1 00:00:02,759 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am. 3 00:00:14,640 --> 00:00:17,279 Speaker 1: He's done on Apple, Cocklay and Android Auto with the 4 00:00:17,320 --> 00:00:21,080 Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,400 --> 00:00:26,560 Speaker 2: There's a lot of commitments going on out there in 7 00:00:26,600 --> 00:00:30,720 Speaker 2: the technology world, Scarlett Nvidia is committed to investing up 8 00:00:30,760 --> 00:00:34,360 Speaker 2: to ten billion dollars in Entropic. Microsoft is also committed 9 00:00:34,520 --> 00:00:37,120 Speaker 2: to invest up to five billion dollars in Entropic and 10 00:00:37,240 --> 00:00:40,560 Speaker 2: Anthropic for its silent, It's committed to buy thirty billion 11 00:00:40,600 --> 00:00:42,320 Speaker 2: dollars of Azure compute capacity. 12 00:00:42,280 --> 00:00:44,320 Speaker 3: So we just talking about these tens of billions of 13 00:00:44,360 --> 00:00:45,599 Speaker 3: dollars like it's nothing, right. 14 00:00:45,920 --> 00:00:48,920 Speaker 2: I don't get it. It's just the circular stuff we see. 15 00:00:49,000 --> 00:00:52,480 Speaker 2: But people tell me not to worry. Coming up right here, 16 00:00:52,760 --> 00:00:55,400 Speaker 2: the best dressed man on Wall Street, his turbine matches 17 00:00:55,520 --> 00:00:58,880 Speaker 2: is tie every day, no accident. I mean, nice job. 18 00:00:58,920 --> 00:01:01,640 Speaker 2: MANYEP saying he's a senior tech dude. It Bloomberg Intelligence 19 00:01:01,880 --> 00:01:04,600 Speaker 2: and I have a lot of big companies making some 20 00:01:04,720 --> 00:01:08,720 Speaker 2: big commitments in Anthropic. What is nthropic again? 21 00:01:09,560 --> 00:01:13,840 Speaker 4: Well, Nthropic is one of the five frontier lms that 22 00:01:13,920 --> 00:01:16,720 Speaker 4: are remaining I mean, and they are leading the charge 23 00:01:16,720 --> 00:01:18,959 Speaker 4: when it comes to generative AI. So it's one of 24 00:01:19,000 --> 00:01:24,280 Speaker 4: the five. The other one are Google, Open Ai, Meta 25 00:01:24,520 --> 00:01:29,600 Speaker 4: and Xai. And so look, when it comes to these commitments, 26 00:01:29,680 --> 00:01:33,720 Speaker 4: it's pretty obvious that OpenAI has raised the bar by 27 00:01:33,760 --> 00:01:37,320 Speaker 4: announcing they're going to spend one point four trillion. So 28 00:01:37,360 --> 00:01:40,560 Speaker 4: the question is what are the other LLM companies going 29 00:01:40,600 --> 00:01:44,200 Speaker 4: to do? And Entropic is also a pure play LLM, 30 00:01:44,319 --> 00:01:47,440 Speaker 4: and in their case, they don't have the funding, I mean, 31 00:01:47,480 --> 00:01:50,600 Speaker 4: they don't have the balance sheet like Google or Meta have, 32 00:01:51,360 --> 00:01:53,600 Speaker 4: so they have to raise the money either in the 33 00:01:53,640 --> 00:01:58,000 Speaker 4: private markets or from someone like Nvidia, or get into 34 00:01:58,040 --> 00:02:01,760 Speaker 4: an agreement with Microsoft, which also has an agreement with 35 00:02:01,840 --> 00:02:07,280 Speaker 4: open Ai. So that's where you know LM's need compute. 36 00:02:07,400 --> 00:02:10,600 Speaker 4: That's how you serve billion plus users, and that's where 37 00:02:10,639 --> 00:02:12,920 Speaker 4: you know the numbers get bigger and bigger when it 38 00:02:12,960 --> 00:02:15,560 Speaker 4: comes to the tie up with cloud provider. 39 00:02:15,680 --> 00:02:18,000 Speaker 3: This is like the popular click in high school where 40 00:02:18,000 --> 00:02:20,919 Speaker 3: everyone knows each other and everyone's messing around with each other. 41 00:02:22,960 --> 00:02:24,440 Speaker 3: Just give us a little bit of background here on 42 00:02:24,560 --> 00:02:27,880 Speaker 3: Anthropic because My understanding is that it was founded by 43 00:02:27,919 --> 00:02:30,640 Speaker 3: folks who used to work at open ai and some 44 00:02:30,720 --> 00:02:34,840 Speaker 3: of the early investors like big stakeholders include Alphabet and 45 00:02:34,880 --> 00:02:37,760 Speaker 3: include Amazon, and now you've got Microsoft in there. I mean, 46 00:02:37,800 --> 00:02:40,480 Speaker 3: is there anyone who's not part of Anthropic and not 47 00:02:40,600 --> 00:02:42,840 Speaker 3: committed to investing in this company? 48 00:02:43,560 --> 00:02:47,600 Speaker 4: Well, you could say Meta, they're doing things, We're doing 49 00:02:47,639 --> 00:02:49,440 Speaker 4: their own thing. They are doing their own thing in 50 00:02:49,600 --> 00:02:53,440 Speaker 4: terms of you know, using the computer internally, and they 51 00:02:53,520 --> 00:02:54,680 Speaker 4: don't have a cloud business. 52 00:02:55,040 --> 00:02:57,560 Speaker 3: Is that a problem for them that metas out there 53 00:02:57,600 --> 00:02:58,840 Speaker 3: on its own. I know, it doesn't have its own 54 00:02:58,840 --> 00:03:02,400 Speaker 3: cloud business, but it's not buying stakes or committed to 55 00:03:02,440 --> 00:03:04,720 Speaker 3: invest up to five billion or ten billion in any 56 00:03:04,720 --> 00:03:07,200 Speaker 3: of these AI companies. 57 00:03:07,320 --> 00:03:10,560 Speaker 4: I mean, so far, just to go to Meta, it 58 00:03:10,600 --> 00:03:14,280 Speaker 4: feels like, you know, investors were okay with them using 59 00:03:14,320 --> 00:03:17,520 Speaker 4: the GPU compute for their own family of apps. But 60 00:03:17,639 --> 00:03:20,320 Speaker 4: the fact that they're talking about one hundred billion plus 61 00:03:20,360 --> 00:03:24,760 Speaker 4: in capex for next year without having a substantial ROI. 62 00:03:24,800 --> 00:03:27,320 Speaker 4: And what I mean by rois in the case of Microsoft, 63 00:03:27,760 --> 00:03:30,919 Speaker 4: yes they are raising their capex two hundred and twenty billion, 64 00:03:31,200 --> 00:03:33,800 Speaker 4: but they're winning deals like the one with Nthropic thirty 65 00:03:33,840 --> 00:03:37,960 Speaker 4: billion dollar in commitment from Entropic, so somebody is paying 66 00:03:38,040 --> 00:03:41,040 Speaker 4: for that compute. In the case of Microsoft, you don't 67 00:03:41,080 --> 00:03:44,840 Speaker 4: have that with a meta How are you generating ROI 68 00:03:44,960 --> 00:03:48,080 Speaker 4: outside of your family of apps? And over there you 69 00:03:48,120 --> 00:03:51,800 Speaker 4: have to show a really substantial increase in engagement to 70 00:03:51,880 --> 00:03:54,880 Speaker 4: convince investors it's worth hundred billion plus in capex. 71 00:03:55,560 --> 00:03:59,160 Speaker 2: Any of these open ais anthropics are they going to 72 00:03:59,320 --> 00:04:00,440 Speaker 2: ever come public? Do you think? 73 00:04:01,320 --> 00:04:04,480 Speaker 4: I mean, in the case of Entropic, look, I know 74 00:04:05,080 --> 00:04:08,120 Speaker 4: the numbers are getting big, but their gross margins at 75 00:04:08,120 --> 00:04:11,440 Speaker 4: this point are probably better than open ai, which is 76 00:04:11,480 --> 00:04:13,880 Speaker 4: doing too many things. I mean, the biggest risk I 77 00:04:13,920 --> 00:04:17,240 Speaker 4: see for open aiy is they feel they can get 78 00:04:17,279 --> 00:04:21,279 Speaker 4: into any business, whether it's chip business, whether it's you know, 79 00:04:21,400 --> 00:04:24,800 Speaker 4: obviously l M is their turf, any type of applications, 80 00:04:25,240 --> 00:04:28,039 Speaker 4: and that's where there's a possibility of a misstep. You 81 00:04:28,040 --> 00:04:31,680 Speaker 4: can end up wasting time because you just don't have, 82 00:04:32,360 --> 00:04:35,520 Speaker 4: you know, the capability. Yeah, the focus there Entropic is 83 00:04:35,560 --> 00:04:36,240 Speaker 4: more focused. 84 00:04:36,320 --> 00:04:38,880 Speaker 2: Dumb question of the day. Yeah, these US companies, Entropic 85 00:04:39,040 --> 00:04:43,479 Speaker 2: opening are they base? Where are they? Good question? Okay, 86 00:04:43,520 --> 00:04:45,840 Speaker 2: So I'm going to go out there visit my son 87 00:04:45,880 --> 00:04:49,120 Speaker 2: at Santa Clara. They're in the backyard right there. I 88 00:04:49,480 --> 00:04:51,239 Speaker 2: can go knock on the door of Chatch. 89 00:04:51,320 --> 00:04:55,440 Speaker 3: They're not incorporated in Dublin or you know, some some islands. 90 00:04:56,480 --> 00:05:00,720 Speaker 4: Look, it's a nonprofit looking to have a profitable and 91 00:05:01,200 --> 00:05:03,000 Speaker 4: so all that could happen. 92 00:05:03,080 --> 00:05:04,160 Speaker 5: But look at the end of. 93 00:05:04,080 --> 00:05:08,680 Speaker 4: The day, these llms are showing constant improvement, which is 94 00:05:08,720 --> 00:05:13,400 Speaker 4: what's driving you know, companies like Microsoft to partner with Entropic. 95 00:05:13,760 --> 00:05:16,240 Speaker 4: They have that exclusive partnership with Opening Eye, but now 96 00:05:16,240 --> 00:05:17,320 Speaker 4: they are diversifying. 97 00:05:17,560 --> 00:05:20,640 Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this. 98 00:05:24,279 --> 00:05:27,960 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 99 00:05:28,040 --> 00:05:31,159 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 100 00:05:31,160 --> 00:05:34,440 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 101 00:05:34,520 --> 00:05:37,640 Speaker 1: you get your podcasts, or watch us live on YouTube 102 00:05:38,560 --> 00:05:39,200 Speaker 1: home depot. 103 00:05:39,240 --> 00:05:43,120 Speaker 2: They cut their forecast on week remodeling demands off the 104 00:05:43,200 --> 00:05:44,760 Speaker 2: check in with John Tucker to see if that is 105 00:05:44,800 --> 00:05:47,120 Speaker 2: in fact the case, because he is like the do 106 00:05:47,200 --> 00:05:48,360 Speaker 2: it yourself kind of guy. 107 00:05:48,480 --> 00:05:50,159 Speaker 3: Really, what has he done in his house? 108 00:05:50,560 --> 00:05:53,039 Speaker 2: It does everything, and like big jobs that take a 109 00:05:53,040 --> 00:05:55,240 Speaker 2: long time, Like he doesn't ream out in the bathroom 110 00:05:55,279 --> 00:05:57,760 Speaker 2: and he does plumbing, he does all this stuff. Oh, 111 00:05:58,040 --> 00:06:01,000 Speaker 2: hes about lumber that he can't get quality the lumbers 112 00:06:01,000 --> 00:06:02,520 Speaker 2: He's got to go to. He's got a guy. 113 00:06:02,640 --> 00:06:04,080 Speaker 3: Then he's like their model customer. 114 00:06:04,240 --> 00:06:07,359 Speaker 2: Yes, exactly right, he's the guy. So let's check in 115 00:06:07,400 --> 00:06:09,479 Speaker 2: with that Drew reading. He covers all the homebuilders, he 116 00:06:09,520 --> 00:06:12,640 Speaker 2: covers all the stores that cater to the homebowners, like 117 00:06:12,720 --> 00:06:15,240 Speaker 2: home depot. Drew, thanks so much for joining us here. 118 00:06:15,240 --> 00:06:18,080 Speaker 2: What did the home depots say about their customers? 119 00:06:19,400 --> 00:06:22,000 Speaker 6: So they came in with the same store sales growth 120 00:06:22,040 --> 00:06:25,760 Speaker 6: of about zero point two percent, which misconsensus this quarter. 121 00:06:25,839 --> 00:06:29,120 Speaker 6: That was largely due to whether last year they had 122 00:06:29,160 --> 00:06:32,839 Speaker 6: pretty significant gains from storms. This year that wasn't replicated, 123 00:06:33,320 --> 00:06:35,880 Speaker 6: so that had about an eighty basis point impact on 124 00:06:35,920 --> 00:06:39,000 Speaker 6: the comp And that's important because if you back that out, 125 00:06:39,040 --> 00:06:42,560 Speaker 6: the underlying business has been relatively stable with about a 126 00:06:42,640 --> 00:06:47,560 Speaker 6: one percent comp you know, so underlying trends still pretty stable. 127 00:06:47,640 --> 00:06:50,880 Speaker 6: I think the bigger problem is that last quarter they 128 00:06:50,880 --> 00:06:53,400 Speaker 6: said that they had expected to see an acceleration in 129 00:06:53,480 --> 00:06:56,960 Speaker 6: demand in the second half, and that hasn't materialized. We 130 00:06:57,040 --> 00:06:59,600 Speaker 6: have gotten the pullback in rates, but that hasn't translated 131 00:06:59,600 --> 00:07:00,960 Speaker 6: into housing activity. 132 00:07:01,960 --> 00:07:05,920 Speaker 3: Yeah, and the problem there is that customers are deferring 133 00:07:05,960 --> 00:07:09,159 Speaker 3: their large purchases. Demand has remained steady, but it's definitely 134 00:07:09,200 --> 00:07:11,800 Speaker 3: not picking up at the same time. So when people 135 00:07:11,840 --> 00:07:14,680 Speaker 3: are undertaking some kind of home renovation projects, they're just 136 00:07:14,680 --> 00:07:17,480 Speaker 3: doing it at a smaller scale. Does home depot still 137 00:07:17,520 --> 00:07:19,800 Speaker 3: benefit from those customers. 138 00:07:21,200 --> 00:07:23,760 Speaker 6: Sure, and that's what's driving a lot of the demand 139 00:07:23,760 --> 00:07:28,160 Speaker 6: for the home improvement retailers. It's smaller ticket projects, you know, 140 00:07:28,360 --> 00:07:31,400 Speaker 6: maintenance oriented type stuff, which is a huge part of 141 00:07:31,400 --> 00:07:34,120 Speaker 6: their business. But to your point, to really see I 142 00:07:34,120 --> 00:07:36,240 Speaker 6: guess the turn and growth, what you want to see 143 00:07:36,280 --> 00:07:40,040 Speaker 6: as a resurgence in those big ticket categories. Now, big 144 00:07:40,040 --> 00:07:42,880 Speaker 6: ticket spending was up two point three percent in the quarter, 145 00:07:42,960 --> 00:07:46,680 Speaker 6: but that's morally more reflective of single item purchases to 146 00:07:46,760 --> 00:07:52,400 Speaker 6: think about things like appliances, power tools, gypsum. They also 147 00:07:52,440 --> 00:07:56,280 Speaker 6: are taking share in the larger pro market, which is 148 00:07:56,320 --> 00:07:58,200 Speaker 6: aiding the mix a little bit, but it really doesn't 149 00:07:58,240 --> 00:08:01,520 Speaker 6: reflect an increase as you mentioned, in big ticket projects 150 00:08:01,520 --> 00:08:04,520 Speaker 6: such as kitchen and bath three models or flooring projects. 151 00:08:04,560 --> 00:08:06,480 Speaker 6: And that's really what we want to see turn and 152 00:08:06,920 --> 00:08:09,280 Speaker 6: will likely drive the next leg of growth next year. 153 00:08:09,600 --> 00:08:12,120 Speaker 3: So I ask about that big ticket items versus smaller 154 00:08:12,120 --> 00:08:15,200 Speaker 3: projects because I wonder what this means for competitor Lows. 155 00:08:15,680 --> 00:08:17,720 Speaker 3: Low's shares are down today, but only by about one 156 00:08:17,760 --> 00:08:21,520 Speaker 3: point three percent versus Home Depots four percent, and I 157 00:08:21,680 --> 00:08:24,960 Speaker 3: wonder how much you can extrapolate from Home Depot to Lows, 158 00:08:24,960 --> 00:08:28,200 Speaker 3: which will be reporting on the nineteenth before the market open, 159 00:08:28,200 --> 00:08:29,119 Speaker 3: so that is tomorrow morning. 160 00:08:30,800 --> 00:08:34,160 Speaker 6: Yeah, so for loaws, we're expecting to hear pretty similar 161 00:08:34,200 --> 00:08:37,760 Speaker 6: commentary that we heard from Home Depot today. They're operating 162 00:08:37,920 --> 00:08:41,400 Speaker 6: in the same environment with a weak housing backdrop, more 163 00:08:41,440 --> 00:08:44,960 Speaker 6: cautious consumers. The main difference between the two businesses would 164 00:08:45,000 --> 00:08:49,000 Speaker 6: be Home depots greater exposure to the professional contractor, which 165 00:08:49,040 --> 00:08:51,400 Speaker 6: is fifty percent or more of sales compared to Lows 166 00:08:51,440 --> 00:08:54,680 Speaker 6: at about thirty percent. So we have seen on a 167 00:08:54,720 --> 00:09:00,520 Speaker 6: relative basis more weakness among the DIY category with particular 168 00:09:00,760 --> 00:09:03,680 Speaker 6: strength and pros. Really that would be the only difference. 169 00:09:03,720 --> 00:09:06,320 Speaker 6: But I think by and large, the sentiment is going 170 00:09:06,360 --> 00:09:09,920 Speaker 6: to be that consumers are taking on more caution because 171 00:09:09,920 --> 00:09:12,640 Speaker 6: they're increasingly worried about the outlook for the economy, the 172 00:09:12,640 --> 00:09:15,320 Speaker 6: outlook for their job, and that's causing them to defer 173 00:09:15,760 --> 00:09:17,559 Speaker 6: spending on discretionary categories. 174 00:09:18,040 --> 00:09:20,280 Speaker 2: How about tariffs. What are the companies saying about tariffs 175 00:09:20,320 --> 00:09:23,960 Speaker 2: at Low's and Home Depot like tariffs on wood hammers. 176 00:09:24,040 --> 00:09:24,960 Speaker 2: I guess I don't know. 177 00:09:26,360 --> 00:09:28,679 Speaker 6: Sure, so not a whole lot of discussion this quarter. 178 00:09:28,760 --> 00:09:31,280 Speaker 6: I think, you know, given home Depot and low scale, 179 00:09:31,320 --> 00:09:33,760 Speaker 6: I think they're relatively well positioned to kind of navigate 180 00:09:33,800 --> 00:09:37,000 Speaker 6: this environment with their suppliers. That being said, they're certainly 181 00:09:37,040 --> 00:09:40,520 Speaker 6: not entirely immune. They kind of shifted their stance on 182 00:09:40,559 --> 00:09:42,839 Speaker 6: their pricing strategy. Earlier in the year, they said that 183 00:09:42,880 --> 00:09:45,560 Speaker 6: they wouldn't be raising prices, but as a situation in 184 00:09:45,600 --> 00:09:48,520 Speaker 6: the landscape continue to evolve, they said they would be 185 00:09:48,640 --> 00:09:52,079 Speaker 6: raising prices selectively. We did see that, I think a 186 00:09:52,080 --> 00:09:55,280 Speaker 6: little bit in the average ticket this quarter, the growth 187 00:09:55,280 --> 00:09:58,120 Speaker 6: in that, but we don't really know at this point 188 00:09:58,200 --> 00:10:00,440 Speaker 6: what the demand impact has been. There was a lot 189 00:10:00,440 --> 00:10:02,439 Speaker 6: of noise in the quarter, as I mentioned, with the weather, 190 00:10:02,559 --> 00:10:06,120 Speaker 6: so arish will certainly be something to watch, particularly since 191 00:10:06,160 --> 00:10:10,120 Speaker 6: we just heard some new terraffs being introduced on lumber 192 00:10:10,280 --> 00:10:14,160 Speaker 6: imports and as well as kitchen and bath cabinets, which 193 00:10:14,280 --> 00:10:17,240 Speaker 6: increase significantly as we get into next year, so not 194 00:10:17,320 --> 00:10:19,400 Speaker 6: a huge impact to this point, but certainly something to 195 00:10:19,440 --> 00:10:20,000 Speaker 6: keep an eye on. 196 00:10:20,280 --> 00:10:24,400 Speaker 3: Okay, definitely, I'm curious how much does Home Depot and 197 00:10:24,480 --> 00:10:27,079 Speaker 3: Low's mirror what's happening in the housing market, because when 198 00:10:27,080 --> 00:10:30,240 Speaker 3: it comes to housing, of course, the affordability crisis is 199 00:10:30,400 --> 00:10:33,600 Speaker 3: you know, the big thing that's keeping it frozen. Mortgage 200 00:10:33,679 --> 00:10:36,840 Speaker 3: rates have come down, but they're still really elevated compared 201 00:10:36,880 --> 00:10:40,280 Speaker 3: to where they were during the pandemic. Inflation is capping 202 00:10:40,320 --> 00:10:44,640 Speaker 3: spending on big projects, and overall home prices remain really 203 00:10:44,640 --> 00:10:47,760 Speaker 3: really high, so people just can't move and they're stuck 204 00:10:47,800 --> 00:10:51,520 Speaker 3: in place, and they don't necessarily want to spend more 205 00:10:51,559 --> 00:10:52,360 Speaker 3: than they can afford. 206 00:10:54,120 --> 00:10:56,880 Speaker 6: No, it's a great point, and housing is extremely important 207 00:10:56,920 --> 00:11:00,600 Speaker 6: to Home depot and Lows as you would expect, you know, housing, 208 00:11:00,760 --> 00:11:03,160 Speaker 6: the housing market has been stagnant. We're running about a 209 00:11:03,160 --> 00:11:06,880 Speaker 6: four million annuallyzed sales pace that's about twenty five percent 210 00:11:07,040 --> 00:11:10,360 Speaker 6: below normalized levels. We know that when people list a 211 00:11:10,400 --> 00:11:12,719 Speaker 6: home for sale or when they purchase new home, there 212 00:11:12,760 --> 00:11:15,679 Speaker 6: tends to be increased spending. Movers tend to spend a 213 00:11:15,720 --> 00:11:18,000 Speaker 6: lot more than people who are already in their house, 214 00:11:18,400 --> 00:11:20,640 Speaker 6: so they're certainly losing that piece of the business. I 215 00:11:20,640 --> 00:11:23,360 Speaker 6: think one of the interesting things to keep an eye 216 00:11:23,400 --> 00:11:27,360 Speaker 6: on looking forward is home prices. Home deep on Lows 217 00:11:27,360 --> 00:11:30,240 Speaker 6: have historically told us that that's probably the most important 218 00:11:30,280 --> 00:11:33,200 Speaker 6: aspect of the housing market to them, and you know, 219 00:11:33,520 --> 00:11:35,800 Speaker 6: as we well know, since twenty twenty, home prices are 220 00:11:35,880 --> 00:11:38,960 Speaker 6: up fifty percent or more depending on the market, so 221 00:11:39,000 --> 00:11:41,040 Speaker 6: owners have up a lot of equity. But what we're 222 00:11:41,040 --> 00:11:43,280 Speaker 6: starting to see now is prices rise at a much 223 00:11:43,320 --> 00:11:46,000 Speaker 6: slower pace, and in a lot of key housing markets 224 00:11:46,000 --> 00:11:48,520 Speaker 6: across the country, we're actually seeing year over year declines 225 00:11:48,559 --> 00:11:51,000 Speaker 6: in home prices. So when you start to get declining 226 00:11:51,040 --> 00:11:53,480 Speaker 6: home prices, that hits at that confidence aspect. If you 227 00:11:53,520 --> 00:11:56,200 Speaker 6: think the value of your property is falling, you're less 228 00:11:56,200 --> 00:12:00,280 Speaker 6: inclined to invest. So it's something they called out. It's 229 00:12:00,320 --> 00:12:02,800 Speaker 6: not necessarily something we've seen at the national level, but 230 00:12:02,840 --> 00:12:04,880 Speaker 6: if you look at particular markets around the country, it's 231 00:12:04,880 --> 00:12:05,959 Speaker 6: something that's starting to happen. 232 00:12:06,640 --> 00:12:09,800 Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this. 233 00:12:13,720 --> 00:12:17,400 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 234 00:12:17,480 --> 00:12:20,880 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 235 00:12:20,960 --> 00:12:24,040 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 236 00:12:24,080 --> 00:12:27,080 Speaker 1: get your podcasts, or watch us live on YouTube. 237 00:12:27,800 --> 00:12:30,280 Speaker 2: Way way back in the day at the Chase Manhattan 238 00:12:30,320 --> 00:12:35,320 Speaker 2: Bank credit training program exhausted program. At the end of it, 239 00:12:35,360 --> 00:12:37,640 Speaker 2: you had to do like a big project, pick a company, 240 00:12:37,640 --> 00:12:39,800 Speaker 2: and do like a detailed credit report on it. My 241 00:12:39,920 --> 00:12:42,360 Speaker 2: company was Medtronic. 242 00:12:42,080 --> 00:12:44,559 Speaker 3: The device maker, the medical device maker, exactly right. 243 00:12:45,640 --> 00:12:47,320 Speaker 2: So I knocked him dead. By the way, it was 244 00:12:47,480 --> 00:12:47,920 Speaker 2: just a killer. 245 00:12:49,080 --> 00:12:49,520 Speaker 5: AnyWho. 246 00:12:49,559 --> 00:12:52,040 Speaker 2: It stocks up four percent today, some good numbs, fifty 247 00:12:52,080 --> 00:12:55,240 Speaker 2: two week high. It's good to be in the medical 248 00:12:55,280 --> 00:12:58,160 Speaker 2: device business. I guess. I don't know, so we'll check 249 00:12:58,200 --> 00:13:01,880 Speaker 2: it out. Matt Hendrickson Hendrickson joints us here, senior medtech analyst. 250 00:13:02,640 --> 00:13:06,120 Speaker 2: He's based in Jersey. But you're in the big town today. Yeah, 251 00:13:06,200 --> 00:13:08,440 Speaker 2: commute in every day, you come in every day. 252 00:13:08,520 --> 00:13:08,960 Speaker 5: Yeah. 253 00:13:09,080 --> 00:13:09,880 Speaker 2: Nice, Good for you. 254 00:13:09,960 --> 00:13:12,800 Speaker 5: That's what I'm driving too. What Oh yeah, you drive 255 00:13:12,840 --> 00:13:15,280 Speaker 5: to where? Uh walking a lot right out. 256 00:13:15,200 --> 00:13:17,560 Speaker 7: There, dude, and you do the congestion pricing. I have 257 00:13:17,640 --> 00:13:20,880 Speaker 7: to Yeah, where do you drive from? Well, Ridgewood so 258 00:13:20,920 --> 00:13:23,920 Speaker 7: we have trains, dude, I know. But the Secaucus junction 259 00:13:24,160 --> 00:13:25,240 Speaker 7: it's always a mess. 260 00:13:25,400 --> 00:13:28,600 Speaker 2: Oh my God, what a knuckle ahead. All right, Matt, 261 00:13:28,720 --> 00:13:31,680 Speaker 2: thanks for joining us here. I as serious problems with 262 00:13:31,720 --> 00:13:34,679 Speaker 2: your committing strategy. Talk to us about Metron. What's going 263 00:13:34,720 --> 00:13:35,120 Speaker 2: on there? 264 00:13:35,520 --> 00:13:37,880 Speaker 5: Well, you know, let's take a step back. 265 00:13:37,960 --> 00:13:40,959 Speaker 8: Twelve months ago, they had a lot of promising products 266 00:13:40,960 --> 00:13:44,160 Speaker 8: in the pipeline. The question was execution, and what we're 267 00:13:44,200 --> 00:13:46,840 Speaker 8: seeing the last few quarters is you're starting to see 268 00:13:46,840 --> 00:13:50,280 Speaker 8: some of that execution. So when they raise their organic 269 00:13:50,320 --> 00:13:53,559 Speaker 8: revenue growth guidance by a fifty basis points today to 270 00:13:53,640 --> 00:13:56,080 Speaker 8: five and a half percent, that was driven a lot 271 00:13:56,160 --> 00:13:59,720 Speaker 8: by what they call is their cardiac ablation segment. This 272 00:13:59,840 --> 00:14:03,079 Speaker 8: is new technology that's being used to treat atrial fibrillation. 273 00:14:03,720 --> 00:14:06,360 Speaker 8: That segment alone grew seventy one percent year over year. 274 00:14:06,520 --> 00:14:10,240 Speaker 8: So having that as off a billion dollar revenue run 275 00:14:10,320 --> 00:14:13,120 Speaker 8: rate is what's driving that kind of growth, and is 276 00:14:13,160 --> 00:14:16,800 Speaker 8: what is expecting to accelerate that growth going into fiscal 277 00:14:16,880 --> 00:14:17,520 Speaker 8: twenty twenty. 278 00:14:17,760 --> 00:14:19,520 Speaker 3: Seventy one percent is going to get bigger. 279 00:14:19,880 --> 00:14:22,000 Speaker 8: Yes, they actually said that, and we actually in our 280 00:14:22,040 --> 00:14:26,040 Speaker 8: follow up questions with them, we asked just to confirm, 281 00:14:26,080 --> 00:14:28,440 Speaker 8: are you going to accelerate that seventy one percent growth 282 00:14:28,480 --> 00:14:31,000 Speaker 8: in their fiscal third quarter, which is the one coming up, 283 00:14:31,200 --> 00:14:34,320 Speaker 8: And they said yes, and it's basically the adoption of 284 00:14:34,760 --> 00:14:37,720 Speaker 8: without game two technical. It's called pulse field ablation and 285 00:14:37,760 --> 00:14:41,320 Speaker 8: it's a new way of ablating the heart to treat 286 00:14:41,360 --> 00:14:42,239 Speaker 8: atrial fibrillation. 287 00:14:43,320 --> 00:14:45,320 Speaker 3: Does it have a main competitor in this space? 288 00:14:45,600 --> 00:14:48,120 Speaker 8: Yeah, so it's kind of turned into a duopoly right 289 00:14:48,160 --> 00:14:52,960 Speaker 8: now between Metronic and Boston Scientific, the tickers BSX. And 290 00:14:53,000 --> 00:14:56,640 Speaker 8: what you saw this quarter is Boston Scientific was in 291 00:14:56,720 --> 00:15:01,520 Speaker 8: first and their growth in the quarter sixty percent. So 292 00:15:01,640 --> 00:15:04,480 Speaker 8: Metronic is highlighting that it was actually growing faster in 293 00:15:04,520 --> 00:15:07,160 Speaker 8: the quarter than Boston its main competitor. 294 00:15:07,360 --> 00:15:12,960 Speaker 2: Was how's in these medical device companies like Metronic and 295 00:15:13,080 --> 00:15:15,720 Speaker 2: how are they dealing with this administration in I don't know, 296 00:15:15,840 --> 00:15:19,600 Speaker 2: terriffs regulations. What's the backdrop for this for the sector 297 00:15:19,640 --> 00:15:20,560 Speaker 2: of the healthcare space. 298 00:15:20,760 --> 00:15:23,520 Speaker 8: Yeah, so if you look at broadly, it should be 299 00:15:23,560 --> 00:15:26,640 Speaker 8: more insulated than some of the other kind of import 300 00:15:26,640 --> 00:15:33,400 Speaker 8: export type of businesses. Procedure volumes remain steady. Devices that 301 00:15:33,480 --> 00:15:35,720 Speaker 8: are used in the US are mostly built in the US. 302 00:15:35,800 --> 00:15:40,760 Speaker 8: There's some caveats here and there, so it's overall relative 303 00:15:40,800 --> 00:15:45,360 Speaker 8: to the broader market minimal. Metronic highlighted that you know, 304 00:15:45,400 --> 00:15:46,960 Speaker 8: the worst quarter is going to be coming up this 305 00:15:47,200 --> 00:15:50,920 Speaker 8: their fiscal third quarter, which ends in January, a little 306 00:15:50,960 --> 00:15:53,200 Speaker 8: bit worse in the fourth quarter that ends in April, 307 00:15:53,800 --> 00:15:55,600 Speaker 8: and then you know, they haven't gotten too much into 308 00:15:55,640 --> 00:15:57,560 Speaker 8: fiscal twenty twenty seven, but they said it should be 309 00:15:57,560 --> 00:15:59,200 Speaker 8: incremental overall. 310 00:15:59,320 --> 00:16:00,720 Speaker 5: It should be about. 311 00:16:00,480 --> 00:16:03,040 Speaker 8: One hundred and eighty million to the overall net income 312 00:16:03,680 --> 00:16:06,200 Speaker 8: that you so, but that's talking about a company that's 313 00:16:06,200 --> 00:16:08,320 Speaker 8: making thirty billion plus in revenue per year. 314 00:16:08,800 --> 00:16:12,120 Speaker 3: What I noticed as well is that Medtronic has as 315 00:16:12,160 --> 00:16:15,920 Speaker 3: one of its biggest investors Elliott Investment Management, the activist investors, 316 00:16:15,960 --> 00:16:19,280 Speaker 3: And yeah, they've become one of the biggest shareholders earlier 317 00:16:19,320 --> 00:16:23,240 Speaker 3: this year, and they've made some changes, adding some folks 318 00:16:23,240 --> 00:16:27,560 Speaker 3: to its board as independent directors, presumably ones that Elliott 319 00:16:28,160 --> 00:16:31,920 Speaker 3: finds favorable. What does this mean for that relationship? Is 320 00:16:31,920 --> 00:16:34,320 Speaker 3: this an antagonistic relationship or is it something that's a 321 00:16:34,320 --> 00:16:35,160 Speaker 3: little bit friendlier. 322 00:16:35,920 --> 00:16:39,360 Speaker 8: I would to say more it's a friendlier type of relationship. 323 00:16:39,360 --> 00:16:40,800 Speaker 8: And I think it goes back to what I was 324 00:16:40,840 --> 00:16:42,920 Speaker 8: talking about twelve months ago, when we were looking at 325 00:16:42,920 --> 00:16:46,440 Speaker 8: a company that had all these massine developments in the 326 00:16:46,560 --> 00:16:49,760 Speaker 8: pipeline and they just couldn't get that revenue growth from 327 00:16:49,760 --> 00:16:51,600 Speaker 8: the four to five percent up to that five to 328 00:16:51,680 --> 00:16:55,040 Speaker 8: six percent where we're seeing now. Now, the question is 329 00:16:55,040 --> 00:16:57,280 Speaker 8: how much of that is behind the scenes Elliott is 330 00:16:57,280 --> 00:16:59,240 Speaker 8: making a push or just the fact that the management 331 00:16:59,280 --> 00:17:03,080 Speaker 8: team just needed that extra time to get that initial 332 00:17:03,560 --> 00:17:07,760 Speaker 8: acceleration of the growth just internally. But yeah, they came 333 00:17:07,800 --> 00:17:10,600 Speaker 8: in I mean honestly at the right time with kind 334 00:17:10,600 --> 00:17:13,360 Speaker 8: of at the when it was down, you know, more 335 00:17:13,400 --> 00:17:14,160 Speaker 8: than twenty percent. 336 00:17:14,600 --> 00:17:18,520 Speaker 3: To seeing a potentially friendly relationship between Elliott and the 337 00:17:18,560 --> 00:17:19,880 Speaker 3: target companies at Targets. 338 00:17:20,040 --> 00:17:22,560 Speaker 2: Yeah, exactly good point. But maybe it's working this bit 339 00:17:22,600 --> 00:17:24,439 Speaker 2: to the case. Matt thinks so much for joining us. 340 00:17:24,440 --> 00:17:27,879 Speaker 2: Appreciated Matt Hendrickson. He's a senior medtech analyst Bloomberg Intelligence. 341 00:17:28,200 --> 00:17:31,199 Speaker 2: He of the questionable commuting strategy. We'll discuss that at 342 00:17:31,200 --> 00:17:31,600 Speaker 2: a little bit. 343 00:17:31,640 --> 00:17:32,840 Speaker 3: What would you do if you were him? 344 00:17:33,240 --> 00:17:34,959 Speaker 2: Oh, train, dude, I mean that's what I mean. Live 345 00:17:35,000 --> 00:17:36,240 Speaker 2: in New Jersey for that reason. 346 00:17:36,480 --> 00:17:38,360 Speaker 3: Is that New Jersey Transit or is that another one? 347 00:17:38,400 --> 00:17:41,159 Speaker 2: But he lives in Ridgid, which is beat for no 348 00:17:41,320 --> 00:17:43,240 Speaker 2: rail service, cause you got to you gotta go to. 349 00:17:43,680 --> 00:17:45,399 Speaker 5: You're kind of only supporting my thesis there. 350 00:17:45,480 --> 00:17:47,800 Speaker 2: Yeah, but you don't come into the city. 351 00:17:48,160 --> 00:17:50,480 Speaker 3: I mean that there's a real proba is with the 352 00:17:50,600 --> 00:17:51,840 Speaker 3: driving into midtown. 353 00:17:51,960 --> 00:17:54,200 Speaker 2: Yes, you go to Secaucus, you hop on a train, 354 00:17:54,280 --> 00:17:55,520 Speaker 2: you're in, and then you're done. 355 00:17:55,640 --> 00:17:56,560 Speaker 3: Drive to se Caucus. 356 00:17:56,960 --> 00:17:59,520 Speaker 5: No, or I do my five point thirty commute too. 357 00:18:00,320 --> 00:18:03,399 Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this. 358 00:18:07,359 --> 00:18:11,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 359 00:18:11,119 --> 00:18:14,200 Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android 360 00:18:14,240 --> 00:18:17,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 361 00:18:17,600 --> 00:18:20,720 Speaker 1: you get your podcasts, or watch us live on YouTube. 362 00:18:21,520 --> 00:18:26,560 Speaker 2: Amer Sports. That's Solomon. They got the Solomon best binding company, right, 363 00:18:26,680 --> 00:18:28,520 Speaker 2: best bindings in the world, I think I've had I've 364 00:18:28,520 --> 00:18:31,159 Speaker 2: been skied on Solomon Bindings for like forty years. But 365 00:18:31,200 --> 00:18:32,919 Speaker 2: they had lots of other stuff, Wilson's Sports and all 366 00:18:32,920 --> 00:18:34,960 Speaker 2: that kind of stuff. They's some pretty good numbers today. 367 00:18:35,080 --> 00:18:37,400 Speaker 2: I mean, you know, raising their guidance for the third 368 00:18:37,400 --> 00:18:40,080 Speaker 2: time this year. So I don't know the consumers seam. 369 00:18:40,200 --> 00:18:42,919 Speaker 3: I think in the shaped economy they serve the upper leg, 370 00:18:43,000 --> 00:18:43,480 Speaker 3: upper part. 371 00:18:43,400 --> 00:18:43,639 Speaker 4: Of the king. 372 00:18:43,760 --> 00:18:45,920 Speaker 2: All right, that's the place to be. Abigail good Martin 373 00:18:46,000 --> 00:18:48,439 Speaker 2: joins us here. She is a footwear and at leisure analyst. 374 00:18:48,440 --> 00:18:51,240 Speaker 2: I don't know what ath leisure is for Bloomberg Intelligence. 375 00:18:51,240 --> 00:18:54,399 Speaker 2: She is a proud spider University of Richmond spider. 376 00:18:54,520 --> 00:18:57,000 Speaker 3: Oh that's how I didn't know that that was the mass. 377 00:18:57,040 --> 00:18:57,280 Speaker 6: It is. 378 00:18:57,320 --> 00:18:58,800 Speaker 2: It's very unique, isn't it. 379 00:18:58,920 --> 00:19:01,959 Speaker 3: I ken't like most Sure looks like it's a big spider. 380 00:19:02,520 --> 00:19:04,320 Speaker 2: Yeah, we'll get you the Yeah, get We'll get one 381 00:19:04,359 --> 00:19:07,159 Speaker 2: for you. I got my fortieth anniversary, you know, rich 382 00:19:07,520 --> 00:19:09,399 Speaker 2: Richmond coming up this year. This are you going to go? 383 00:19:09,560 --> 00:19:13,040 Speaker 2: Damn right? I am going. I might actually joined forced 384 00:19:13,040 --> 00:19:15,600 Speaker 2: me to kind of go on the committee. I'm in charge. 385 00:19:15,600 --> 00:19:17,720 Speaker 2: I'll be dialing for dollars getting people to come. And 386 00:19:17,760 --> 00:19:20,240 Speaker 2: Abba goes she's a spial So talk to us about 387 00:19:20,240 --> 00:19:21,879 Speaker 2: a M E. R. Sports here. I don't think a 388 00:19:21,880 --> 00:19:22,919 Speaker 2: lot of people know them too. 389 00:19:23,160 --> 00:19:26,320 Speaker 9: Yeah no, because the brands underneath that. It is Arctics, 390 00:19:26,800 --> 00:19:29,560 Speaker 9: which is their outdoor performance brand, as well as Solomon 391 00:19:29,560 --> 00:19:31,960 Speaker 9: and Wilson are their three biggest so I think today 392 00:19:32,080 --> 00:19:34,560 Speaker 9: was a big day for them. They did really well, 393 00:19:35,320 --> 00:19:38,800 Speaker 9: you know, sales up thirty percent. Broad Based strength across regions, 394 00:19:38,920 --> 00:19:42,200 Speaker 9: across channels, and across brands. I think the key thing 395 00:19:42,200 --> 00:19:46,400 Speaker 9: people are looking for was China. Arcterics recently had some 396 00:19:46,920 --> 00:19:50,360 Speaker 9: controversy in China with fireworks display in the Himalayas. 397 00:19:50,440 --> 00:19:53,360 Speaker 3: That what fireworks display? 398 00:19:53,160 --> 00:19:55,040 Speaker 2: He displayed fireworks in the Himalayans. 399 00:19:55,520 --> 00:20:02,280 Speaker 9: Arctics for set off fireworks exactly. It was definitely missed 400 00:20:02,359 --> 00:20:05,159 Speaker 9: up for an outdoor brand that's really focused on sustainability, 401 00:20:05,600 --> 00:20:07,600 Speaker 9: and there was definitely some concern that there would be 402 00:20:07,600 --> 00:20:10,359 Speaker 9: a little backlash in China. There's definitely a lot of 403 00:20:10,400 --> 00:20:13,280 Speaker 9: people upset about it, and they were fined by the 404 00:20:13,359 --> 00:20:15,639 Speaker 9: Chinese government and working. 405 00:20:15,359 --> 00:20:17,480 Speaker 3: To restore the ecology there. 406 00:20:17,520 --> 00:20:20,879 Speaker 9: But Greater China was up forty seven percent, momentum is 407 00:20:20,880 --> 00:20:23,360 Speaker 9: continuing into four Q so I think that was really 408 00:20:23,400 --> 00:20:28,080 Speaker 9: a big takeaway, just quelling investors' concerns about potential backlash 409 00:20:28,080 --> 00:20:31,640 Speaker 9: in China, especially because they're the number one outdoor sports 410 00:20:31,640 --> 00:20:32,400 Speaker 9: brand in China. 411 00:20:32,600 --> 00:20:36,120 Speaker 3: Arctereric So I had no idea that they have such 412 00:20:36,160 --> 00:20:38,360 Speaker 3: strong brands. I mean, a mare Sports on its own, 413 00:20:38,720 --> 00:20:41,360 Speaker 3: it's kind of it doesn't it's not memorable the name, 414 00:20:41,480 --> 00:20:43,440 Speaker 3: the parent company name, right, but the brands of course, 415 00:20:43,480 --> 00:20:46,920 Speaker 3: are Solomon Arctic. So Wilson, as you mentioned, what does 416 00:20:47,040 --> 00:20:49,160 Speaker 3: the tariff picture look like for this company? 417 00:20:49,560 --> 00:20:51,760 Speaker 9: Yeah, I think it's very similar to most of the 418 00:20:51,800 --> 00:20:56,040 Speaker 9: other companies. I think for them, what benefits them as 419 00:20:56,080 --> 00:20:59,520 Speaker 9: their premium positioning. They're able to raise prices and they're 420 00:20:59,560 --> 00:21:03,120 Speaker 9: not seen any backlash from consumers or pullback. They're still 421 00:21:03,119 --> 00:21:06,720 Speaker 9: seeing very strong full price sell through, so they're able 422 00:21:06,760 --> 00:21:09,560 Speaker 9: to offset some of those tariff costs with that, which 423 00:21:09,560 --> 00:21:11,359 Speaker 9: I think is really helping. And we're seeing that with 424 00:21:11,359 --> 00:21:13,720 Speaker 9: a lot of more of the premium brands are able 425 00:21:13,760 --> 00:21:16,560 Speaker 9: to kind of navigate through the tariffs since their consumers 426 00:21:16,600 --> 00:21:19,200 Speaker 9: are willing to pay upper K, upper. 427 00:21:19,040 --> 00:21:20,280 Speaker 3: K of the K shaped economy. 428 00:21:20,440 --> 00:21:22,680 Speaker 2: I guess I know that's I guess where you want 429 00:21:22,720 --> 00:21:25,600 Speaker 2: to be there. Talk to us about the footwear market here. 430 00:21:27,359 --> 00:21:29,680 Speaker 2: I think you know, Nike, Adidas, all that kind of stuff. 431 00:21:29,720 --> 00:21:30,520 Speaker 2: What's going on there? 432 00:21:30,720 --> 00:21:33,480 Speaker 9: Yeah, I think you know, we're in store for a 433 00:21:33,560 --> 00:21:36,960 Speaker 9: very interesting holiday season. I think that we're going to 434 00:21:37,000 --> 00:21:39,480 Speaker 9: continue to see the premium brands continue to do well 435 00:21:39,760 --> 00:21:43,240 Speaker 9: on holdings recently just reported and did phenomenal and they 436 00:21:43,280 --> 00:21:46,680 Speaker 9: also said they're not seeing any backlash on raised prices 437 00:21:46,720 --> 00:21:49,560 Speaker 9: and they'll continue to do you know, limited discounting through 438 00:21:49,560 --> 00:21:52,919 Speaker 9: the holidays. So we may see some differences between the 439 00:21:53,000 --> 00:21:56,800 Speaker 9: two companies, but we just had our recent BI survey 440 00:21:56,960 --> 00:21:59,960 Speaker 9: and Nike continues to lete. I think there's been concerned 441 00:22:00,080 --> 00:22:02,679 Speaker 9: over Nike, but they still are the major shareholder and 442 00:22:03,040 --> 00:22:06,320 Speaker 9: still a favorite brand of millennials. Gen Z's everyone for 443 00:22:06,359 --> 00:22:08,400 Speaker 9: the holidays, so they should continue to do well too. 444 00:22:08,800 --> 00:22:11,600 Speaker 3: What is the Mayorsports distribution strategy? Do they have a 445 00:22:11,680 --> 00:22:15,600 Speaker 3: DTC offering or are they going through third party retailers. 446 00:22:15,720 --> 00:22:17,679 Speaker 9: Yeah, that's a great question, so it's a little different 447 00:22:17,680 --> 00:22:21,600 Speaker 9: for each brand. For Arctics, they're leaning a lot more 448 00:22:21,600 --> 00:22:25,520 Speaker 9: into DTC. They've changed their distribution strategy from basically nine 449 00:22:25,560 --> 00:22:29,040 Speaker 9: eighty percent wholesale to eighty percent DTC over the last 450 00:22:29,080 --> 00:22:33,000 Speaker 9: three years, and they're really focusing on growing their store 451 00:22:33,040 --> 00:22:34,919 Speaker 9: base because I think not a lot of people know 452 00:22:34,920 --> 00:22:37,560 Speaker 9: about Arctics. It's really going to help the brand awareness. 453 00:22:37,600 --> 00:22:40,199 Speaker 9: So even in the US, they're looking to double their 454 00:22:40,200 --> 00:22:44,160 Speaker 9: store a count by twenty thirty. So that's that Solomon 455 00:22:44,600 --> 00:22:48,280 Speaker 9: continues to be wholesale, especially for footwear. We're seeing this 456 00:22:48,359 --> 00:22:52,560 Speaker 9: holiday season consumers strap for cash they're wanting to go 457 00:22:52,680 --> 00:22:55,320 Speaker 9: into the stores and try on their shoes and make 458 00:22:55,359 --> 00:22:57,480 Speaker 9: sure it's the right fit and buy them versus you know, 459 00:22:57,560 --> 00:22:58,959 Speaker 9: buy five pairs and return them. 460 00:22:59,040 --> 00:22:59,600 Speaker 6: Yeah. 461 00:22:59,800 --> 00:23:03,080 Speaker 9: So the wholesale distribution for Solomon and is really key, 462 00:23:03,119 --> 00:23:06,119 Speaker 9: and they're in a lot of key premium partners, I 463 00:23:06,160 --> 00:23:09,440 Speaker 9: would say, and you know the running specialty stores as well. 464 00:23:09,520 --> 00:23:11,919 Speaker 2: I mean, I'm looking at your report here, research your 465 00:23:11,920 --> 00:23:14,639 Speaker 2: reportal on the sneaker business. I didn't know there were 466 00:23:14,680 --> 00:23:17,919 Speaker 2: so many shoe manufacturers. I mean, Nike's the dominant one, 467 00:23:17,920 --> 00:23:20,520 Speaker 2: as you said, but there's like fourteen in your survey here. 468 00:23:20,600 --> 00:23:20,840 Speaker 4: Yeah. 469 00:23:21,160 --> 00:23:21,880 Speaker 3: Yeah, those are. 470 00:23:21,880 --> 00:23:23,840 Speaker 2: A competitive marketplace. 471 00:23:24,080 --> 00:23:29,080 Speaker 9: Definitely, it's getting even more competitive as consumers with AI technology, 472 00:23:29,119 --> 00:23:32,400 Speaker 9: you know, there's just such more of a breath of discovery. 473 00:23:33,359 --> 00:23:35,960 Speaker 9: So that's where product is really coming into play this 474 00:23:36,040 --> 00:23:39,679 Speaker 9: holiday season. I think, you know, the innovation, product and style. 475 00:23:40,960 --> 00:23:43,119 Speaker 3: If there's one thing to be worried about when it 476 00:23:43,160 --> 00:23:45,040 Speaker 3: comes to a mare sports, what would it be? I mean, 477 00:23:45,080 --> 00:23:47,840 Speaker 3: what's an area that they're not executing on? 478 00:23:49,040 --> 00:23:52,360 Speaker 9: So I think the China thing was the one uncertainty 479 00:23:52,480 --> 00:23:54,879 Speaker 9: for this quarter that we were Definitely it could have 480 00:23:54,920 --> 00:23:57,480 Speaker 9: gone either way, So that would be the biggest thing. 481 00:23:57,520 --> 00:24:00,280 Speaker 9: But honestly, they're executing on most of their things. Their 482 00:24:00,280 --> 00:24:04,439 Speaker 9: biggest drivers are DTC, Women's and China, and all of 483 00:24:04,440 --> 00:24:07,640 Speaker 9: those were up double digits and more. And they're really 484 00:24:07,680 --> 00:24:09,760 Speaker 9: gaining share in women's which I think is a big 485 00:24:09,960 --> 00:24:13,200 Speaker 9: new opportunity for them as more women joined the outdoor market. 486 00:24:13,440 --> 00:24:16,520 Speaker 2: All right, which have you purchased in the last twelve months? 487 00:24:16,560 --> 00:24:21,280 Speaker 2: Sneaker brands for baby boomers? Sketchers? 488 00:24:21,440 --> 00:24:21,680 Speaker 6: Yeah? 489 00:24:21,760 --> 00:24:25,160 Speaker 3: What what Sketches continues to win? 490 00:24:25,240 --> 00:24:29,720 Speaker 9: It's honestly, they're so comfortable, they're like the price point, 491 00:24:29,760 --> 00:24:33,040 Speaker 9: the quality, I know, I know, I know, I. 492 00:24:33,000 --> 00:24:36,040 Speaker 3: Know, but that is not something that they market out there, 493 00:24:36,080 --> 00:24:37,000 Speaker 3: that they put out there. 494 00:24:37,160 --> 00:24:41,720 Speaker 9: No, and they're the third largest footwear brand totally. Really yeah, 495 00:24:41,720 --> 00:24:43,119 Speaker 9: I think right behind Adidas. 496 00:24:43,119 --> 00:24:44,679 Speaker 3: Next you're going to tell me that, you know, the 497 00:24:44,760 --> 00:24:47,200 Speaker 3: boomers are using the shoes with the little wheel in 498 00:24:47,240 --> 00:24:47,679 Speaker 3: the back of. 499 00:24:47,680 --> 00:24:49,600 Speaker 2: Them, the wheelers, the wheels. 500 00:24:49,680 --> 00:24:51,560 Speaker 3: Yeah, no, they're doing the step ins. You don't even 501 00:24:51,600 --> 00:24:53,080 Speaker 3: have to bend down your shoe. 502 00:24:53,160 --> 00:24:53,680 Speaker 5: Is that's it? 503 00:24:54,000 --> 00:24:54,879 Speaker 2: That's what I think it is. 504 00:24:55,000 --> 00:24:55,080 Speaker 6: Ye. 505 00:24:55,400 --> 00:24:56,840 Speaker 2: I think you're right, all right, I mean, yeah, there 506 00:24:56,880 --> 00:24:59,600 Speaker 2: you go. I mean the kids, the gen Z the millennials, 507 00:25:00,240 --> 00:25:02,920 Speaker 2: they're still in that Nike brand Yeah brand still. 508 00:25:03,960 --> 00:25:07,800 Speaker 9: Or hokahs yeah, hokah, hokah and on are gaining, but 509 00:25:07,960 --> 00:25:10,320 Speaker 9: they're you know, they're still small, and I think people 510 00:25:10,359 --> 00:25:12,479 Speaker 9: don't realize that just because there's been such a big boom. 511 00:25:12,640 --> 00:25:13,680 Speaker 3: They're still very like. 512 00:25:13,840 --> 00:25:17,040 Speaker 9: West Coast East Coast oriented, you know, they still have 513 00:25:17,040 --> 00:25:19,400 Speaker 9: a lot more room to grow brand awareness in the US, 514 00:25:19,480 --> 00:25:23,520 Speaker 9: especially in the middle of America. So yeah, Nike continue 515 00:25:23,600 --> 00:25:25,800 Speaker 9: and their higher price points right if not everyone can 516 00:25:25,880 --> 00:25:27,400 Speaker 9: afford them. 517 00:25:27,640 --> 00:25:32,320 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 518 00:25:32,480 --> 00:25:36,000 Speaker 1: and anywhere else you get your podcasts. Listen live each 519 00:25:36,000 --> 00:25:39,760 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 520 00:25:39,880 --> 00:25:43,399 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 521 00:25:43,840 --> 00:25:46,760 Speaker 1: You can also watch us live every weekday on YouTube 522 00:25:47,160 --> 00:25:49,400 Speaker 1: and always on the Bloomberg terminal.