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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the Radio, plus Molobo Last and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellett, the DAL, the SMP, NAZDAK all advancing.

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Speaker 1: Right now. We've got the SMP five hundred index up

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Speaker 1: six to a gain of three tenths of one percent. Down,

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Speaker 1: Industrial is up thirty one points to eighteen thousand, five

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Speaker 1: hundred sixty. That's a gain of two tenths of one percent,

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Speaker 1: and nastack is up four tenths of one percent. The

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Speaker 1: tenure down one thirty second, with the yield hovering at

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Speaker 1: one point five five percent. Right now, Gold up for

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Speaker 1: a dollar ten the ounce forty a gain of one

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Speaker 1: tenth of one percent, and crude oil West Texas Intermediate

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Speaker 1: up sixty nine cents forty eight ten a barrel. Again

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Speaker 1: there of one and a half percent. I'm Charlie Pellett,

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Speaker 1: and that's a Bloomberg Business Flash. This is taking stock

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Speaker 1: with Kathleen Hayes and Pin Box on Bloomberg Radio. Shares

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Speaker 1: of Best Buy are up more than eighteen percent today.

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Speaker 1: Are you happen to be in the market for maybe

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Speaker 1: a wearable or video games, tablets, computers, TVs, drones or

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Speaker 1: connected home. Here to connect all the dots for us

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Speaker 1: as Matt Townsend, retail reporter for Bloomberg News, Matt, thanks

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Speaker 1: for coming into the studio. Tell us about Best Buy

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Speaker 1: and how did they exceed analyst estimates? Yeah, some good

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Speaker 1: news in the retail world, which has not had much

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Speaker 1: of it lately. Uh So they beat the expectations game.

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Speaker 1: You know that their own forecast for the second quarter,

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Speaker 1: where that sales would be down as much as two percent,

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Speaker 1: they actually posted a small gain, which in the world

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Speaker 1: of retail is a pretty big deal. Um. And then

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Speaker 1: they said that for the rest of the year they

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Speaker 1: expect profit to be a little bit higher than they

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Speaker 1: previously said. So forecast up and they beat expectations in

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Speaker 1: the quarter. What's really working for them, because I note

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Speaker 1: that they're best sellers are things like the Amazon Fire

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Speaker 1: TV stick for forty bucks as well as Madden NFL

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Speaker 1: seventeen for the PlayStation sixty bucks. Is that where they're

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Speaker 1: making their money. They it's across the board. I mean

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Speaker 1: they called out I mean the first of all the week,

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Speaker 1: part of the market right now is mobile phones and tablets.

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Speaker 1: So one of the things that happened in the quarter

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Speaker 1: was that that decline was less than they expected, and

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Speaker 1: they said they basically are taking more market share from competitors.

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Speaker 1: But what's really working for them? Um? Yes, things like drones,

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Speaker 1: wearables like fitbits, all the stuff you do attracts sort

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Speaker 1: of your health and activity. Um And also four K television,

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Speaker 1: which is the relatively new high extremely high deaf flat

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Speaker 1: screen televisions that are you know, priced higher than normal ones.

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Speaker 1: Talk about wearables for just a moment. For example, of

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Speaker 1: their Apple watches are on sale, the sport Watch. They're

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Speaker 1: offering them for fifty dollars, less than the regular price

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Speaker 1: of three and fifty bucks. Also they're selling obviously the

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Speaker 1: Samsung wearables as well as the Samsung virtual reality gear.

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Speaker 1: Are they hurting Apple sales by offering these things at

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Speaker 1: a discount? I would I would almost assume, or I

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Speaker 1: would speculate that Apple is okay in these discounts. That's

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Speaker 1: why usually these vendor relationships work. I mean, one of

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Speaker 1: the things about best Buy that's interesting is that, you know,

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Speaker 1: the turnaround has basically been cutting costs, and now they're

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Speaker 1: showing some growth, and what the CEO chalk that up

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Speaker 1: to is, look, we have these really strong relationships with Apple, Microsoft,

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Speaker 1: Samsung that allows us to have better assortment, better customer

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Speaker 1: service in the stores. And they see that as as

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Speaker 1: a big advantage. And you know, if you've looked back

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Speaker 1: last week, Target said they're like electronic sales were weak

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Speaker 1: and actually blamed Apple, called out Apples as the weak

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Speaker 1: link there. So it's it's potentially what's going on here

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Speaker 1: is best Buy in this sort of brick and mortar

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Speaker 1: retail world is taking share from Walmart, Target and those competitors.

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Speaker 1: So you go to best Buy if you're looking for

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Speaker 1: your d j I Phantom for quad copter, and especially

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Speaker 1: if you want it in in white. But what does

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Speaker 1: it tell you when they're offering you know, like two

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Speaker 1: hundred dollars off these things? Are they trying to just

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Speaker 1: move them out of the store or is it just

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Speaker 1: to lure you into the store so that then they

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Speaker 1: can upsell you maybe to a five dollar uh you

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Speaker 1: know version of a drone. Yeah, true, yeah, they they

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Speaker 1: are probably it's probably both fronts, but more likely it's

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Speaker 1: to get people in the door. If it's a hot item,

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Speaker 1: put a little dis kond on and get someone in

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Speaker 1: the door. But also this is August, this is when

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Speaker 1: a lot of inventors being cleared. Um. Also, I mean

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Speaker 1: it's basically back to school. It's just is starting now too,

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Speaker 1: So it could be you know, claianuce inventory for back

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Speaker 1: to school. Um. But again, you know Best Buy, it's

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Speaker 1: the big question mark has been can they return to growth?

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Speaker 1: Can they return to growth? And they've grown their comparable

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Speaker 1: store sales six out of the past eight quarters, which

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Speaker 1: you know, you wouldn't have expected two years ago, you

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Speaker 1: wouldn't have expected that. So it's it's it seems like

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Speaker 1: the right path. And they did say that, you know,

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Speaker 1: they thought the first half was gonna be a little

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Speaker 1: bit down as far as sales, and they show growth

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Speaker 1: in the second half. Now they have this growth in

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Speaker 1: the second quarter, they have you know, what looks like

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Speaker 1: a bullish quarter or second half ahead of them. One

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Speaker 1: deg reason is the new iPhone coming out, the iPhone

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Speaker 1: perhaps going to be unveiled in September. Yeah, I mean

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Speaker 1: most speculation in September. You know Best buy one comment

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Speaker 1: on that today. But a lot of their business been

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Speaker 1: driven by product cycles. So when there's a new phone

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Speaker 1: that is hot, or like when the Tabot sort of

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Speaker 1: craze happened. Best Buy has been did well, but what

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Speaker 1: we saw this quarter was that well most of the

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Speaker 1: market was down in the US and a lot of

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Speaker 1: the electronics categories best Buy wasn't um which is a

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Speaker 1: pretty positive sign. Thus one of the reasons why the

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Speaker 1: stock is up so much today. The stock up eighteen

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Speaker 1: percent today, up a nearly thirty percent a year to day.

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Speaker 1: Based in Richfield in Minnesota, they've got a hundred and

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Speaker 1: twenty five thousand employees. Are they still cutting staff or

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Speaker 1: are they done with that? They're they're doing some of that.

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Speaker 1: They're they're you know, they every quarter they closed some

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Speaker 1: you know, a couple of stores here there. Um. I

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Speaker 1: think compared to a year ago, they have twenty last

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Speaker 1: stores in the US, which is they still have a

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Speaker 1: boatload of stores in the US. But the big cost

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Speaker 1: cutting is mainly over the first phase of the turnaround.

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Speaker 1: When the CEO Uber Jolie came in, he's been there

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Speaker 1: a little over three years now. Was that too big

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Speaker 1: of a company to bloated cost rationalize certain parts of

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Speaker 1: the business. They sold off all their foreign divisions except

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Speaker 1: for Canada, and now it's can they really show growth

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Speaker 1: in the US, which is basically their business. Now it's

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Speaker 1: a forty billion dollar a year business. For you know,

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Speaker 1: as much as people talk about Amazon everything, I mean,

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Speaker 1: best Buy still turns out forty billion dollars worth of sales.

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Speaker 1: I mean, think about that. That's a lot of money.

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Speaker 1: That's a lot, that's a big that's a big chunk

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Speaker 1: of the market that they still own. And as far

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Speaker 1: as if you have a look at the brick and

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Speaker 1: water environment, they don't have competition. I mean, yes to

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Speaker 1: people go to Walmart and Costco and and Target to

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Speaker 1: buy business in the electronics field from Walmart and from

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Speaker 1: some of those big box retailer and as far as

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Speaker 1: especially especially electronics chain, they're the only one left. And

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Speaker 1: as as electronics is, as electronics get more complex, hated,

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Speaker 1: best Buy is betting that people will need more help,

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Speaker 1: especially in person the ramping up services that obviously have

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Speaker 1: the geek squad. So that's sort of the whole play

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Speaker 1: is to become a services company. So they sell you

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Speaker 1: a tech product and they help you put in your home,

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Speaker 1: and then they help service it throughout the life of

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Speaker 1: the product and they help you get, you know, pick

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Speaker 1: a new one. My guys out, definitely. I guess everyone't

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Speaker 1: be in line for as you said, that new iPhone seven.

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Speaker 1: iPhone seven is gonna be huge. They think, they think, yeah,

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Speaker 1: good point. Thanks very much, Matt Townsend. He is a

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Speaker 1: retail reporter for Bloomberg News, telling us about the results

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Speaker 1: of best Buy. The shares are higher, up by about

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Speaker 1: eighteen percent today. This is Bloomberg coming up on taking stock.

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Speaker 1: We're gonna take stock of commercial real estate in our

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Speaker 1: nation's capital. Republican candidate Donald Trump he's put two hundred

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Speaker 1: million dollars behind the renovation of the old post office

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Speaker 1: pavilion for a hotel. That's next