed? What's 0:22:24.080 --> 0:22:25.040 their policy on all that? 0:22:25.359 --> 0:22:28.520 Well, they usually try to grow it at the same 0:22:28.640 --> 0:22:32.800 rate of earnings, so we don't necessarily see them as 0:22:33.160 --> 0:22:38.560 as you know, being a little bit you know, increasing 0:22:39.400 --> 0:22:43.760 share repurchases are probably like spiking the dividend. We're probably 0:22:43.840 --> 0:22:46.639 going to see a lot of the same, you know, 0:22:47.320 --> 0:22:50.080