1 00:00:04,040 --> 00:00:08,639 Speaker 1: Broadcasting live to New York, Bloomberg eleven to Washington, d C. 2 00:00:08,840 --> 00:00:14,120 Speaker 1: Bloomberg to Boston, Bloomberg twelve hundred to San Francisco, Bloomberg 3 00:00:14,200 --> 00:00:18,000 Speaker 1: nine to the country, Zeroes Exam General one nine and 4 00:00:18,160 --> 00:00:21,480 Speaker 1: around the globe the Bloomberg Radio Los AP and Bloomberg 5 00:00:21,480 --> 00:00:26,480 Speaker 1: Dot Gone. This is taking Stock coming up on taking 6 00:00:26,480 --> 00:00:29,680 Speaker 1: Stock broadcasting live from Elbow Beach, Bermuda, an ocean front 7 00:00:29,800 --> 00:00:33,280 Speaker 1: enclave of classic style and contemporary luxury. We're going to 8 00:00:33,360 --> 00:00:36,919 Speaker 1: talk about retail spending. We've got Marshall Cohen, chief industry 9 00:00:36,960 --> 00:00:40,400 Speaker 1: analysts for the np D Group. Maybe he could explain 10 00:00:40,479 --> 00:00:43,199 Speaker 1: why retail sales were up one point three percent like 11 00:00:43,320 --> 00:00:46,839 Speaker 1: many department store chains showed losses in a Marshall start 12 00:00:47,000 --> 00:00:51,920 Speaker 1: started his career pim folding Ralph Lauren Polo sweaters at 13 00:00:51,920 --> 00:00:54,840 Speaker 1: a Macy's Bloomingdale's on Long Island. Will be interesting to 14 00:00:54,840 --> 00:00:57,440 Speaker 1: see he's watching his industry for so long because he's 15 00:00:57,440 --> 00:00:59,240 Speaker 1: seen these trands, a lot of them developing. And we'll 16 00:00:59,240 --> 00:01:02,160 Speaker 1: have him way ensued. Let's have Charlie Pellett way in 17 00:01:02,400 --> 00:01:05,319 Speaker 1: on the news. Now he's back in Bloembrook World headquarters 18 00:01:05,319 --> 00:01:07,840 Speaker 1: with a business flash all right, Ralph Laurence shares. They 19 00:01:07,840 --> 00:01:11,440 Speaker 1: are down Kathleen now by one and a half percent. Nordstrom, 20 00:01:11,480 --> 00:01:15,240 Speaker 1: though the big retail story today disappointing earnings, IT shares 21 00:01:15,280 --> 00:01:20,000 Speaker 1: plunging thirteen point six percent. PepsiCo is suffering its biggest 22 00:01:20,080 --> 00:01:23,560 Speaker 1: interday decline in more than two months, after Nelson Peltz's 23 00:01:23,640 --> 00:01:26,679 Speaker 1: investment firms sold off IT shares in the beverage and 24 00:01:26,760 --> 00:01:30,119 Speaker 1: snack Giant. PepsiCo shares they're down now by one point 25 00:01:30,160 --> 00:01:33,160 Speaker 1: six percent. We are brought to you by National Realty 26 00:01:33,560 --> 00:01:36,920 Speaker 1: Returns on cash in rented real estate find them at 27 00:01:37,160 --> 00:01:42,399 Speaker 1: n r I A dot net stocks extending lessons losses 28 00:01:42,440 --> 00:01:45,040 Speaker 1: to fall to a one month low. The dollar climbed 29 00:01:45,080 --> 00:01:48,400 Speaker 1: after the biggest gain in US retail sales in a year, 30 00:01:48,840 --> 00:01:52,200 Speaker 1: reignited speculation the Federal Reserve may liff rates as early 31 00:01:52,240 --> 00:01:56,720 Speaker 1: as June. Kevin Karen is market strategist at Stephile Nicholas. Yes, 32 00:01:56,760 --> 00:01:58,840 Speaker 1: the Fed raising interest rates, but it's very lows. The 33 00:01:58,920 --> 00:02:01,400 Speaker 1: cash rates are still a low, and bond great yields 34 00:02:01,400 --> 00:02:04,600 Speaker 1: of where they are, So the last question then becomes, well, 35 00:02:04,640 --> 00:02:07,040 Speaker 1: what do you do with the growth part of the portfolio? 36 00:02:07,200 --> 00:02:10,560 Speaker 1: And our take on it has been to shift the 37 00:02:10,600 --> 00:02:14,560 Speaker 1: portfolio to look more companies that have more consistency in 38 00:02:14,600 --> 00:02:18,880 Speaker 1: the mix and focus more on attaining kind of lower, 39 00:02:18,919 --> 00:02:21,800 Speaker 1: more consistent returns than grabbing for the very high returns. 40 00:02:22,280 --> 00:02:25,760 Speaker 1: SMP five hundred index down seventeen a drop of eight 41 00:02:26,000 --> 00:02:29,640 Speaker 1: tenths of one percent, naz stackdown nineteen, a drop of 42 00:02:29,639 --> 00:02:33,520 Speaker 1: point four percent down, Industrials down one hundred seventy seven 43 00:02:33,560 --> 00:02:36,880 Speaker 1: points a drop of one percent, Gold up to ninety 44 00:02:36,960 --> 00:02:40,040 Speaker 1: beyond the twelve seventy four a gain of point two percent. 45 00:02:40,560 --> 00:02:42,880 Speaker 1: And now let's take a look at the other stories 46 00:02:43,000 --> 00:02:46,720 Speaker 1: making us. Thank you Charlie from the Bloomberg news Room, 47 00:02:46,760 --> 00:02:49,640 Speaker 1: Myrami Inoescentio. This news update is brought to you by 48 00:02:49,639 --> 00:02:52,960 Speaker 1: the jeep Grand Cherokee, the most awarded sub ever. The 49 00:02:52,960 --> 00:02:55,600 Speaker 1: Grand Cherokee continues to raise the bar with its luxurious 50 00:02:55,600 --> 00:02:59,200 Speaker 1: interior and legendary four by four capability. Drive one your 51 00:02:59,240 --> 00:03:02,680 Speaker 1: local gepper today, Get to the airport early and prepared 52 00:03:02,680 --> 00:03:06,520 Speaker 1: to wait. That's the message from a Homeland Security Secretary J. Johnson. 53 00:03:06,720 --> 00:03:10,280 Speaker 1: Johnson says he's hiring additional security screeners, but adds that 54 00:03:10,320 --> 00:03:13,520 Speaker 1: will not end the delays at security checkpoints. There will 55 00:03:13,639 --> 00:03:16,920 Speaker 1: be wait times. There will be wait times this summer 56 00:03:17,040 --> 00:03:21,080 Speaker 1: as they moved through aviation security checkpoints, Flyers across the 57 00:03:21,080 --> 00:03:24,239 Speaker 1: country have been facing growing lines, which during peak hours 58 00:03:24,240 --> 00:03:28,440 Speaker 1: have topped ninety minutes at some airports. Presumptive Republican nominee 59 00:03:28,440 --> 00:03:30,760 Speaker 1: Donald Trump says he is sticking to his guns when 60 00:03:30,800 --> 00:03:33,840 Speaker 1: it comes to his hardliner stance on immigration, but speaking 61 00:03:33,880 --> 00:03:37,119 Speaker 1: to ABC News today, Trump denied he's shifting positions for 62 00:03:37,200 --> 00:03:39,880 Speaker 1: the general election. I don't think I toned it down. 63 00:03:39,960 --> 00:03:41,840 Speaker 1: I want to have strong immigration. I want to have 64 00:03:41,880 --> 00:03:44,640 Speaker 1: strong borders. Some people agree with me, and some people doubt, 65 00:03:44,680 --> 00:03:46,320 Speaker 1: but for the most part they agree. We have to 66 00:03:46,320 --> 00:03:48,480 Speaker 1: have strong orders, and we don't have a country. So no, 67 00:03:49,120 --> 00:03:53,000 Speaker 1: I don't think Texas Senator John Cornyn says Republicans must 68 00:03:53,120 --> 00:03:55,920 Speaker 1: unify and rally around Trump if they want to beat 69 00:03:55,960 --> 00:04:00,920 Speaker 1: Hillary Clinton this November. Can't govern without when, and so 70 00:04:01,040 --> 00:04:04,520 Speaker 1: you can't win by being divided. Trump has been meeting 71 00:04:04,520 --> 00:04:07,960 Speaker 1: with both House and Senate leaders trying to find common ground, 72 00:04:08,440 --> 00:04:10,640 Speaker 1: and New York City art auctions aren't raking in the 73 00:04:10,640 --> 00:04:13,560 Speaker 1: money they once did. One point one billion dollars change 74 00:04:13,600 --> 00:04:17,600 Speaker 1: hands during this week's major auctions at Christie's, Sotheby's and Phillips. 75 00:04:17,600 --> 00:04:21,400 Speaker 1: That's down more than fifty from one year ago. Global 76 00:04:21,400 --> 00:04:24,440 Speaker 1: News twenty four hours a day, powered by our journalists 77 00:04:24,480 --> 00:04:26,839 Speaker 1: in more than one fifty news heroes around the world. 78 00:04:27,120 --> 00:04:30,760 Speaker 1: From the Bloomberg Newsroom. I'm Rainy in essentio, Charlie, and 79 00:04:30,800 --> 00:04:33,880 Speaker 1: we thank you and again recapping stocks bouncing along the 80 00:04:33,880 --> 00:04:36,920 Speaker 1: bottom with the SMP five hundred index down eighteen, a 81 00:04:37,040 --> 00:04:40,799 Speaker 1: drop of nine tenths of one percent. I'm Charlie Pellett 82 00:04:40,920 --> 00:04:57,960 Speaker 1: and that's a bloom Bread business flash. The surf music 83 00:04:58,000 --> 00:05:00,400 Speaker 1: boy playing that well because I'm Caffeine is along with 84 00:05:00,440 --> 00:05:03,840 Speaker 1: Pim Fox, and we are continuing our live broadcast here 85 00:05:04,279 --> 00:05:07,400 Speaker 1: from Elbow Beach, Bermuda, an ocean front on claim of 86 00:05:07,440 --> 00:05:12,000 Speaker 1: classic style, contemporary luxury. Just a delightful place to be. 87 00:05:12,080 --> 00:05:16,799 Speaker 1: These entire island at Nation is brimming with beautiful sites 88 00:05:16,920 --> 00:05:19,520 Speaker 1: and wonderful, kind, gracious people, and I certainly want to 89 00:05:19,600 --> 00:05:21,320 Speaker 1: thank all of them that have helped us here at 90 00:05:21,320 --> 00:05:23,680 Speaker 1: Elbow Beach and in our time so far on the island. 91 00:05:24,080 --> 00:05:27,320 Speaker 1: Retail sales people are spending money here that where people 92 00:05:27,360 --> 00:05:29,680 Speaker 1: are spending money at resorts. What about the United States, 93 00:05:29,680 --> 00:05:32,640 Speaker 1: What about department stores? The government's retail sales report look 94 00:05:32,680 --> 00:05:35,080 Speaker 1: pretty darn good today, But for a lot of retailers, 95 00:05:35,080 --> 00:05:37,640 Speaker 1: Nordstrom's j C Penny list gets longer and longer. They're 96 00:05:37,640 --> 00:05:41,600 Speaker 1: cutting earnings forecast, they're cutting their sales forecast. Joining us 97 00:05:41,680 --> 00:05:45,640 Speaker 1: Marshall Cohen he retails US at np D Group. Marshall, 98 00:05:45,680 --> 00:05:47,360 Speaker 1: do you ever check in on places like community to 99 00:05:47,400 --> 00:05:50,760 Speaker 1: see how people are spending money? Actually I do. I 100 00:05:50,800 --> 00:05:53,159 Speaker 1: don't get to be there often enough, but we certainly 101 00:05:53,160 --> 00:05:55,880 Speaker 1: do look at boos spending on resorts and boos spending 102 00:05:55,880 --> 00:05:59,000 Speaker 1: on experiences. And that's actually one of the reasons why 103 00:05:59,040 --> 00:06:02,400 Speaker 1: that middle sector of the market has challenged, because the 104 00:06:02,480 --> 00:06:06,200 Speaker 1: experiential customer, the millennial, is a big part of the 105 00:06:06,240 --> 00:06:08,719 Speaker 1: focus for these guys, but it's also a big part 106 00:06:08,720 --> 00:06:14,039 Speaker 1: of the spend diversion. Marshall wondering if you can help me. 107 00:06:14,200 --> 00:06:17,200 Speaker 1: I looked at the numbers from the government today, an 108 00:06:17,200 --> 00:06:20,680 Speaker 1: increase of one point three. But all week I've been 109 00:06:20,720 --> 00:06:24,279 Speaker 1: mindful of the downturn in the reports from many of 110 00:06:24,320 --> 00:06:27,039 Speaker 1: the major department store chains. You saw it happened to 111 00:06:27,120 --> 00:06:30,920 Speaker 1: northstron You saw what happened to Macy's and Coal's. Can 112 00:06:30,960 --> 00:06:35,000 Speaker 1: you explain this when you look at what's going on. 113 00:06:35,080 --> 00:06:39,680 Speaker 1: It's actually a four part answer online, which is, you know, 114 00:06:39,720 --> 00:06:41,160 Speaker 1: you have to be careful what you wish for you 115 00:06:41,240 --> 00:06:43,320 Speaker 1: might just get it. Well. A lot of these retailers 116 00:06:43,320 --> 00:06:46,440 Speaker 1: have really stepped up and ramped up their offerings online. 117 00:06:46,880 --> 00:06:52,440 Speaker 1: That cannibalizes the activity in the store. Omni channel, which 118 00:06:52,520 --> 00:06:55,440 Speaker 1: is the big piece of what they're all talking about 119 00:06:55,960 --> 00:06:58,360 Speaker 1: as far as how they're going to grow their business 120 00:06:58,480 --> 00:07:02,719 Speaker 1: doesn't really grow business at displaced this and then online 121 00:07:02,880 --> 00:07:06,680 Speaker 1: outside of that retail environment certainly has become a formidable 122 00:07:06,760 --> 00:07:12,640 Speaker 1: competition in some categories. Four Online penetration is eroding the 123 00:07:12,680 --> 00:07:16,360 Speaker 1: market share that these mid level of department stores have had. 124 00:07:16,960 --> 00:07:19,320 Speaker 1: Uh you add in the fact that they've all made 125 00:07:19,320 --> 00:07:21,600 Speaker 1: the play to the millennial consumer, and as we just 126 00:07:21,680 --> 00:07:25,840 Speaker 1: kind of discussed, millennial is all about very limited discretionary 127 00:07:25,920 --> 00:07:30,520 Speaker 1: income spending across a very wide field of product, and 128 00:07:30,920 --> 00:07:34,080 Speaker 1: very experiential, which is what the department store doesn't offer. 129 00:07:34,560 --> 00:07:37,360 Speaker 1: The third piece of the puzzle is value. Right now, 130 00:07:37,440 --> 00:07:40,400 Speaker 1: a lot of the categories that are not getting growth 131 00:07:40,600 --> 00:07:44,200 Speaker 1: are all about price points and lower price points and discounts, 132 00:07:44,240 --> 00:07:47,000 Speaker 1: and an example of that would be the ath leisure movement. 133 00:07:47,080 --> 00:07:50,800 Speaker 1: We all know how the big uh trend for the 134 00:07:50,800 --> 00:07:55,000 Speaker 1: whole season of and now into has been this movement 135 00:07:55,040 --> 00:07:59,440 Speaker 1: towards more athletic inspired product. So imagine what stores are doing. 136 00:07:59,440 --> 00:08:02,960 Speaker 1: They're selling, you know, stretched leggings for forty dollars where 137 00:08:02,960 --> 00:08:05,240 Speaker 1: they used to sell stretched denim for a hundred and 138 00:08:05,280 --> 00:08:08,200 Speaker 1: fifty dollars. They have to sell two and three times 139 00:08:08,200 --> 00:08:13,840 Speaker 1: as much merchandise to make up those lost dollars. Marshall, 140 00:08:14,560 --> 00:08:16,680 Speaker 1: you spend what fifty weeks out of the year on 141 00:08:16,720 --> 00:08:19,120 Speaker 1: the road. You go to three or four different stores 142 00:08:19,520 --> 00:08:21,600 Speaker 1: a week. You're all over the country, You're in and 143 00:08:21,640 --> 00:08:25,120 Speaker 1: out of them. Let's take a look at Nordstrom's. Northstrom's 144 00:08:25,200 --> 00:08:29,560 Speaker 1: has been such a successful department store chain, expanding over 145 00:08:29,600 --> 00:08:34,560 Speaker 1: the entire country. But it's even a big successful chain 146 00:08:34,800 --> 00:08:37,160 Speaker 1: like north Rom's kind of doomed. Have we seen the 147 00:08:37,280 --> 00:08:42,000 Speaker 1: end of retail and department stores as we once knew it? Not? 148 00:08:42,200 --> 00:08:45,840 Speaker 1: If they change with the consumer. The consumer has changed 149 00:08:45,840 --> 00:08:49,079 Speaker 1: at a faster pace than the stores at Nordstrom if 150 00:08:49,120 --> 00:08:52,160 Speaker 1: you look at them and any other traditional retailer are 151 00:08:52,240 --> 00:08:55,760 Speaker 1: steeped in tradition, they still keep doing the same thing 152 00:08:55,840 --> 00:08:59,400 Speaker 1: they've been doing since I was folding sweaters of Bloomingdales 153 00:08:59,400 --> 00:09:03,079 Speaker 1: are absolutely right, I've heard that, um. But it's really 154 00:09:03,080 --> 00:09:07,160 Speaker 1: about recognizing that if they don't change who and what 155 00:09:07,360 --> 00:09:10,400 Speaker 1: they are, they will have a tough time. But they 156 00:09:10,440 --> 00:09:13,240 Speaker 1: really can do better, they can do more. They just 157 00:09:13,280 --> 00:09:16,200 Speaker 1: have to learn how to transition quicker. They don't have 158 00:09:16,280 --> 00:09:18,520 Speaker 1: time to test some of these things and then sit 159 00:09:18,559 --> 00:09:20,840 Speaker 1: there and see because the consumer has already moved on 160 00:09:20,920 --> 00:09:24,560 Speaker 1: to something else. So when you have the leading edge 161 00:09:24,559 --> 00:09:28,400 Speaker 1: when it comes to service, that's a big differentiator than online. 162 00:09:28,440 --> 00:09:32,160 Speaker 1: So the stores do have the ability to not only survive, 163 00:09:32,200 --> 00:09:36,840 Speaker 1: but actually start growing again. Well, Marshall, can you tell 164 00:09:36,920 --> 00:09:38,800 Speaker 1: us who the good, the bad, and the ugly when 165 00:09:38,800 --> 00:09:42,640 Speaker 1: it comes to being able to execute as you describe, Well, 166 00:09:42,720 --> 00:09:47,000 Speaker 1: you have to look at individual performers within certain channels. Uh. 167 00:09:47,000 --> 00:09:49,640 Speaker 1: And it's a nice fancy way of basically saying there's 168 00:09:49,640 --> 00:09:52,480 Speaker 1: going to be one or two leaders in every one 169 00:09:52,480 --> 00:09:55,040 Speaker 1: of the of the different channels of distributions. So when 170 00:09:55,080 --> 00:09:57,840 Speaker 1: you look at somebody like in the mass market a target, 171 00:09:58,400 --> 00:10:01,680 Speaker 1: they're out performing the mark it uh. When everybody else 172 00:10:01,720 --> 00:10:05,280 Speaker 1: in apparel was dropping for the quarter, they actually had growth. 173 00:10:05,559 --> 00:10:08,880 Speaker 1: When you look at somebody like a warehouse club, the 174 00:10:08,920 --> 00:10:11,800 Speaker 1: warehouse club channel, you know they actually for the first time, 175 00:10:11,840 --> 00:10:15,760 Speaker 1: you're starting to show some vulnerability. So there's another one 176 00:10:15,800 --> 00:10:17,560 Speaker 1: that you've got to look at. On the negative side, 177 00:10:17,840 --> 00:10:20,600 Speaker 1: when you look at some of the luxury retailers, they're 178 00:10:20,640 --> 00:10:23,280 Speaker 1: holding their own, but they're up against some softer numbers, 179 00:10:23,280 --> 00:10:25,679 Speaker 1: So we have to be careful that we're not looking 180 00:10:25,720 --> 00:10:28,160 Speaker 1: at them as being the growth of the market when 181 00:10:28,160 --> 00:10:31,040 Speaker 1: they're up against some you know, lower numbers, easier softer 182 00:10:31,120 --> 00:10:33,640 Speaker 1: numbers to kind of anniversary. And then when we look 183 00:10:33,679 --> 00:10:36,840 Speaker 1: at the department store sector, but we have to recognize 184 00:10:37,160 --> 00:10:39,920 Speaker 1: is that we are looking at a channel of distribution 185 00:10:39,960 --> 00:10:44,840 Speaker 1: that must change the game. So we have Marshall Cohen, 186 00:10:44,920 --> 00:10:48,600 Speaker 1: Chief Industry Analysts, the n p D Group based in 187 00:10:48,840 --> 00:10:53,200 Speaker 1: Port Washington, New York. You're listening to Taking Stock on 188 00:10:53,280 --> 00:11:05,680 Speaker 1: Bloomberg Radio. Coming up on a taking Stock, how about 189 00:11:05,880 --> 00:11:08,720 Speaker 1: stepping back from the tough time for retailers this week 190 00:11:08,760 --> 00:11:11,040 Speaker 1: and looking at a three to five year outlook for 191 00:11:11,200 --> 00:11:13,520 Speaker 1: big cap companies that can make you money. That's coming 192 00:11:13,600 --> 00:11:14,720 Speaker 1: up on Bloomberg Radio.