WEBVTT - SRG's Flickinger on Walmart: Best Leadership in 20 Years(Audio)

0:00:03.520 --> 0:00:06.920
<v Speaker 1>Global business news twenty four hours a day at Bloomberg

0:00:06.960 --> 0:00:10.000
<v Speaker 1>dot com, the radio, plus Globo lact and on your radio.

0:00:10.320 --> 0:00:14.240
<v Speaker 1>This is a Bloomberg Business Flight from Bloomberg World Handquarters.

0:00:14.240 --> 0:00:16.680
<v Speaker 1>I'm Charlie Pellod. We do have thirteen minutes to go

0:00:16.760 --> 0:00:19.520
<v Speaker 1>ahead of the clothes On a Thursday. Stocks are holding

0:00:19.520 --> 0:00:22.000
<v Speaker 1>onto their gains right now, with the SMP five hundred

0:00:22.040 --> 0:00:24.000
<v Speaker 1>in decks showing in the advance of three points to

0:00:25.040 --> 0:00:27.639
<v Speaker 1>eight five, up by one tenth to one percent, and

0:00:27.680 --> 0:00:30.040
<v Speaker 1>as stack up eight points a gain of two tents

0:00:30.080 --> 0:00:33.200
<v Speaker 1>of one percent. Down Industrial is up seven a gain

0:00:33.280 --> 0:00:36.360
<v Speaker 1>of less than point one percent. The ten year up

0:00:36.400 --> 0:00:39.000
<v Speaker 1>four or thirty seconds, the yield on the tenure one

0:00:39.000 --> 0:00:42.640
<v Speaker 1>point five three percent. Gold up nine sixty ounce, the

0:00:42.680 --> 0:00:45.519
<v Speaker 1>thirteen fifty four a gain of seven tenths of one percent.

0:00:46.000 --> 0:00:49.440
<v Speaker 1>Crude oil West Texas Intermediate now officially in a bowl

0:00:49.479 --> 0:00:53.440
<v Speaker 1>market up a dollar forty one twenty for West Texas

0:00:53.479 --> 0:00:56.840
<v Speaker 1>Intermediate up now by three percent. Brent crude above fifty

0:00:56.880 --> 0:01:00.280
<v Speaker 1>dollars up one point nine percent, fifty dollars seventies seven

0:01:00.320 --> 0:01:03.280
<v Speaker 1>cents on Brent. I'm Charlie Pallett, and that's a bloom

0:01:03.280 --> 0:01:07.680
<v Speaker 1>Bred business Flash. You're listening to Taking Stock with Kathleen

0:01:08.080 --> 0:01:13.680
<v Speaker 1>and Pim Fox on Bloomberg Radio. Walmart good news for shareholders,

0:01:14.000 --> 0:01:17.120
<v Speaker 1>for company managers and all employees. I assume increasing in

0:01:17.160 --> 0:01:21.320
<v Speaker 1>saniel earnings forecast after second quarter results topped analyst estimates.

0:01:21.840 --> 0:01:24.800
<v Speaker 1>Is this assigned the world's largest retailer is pulling business

0:01:24.800 --> 0:01:27.880
<v Speaker 1>away from rivals like a target where we want to

0:01:27.880 --> 0:01:31.240
<v Speaker 1>talk about this and so much more. Walmart acquiring Jet

0:01:31.280 --> 0:01:34.920
<v Speaker 1>dot Com. It's attempt to compete with Amazon even more

0:01:34.959 --> 0:01:39.480
<v Speaker 1>aggressively when it comes to online shopping. Walmart shares up

0:01:39.480 --> 0:01:41.880
<v Speaker 1>a dollar thirty six cents at seventy four dollars and

0:01:41.920 --> 0:01:46.399
<v Speaker 1>twenty nine cents. Bert Flickinger joins this managing director Strategic

0:01:46.600 --> 0:01:49.400
<v Speaker 1>Resource Group. He's back in our New York studio with

0:01:49.480 --> 0:01:53.360
<v Speaker 1>us today. Bert, welcome, Thank you so Walmart. How good

0:01:53.440 --> 0:01:56.560
<v Speaker 1>is the good news? It's good news because Walmart has

0:01:56.600 --> 0:01:59.840
<v Speaker 1>good leadership for the first time in nearly twenty years. Kathleen, So,

0:02:00.480 --> 0:02:03.560
<v Speaker 1>with good leadership, it's taking a long time to turn

0:02:03.600 --> 0:02:05.960
<v Speaker 1>the company around, but with eighth straight quarters of positive

0:02:06.040 --> 0:02:09.200
<v Speaker 1>same store sales, as you and Pim references I heard

0:02:09.280 --> 0:02:13.800
<v Speaker 1>driving up from Philadelphia, Walmart's gain is Targets pain the

0:02:13.960 --> 0:02:16.760
<v Speaker 1>offering at Walmart has it changed. I was looking at

0:02:16.760 --> 0:02:20.079
<v Speaker 1>things like organic food groceries. They seem to be doing

0:02:20.240 --> 0:02:23.320
<v Speaker 1>much better in terms of providing those kinds of products

0:02:23.680 --> 0:02:27.640
<v Speaker 1>to customers than Target. That's what we're looking at PIM

0:02:27.880 --> 0:02:32.680
<v Speaker 1>is organic local farmers, looking at hydroponic bringing in the

0:02:32.760 --> 0:02:37.680
<v Speaker 1>destination demand daily, particularly for millennials, young adults that are

0:02:37.680 --> 0:02:40.760
<v Speaker 1>focused on fresh. The other thing that the leadership really

0:02:40.800 --> 0:02:43.520
<v Speaker 1>deserves a lot of credit for is being the first

0:02:43.560 --> 0:02:46.640
<v Speaker 1>team at Walmart after fifty years of failure in basic

0:02:46.720 --> 0:02:51.120
<v Speaker 1>fashion to finally fix basic fashion, especially for young girls,

0:02:51.400 --> 0:02:55.000
<v Speaker 1>young boys. And Targets had some failings in fashion again,

0:02:55.080 --> 0:02:58.600
<v Speaker 1>Walmart's game Walmart. You know, but you've been on the show,

0:02:59.120 --> 0:03:01.239
<v Speaker 1>Uh even on her Big Friend of radio and TV

0:03:01.320 --> 0:03:06.160
<v Speaker 1>here at Bloomberg. Where is Walmart now? He said, for

0:03:06.400 --> 0:03:08.640
<v Speaker 1>the best management they've had in years, So we can

0:03:08.720 --> 0:03:13.000
<v Speaker 1>understand better Jet dot Com that acquisition. But you know,

0:03:13.240 --> 0:03:16.360
<v Speaker 1>so recently it's it's holiday shopping, it's Christmas Eve, and

0:03:16.360 --> 0:03:19.400
<v Speaker 1>the shocks, the stocks aren't the shelves aren't stocked. We've

0:03:19.480 --> 0:03:22.840
<v Speaker 1>we've seen that as as part of Walmart. We've seen

0:03:23.360 --> 0:03:26.240
<v Speaker 1>them built. These new stores are supposed to appeal more

0:03:26.280 --> 0:03:28.920
<v Speaker 1>for shoppers and they don't. Necessarily, what else do they

0:03:28.960 --> 0:03:31.960
<v Speaker 1>have to do? Let's let's besides build up Jet dot

0:03:32.000 --> 0:03:35.360
<v Speaker 1>Com and compete with Amazon Kathleen. As you and PIM

0:03:35.400 --> 0:03:38.920
<v Speaker 1>have always said, leadership makes a difference in retail, and

0:03:39.200 --> 0:03:42.720
<v Speaker 1>you and PIM and Bloomberg have been uniquely successful in

0:03:42.760 --> 0:03:45.400
<v Speaker 1>making individual and institutional investors a lot of money. And

0:03:45.440 --> 0:03:49.760
<v Speaker 1>when there is a major leadership change Frank Blake replacing

0:03:49.760 --> 0:03:54.760
<v Speaker 1>bobner Delhi at Home Depot for example, um Richard Baker

0:03:54.800 --> 0:03:57.200
<v Speaker 1>and his team coming in at Hudson Bay taking over

0:03:57.640 --> 0:04:02.040
<v Speaker 1>Sex Fifth Avenue, Lord and Taylor's, etcetera expanding out Sex

0:04:02.080 --> 0:04:05.800
<v Speaker 1>Off five. When when you have better leadership like Doug

0:04:05.880 --> 0:04:10.840
<v Speaker 1>McMillan and Greg farrand at Walmart. Target has good leadership

0:04:10.840 --> 0:04:13.440
<v Speaker 1>in Brian Cornell, but Brian's cleaning up the problems of

0:04:13.560 --> 0:04:16.440
<v Speaker 1>Hien passed along by his two predecessor and bad boards

0:04:16.480 --> 0:04:20.960
<v Speaker 1>for fifteen years. Uh So with so with Walmart, what

0:04:20.960 --> 0:04:23.520
<v Speaker 1>what you have is is what you and Pen reference

0:04:23.960 --> 0:04:27.680
<v Speaker 1>from UH fresh food to fashion. UH they're winning for

0:04:27.720 --> 0:04:30.120
<v Speaker 1>the first time. And what Walmart does with the new

0:04:30.160 --> 0:04:33.240
<v Speaker 1>team they look at investing in fresh, they look at

0:04:33.320 --> 0:04:36.120
<v Speaker 1>investing in stocking the shelves issue reference, they look at

0:04:36.160 --> 0:04:39.360
<v Speaker 1>investing in fashion. They don't look at that as an expense.

0:04:39.440 --> 0:04:43.400
<v Speaker 1>Targets still outsourcing. Looking at everything, it's an expense. Walmart's

0:04:43.400 --> 0:04:46.640
<v Speaker 1>investing in people for the first time literally since Sam

0:04:46.680 --> 0:04:49.719
<v Speaker 1>Walton started the company, and that investment is paying off

0:04:49.800 --> 0:04:53.000
<v Speaker 1>because there's no expense mentality and there isn't as much

0:04:53.000 --> 0:04:56.280
<v Speaker 1>of an expense mentality back in bent Bentville at the

0:04:56.320 --> 0:04:59.679
<v Speaker 1>home office. These days, UM two point seven billion dollars

0:04:59.720 --> 0:05:04.120
<v Speaker 1>spent on training and wages for the Walmart sales force.

0:05:04.520 --> 0:05:08.159
<v Speaker 1>What drives traffic into stores? It doesn't have to be

0:05:08.200 --> 0:05:10.159
<v Speaker 1>just Walmart. But I'm curious, because you're an expert in this,

0:05:10.600 --> 0:05:13.760
<v Speaker 1>what gets people to go into the store, because traffic

0:05:13.760 --> 0:05:17.880
<v Speaker 1>and Walmart much better than traffic and Target. It's it's

0:05:17.920 --> 0:05:21.760
<v Speaker 1>what your referenced in the brake pain it's local. So

0:05:21.839 --> 0:05:26.159
<v Speaker 1>for example, we'll be going through Mississippi and we'll see

0:05:26.520 --> 0:05:31.120
<v Speaker 1>UM Walmart separated, so they'll have the licensed merchandise for

0:05:31.320 --> 0:05:35.280
<v Speaker 1>Mississippi State, Southern Mississippi versus Old miss some l s

0:05:35.360 --> 0:05:38.520
<v Speaker 1>U on one border some Alabama and Auburn on the

0:05:38.560 --> 0:05:44.440
<v Speaker 1>other border across merchandise between apparel, licensed food and Target

0:05:44.520 --> 0:05:47.760
<v Speaker 1>had been great at it, but as we talked at

0:05:47.760 --> 0:05:50.599
<v Speaker 1>the turn of the year, uh, Target really forgot to

0:05:50.640 --> 0:05:53.560
<v Speaker 1>market and merchandise Christmas this year and their stores they

0:05:53.560 --> 0:05:58.400
<v Speaker 1>had more tires than Christmas trees and honekah lights and

0:05:58.440 --> 0:06:02.120
<v Speaker 1>in some of their ads, and Walmart's getting back to

0:06:02.160 --> 0:06:05.200
<v Speaker 1>that rhythm of retail and understanding the detail of retailing.

0:06:05.200 --> 0:06:08.279
<v Speaker 1>At Kathleen's point, they actually have product in the stores

0:06:08.360 --> 0:06:11.280
<v Speaker 1>between Friday and Sunday when they do sixties seventy percent

0:06:11.320 --> 0:06:14.880
<v Speaker 1>of their business. That's the first since really the turn

0:06:15.000 --> 0:06:18.480
<v Speaker 1>the turn of the century, going back to about two thousand. Well,

0:06:18.520 --> 0:06:23.680
<v Speaker 1>you know, I just want to ask you about something

0:06:23.720 --> 0:06:29.760
<v Speaker 1>that Brian Sazzi was writing about yesterday, suggesting that even

0:06:29.760 --> 0:06:32.799
<v Speaker 1>though t J Max just had another sexy quarter, especially

0:06:32.800 --> 0:06:35.919
<v Speaker 1>relative to its struggling department store arrivals like Me Season Coals,

0:06:35.960 --> 0:06:38.440
<v Speaker 1>this could be a good time for investors to head

0:06:38.680 --> 0:06:42.800
<v Speaker 1>for the exit doors. Yeah. T J acts a lot

0:06:42.839 --> 0:06:46.000
<v Speaker 1>of respect for Ben Camarado, the founder of Start right

0:06:46.040 --> 0:06:49.200
<v Speaker 1>next to Spags and Worcester Carol Meyer Woods has done

0:06:49.240 --> 0:06:52.960
<v Speaker 1>an exceptional job Brian's correct. It's it's it's building out

0:06:52.960 --> 0:06:55.720
<v Speaker 1>towards scale. The better investment is the ones that are

0:06:55.760 --> 0:06:59.560
<v Speaker 1>still going more from multi regional and national national. Burlington's

0:06:59.560 --> 0:07:03.119
<v Speaker 1>Center had a really good run. Ross is trying to

0:07:03.160 --> 0:07:05.760
<v Speaker 1>trying to run off off Price. Really is where all

0:07:05.800 --> 0:07:10.960
<v Speaker 1>the action is. Luxury and prestige really struggling. Uh, nationally

0:07:10.960 --> 0:07:15.760
<v Speaker 1>and internationally. UH. Brian, to his credit also, UH was

0:07:15.800 --> 0:07:17.760
<v Speaker 1>one of the first, along with the three of us

0:07:17.800 --> 0:07:20.600
<v Speaker 1>to call the turn on J. C. Penny too. So

0:07:21.040 --> 0:07:24.640
<v Speaker 1>H with with what Penny is doing and expanding Sephora,

0:07:25.120 --> 0:07:28.400
<v Speaker 1>with the exclusivity and what Penny is doing with the

0:07:28.760 --> 0:07:31.760
<v Speaker 1>Disney Co exclusives. Uh, that's one of the few bright

0:07:31.760 --> 0:07:34.840
<v Speaker 1>spots in department store retail today too. How about it

0:07:34.960 --> 0:07:41.760
<v Speaker 1>characterize urban outfitters, UH, lover ran outfitters, American Eagle, good leadership,

0:07:41.800 --> 0:07:47.880
<v Speaker 1>good merchants, UH. People people from Great Lakes Great Lakes

0:07:47.920 --> 0:07:52.480
<v Speaker 1>region to really get after retail, understand understand the trends. UH.

0:07:52.480 --> 0:07:56.000
<v Speaker 1>If they're going at an Ali's bargain basement to see

0:07:56.000 --> 0:07:58.920
<v Speaker 1>what Ali's is selling, they're seeing what Mark Lassman selling

0:07:58.920 --> 0:08:01.400
<v Speaker 1>in the Marks off Price store. Some of the highest

0:08:01.480 --> 0:08:05.760
<v Speaker 1>volume stores unique primarily to the greater Cleveland area. They

0:08:05.800 --> 0:08:11.840
<v Speaker 1>follow everything in existence and rarely understand teens. Teens want

0:08:11.920 --> 0:08:15.080
<v Speaker 1>want to be forward in unique in terms in terms

0:08:15.120 --> 0:08:17.760
<v Speaker 1>of fashion, and they don't want to have that chiseld

0:08:18.040 --> 0:08:22.400
<v Speaker 1>cultured look of Abercrombie and Abercrombie's sister company, Solistera, etcetera.

0:08:23.480 --> 0:08:27.480
<v Speaker 1>So do you agree with Pim Fox, who I think

0:08:27.760 --> 0:08:31.440
<v Speaker 1>believes that brick and mortar is going to be completely

0:08:31.600 --> 0:08:35.120
<v Speaker 1>giving way to e commerce that no one, you know,

0:08:35.240 --> 0:08:37.599
<v Speaker 1>especially the younger generation. They get their brown boxes and

0:08:37.600 --> 0:08:39.800
<v Speaker 1>they're happy and they don't mind sending stuff back. And

0:08:40.240 --> 0:08:44.480
<v Speaker 1>as as the time passes and the generations you know shift,

0:08:44.559 --> 0:08:46.839
<v Speaker 1>that there won't be brick and mortar left. As as

0:08:47.000 --> 0:08:48.800
<v Speaker 1>as we've talked to in the last year, there's this

0:08:49.080 --> 0:08:52.920
<v Speaker 1>accelerating retail ice age pen identifier with the Shaving Club,

0:08:53.400 --> 0:08:57.160
<v Speaker 1>and there's a real ticking time bomb as uh you

0:08:57.240 --> 0:09:00.319
<v Speaker 1>talked about earlier in your show with a JP Morgan report.

0:09:00.360 --> 0:09:03.440
<v Speaker 1>They're one point two million fewer people working at bricks

0:09:03.480 --> 0:09:06.240
<v Speaker 1>based retail. They're not spending the money in the stores,

0:09:06.320 --> 0:09:10.520
<v Speaker 1>Customer counts as Target reported yesterday, really cratering. There's gonna

0:09:10.559 --> 0:09:13.280
<v Speaker 1>be a real crisis in terms of sales tax revenue

0:09:13.559 --> 0:09:17.240
<v Speaker 1>as well as property tax revenue and public sector budgets

0:09:17.240 --> 0:09:19.200
<v Speaker 1>are are going to be going through a lot of pain.

0:09:19.280 --> 0:09:23.679
<v Speaker 1>And pim Pim's correct. The B and C malls Uh,

0:09:23.840 --> 0:09:26.800
<v Speaker 1>The C malls will be ghost towns. Uh. The B

0:09:27.000 --> 0:09:31.360
<v Speaker 1>malls will have high vacancy rates. And retailer is we

0:09:31.400 --> 0:09:34.640
<v Speaker 1>knew it in the twentieth century won't really be there

0:09:34.679 --> 0:09:37.240
<v Speaker 1>ten years from now, probably five years from now. Amazon

0:09:37.679 --> 0:09:40.200
<v Speaker 1>growing twenty five billion a year. That's the size of

0:09:40.240 --> 0:09:44.720
<v Speaker 1>Macy's and Bloomingdale's combined in total. L Brands, the parent

0:09:44.840 --> 0:09:50.559
<v Speaker 1>company of Victoria Secrets, streamlining their offerings active where, sleepwear,

0:09:50.600 --> 0:09:54.120
<v Speaker 1>and so on, but also promotional strategy. The shares of

0:09:54.280 --> 0:09:56.760
<v Speaker 1>L Brands up almost five percent today. What do you

0:09:56.800 --> 0:10:02.280
<v Speaker 1>think of Leslie Westerns L Brands? Leslie's always been able

0:10:02.280 --> 0:10:06.000
<v Speaker 1>to rebound. He's one of the last really brilliant merchants

0:10:06.320 --> 0:10:11.800
<v Speaker 1>working today that's been successful every every decade acrosses operating

0:10:11.840 --> 0:10:18.640
<v Speaker 1>companies from quote unquote the Limited to VSS or Victoria's Secret.

0:10:18.760 --> 0:10:21.160
<v Speaker 1>So L Brands has a lot of room to run

0:10:21.160 --> 0:10:26.120
<v Speaker 1>as well. Just did a nutshell strong enough consumer? Is

0:10:26.160 --> 0:10:28.560
<v Speaker 1>there enough paycheck growth. Is there enough everything to keep

0:10:28.600 --> 0:10:30.640
<v Speaker 1>consumer growing, because this is certainly one of the biggest

0:10:30.640 --> 0:10:32.520
<v Speaker 1>factors for no matter how smart you as a retailer,

0:10:32.520 --> 0:10:35.800
<v Speaker 1>people gotta be shopping. Not enough paycheck growth. In the

0:10:36.000 --> 0:10:40.600
<v Speaker 1>ten monthly consumers spending categories, consumers are spending more and

0:10:40.760 --> 0:10:45.559
<v Speaker 1>nine and the ten everything from rent to health, healthcare tuitions,

0:10:45.640 --> 0:10:49.679
<v Speaker 1>loan's credit, et cetera. So as otto goes down, retails

0:10:49.720 --> 0:10:55.760
<v Speaker 1>going down, consumers getting crushed, consumers getting crushed. Well, we'll

0:10:55.760 --> 0:10:57.560
<v Speaker 1>just have to leave it there for now. There's a

0:10:57.559 --> 0:11:01.000
<v Speaker 1>lot of shopping though, right, I need retail therapy. Is

0:11:01.040 --> 0:11:03.200
<v Speaker 1>this depressing? I'm gonna buy something him? All right, you

0:11:03.200 --> 0:11:07.000
<v Speaker 1>helped the economy. Bert Flickinger, Managing director, Strategic Resource Group,

0:11:07.040 --> 0:11:09.080
<v Speaker 1>thank you very much. He can be followed on Twitter

0:11:09.200 --> 0:11:12.440
<v Speaker 1>at Bert Underscore Flickinger. Take you through to the clothes.

0:11:12.559 --> 0:11:13.599
<v Speaker 1>This is Bloomberg