WEBVTT - Performance Food Said to Get Takeover Interest From US Foods 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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<v Speaker 2>You know, drive in early enough to work. You get

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<v Speaker 2>to see their trucks on the roadway making deliveries to restaurants,

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<v Speaker 2>A Performance Food Group and US Foods.

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<v Speaker 3>Oh you see, No, I see all the time. I

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<v Speaker 3>don't come as early as you I should probably.

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<v Speaker 4>Anyways, three am, there's like.

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<v Speaker 2>Talk about a possible deal takeover one by the other.

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<v Speaker 2>Crystal C is our US deals reporter. Who's taking over? Who?

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<v Speaker 2>Do we know?

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<v Speaker 4>Or is this this rumor at this point?

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<v Speaker 5>So we're reporting that US Foods has made and has

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<v Speaker 5>shown interest in tie up. So the companies are actually

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<v Speaker 5>pretty similar in size in terms of enterprise value. They

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<v Speaker 5>have a lot of debt, both of them. So at

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<v Speaker 5>this point it's early. We don't know who'shitting over who

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<v Speaker 5>just yet. But what we know is if this deal

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<v Speaker 5>does go through, or if this deal does go ahead,

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<v Speaker 5>it will face a lot of regulatory scrutiny. And eventually

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<v Speaker 5>the goal is to combine the company into a company

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<v Speaker 5>that has one hundred billion dollars worth of revenue.

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<v Speaker 3>Do we think it's more about scale, margins, distribution, overlap,

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<v Speaker 3>or just really fending off Cisco.

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<v Speaker 5>So Cisco is actually currently the number one, the top

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<v Speaker 5>three four players.

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<v Speaker 4>Actually that's Cisco with an S an S.

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<v Speaker 5>That's right, and that actually I see those trucks more

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<v Speaker 5>than I see the others, at least in the city.

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<v Speaker 5>So Cisco US Foods performances. They all have their moment

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<v Speaker 5>like in the past decade or so. Actually they have

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<v Speaker 5>each like taken top spot and it's moved around. So

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<v Speaker 5>there are moments where you know, they have had activists

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<v Speaker 5>attack at various different points. So it's interesting that this

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<v Speaker 5>is the moment where you see that US Food is

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<v Speaker 5>performing better than Performance Food despite the name. So it's

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<v Speaker 5>it's it's going to be a very challenging deal in

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<v Speaker 5>twenty fifteen when Cisco and US try for a tie up.

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<v Speaker 5>That that deal got struck by antitrust. So definitely is

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<v Speaker 5>a market where scale matters, margin matters. You can combine regions,

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<v Speaker 5>you can combine your fleets, so all of those things

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<v Speaker 5>make it a very good synergetic.

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<v Speaker 4>Margins right now, or like you said, the razor thin right.

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<v Speaker 5>So it depends on the market that you surface, like

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<v Speaker 5>depending on whether you're going after restaurants, is its cafes

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<v Speaker 5>or is it like uh should back up school?

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<v Speaker 2>What do these companies do? They prepare food, they bring

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<v Speaker 2>explain that.

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<v Speaker 5>So there are various different things that they do. They

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<v Speaker 5>it comes from, they do produce, they do prepared food,

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<v Speaker 5>and they supplied to places like restaurants, hospitals, schools, hotels.

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<v Speaker 5>So depending on your end customers and what your products are,

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<v Speaker 5>the margins slightly different also means your production would be

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<v Speaker 5>different and it impacts costs. So I'm sure there is

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<v Speaker 5>in these CEO's head the dream combination of you know,

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<v Speaker 5>what the composition of each product or each geographic should be,

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<v Speaker 5>and well, if so this in this case, US would

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<v Speaker 5>clearly think that a tie up with performance would get

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<v Speaker 5>them closer to that ideal business portfolio.

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<v Speaker 3>And regarding the why, now, do you think it has

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<v Speaker 3>something to do with software regulatory regulations with the TRAP

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<v Speaker 3>administration as compared to the bidens.

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<v Speaker 5>Yeah, that's definitely one big concern. It is a very

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<v Speaker 5>consolidated industry. So my gut feeling is either way, under

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<v Speaker 5>whatever administration, it will be looked at by d ANTI trust.

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<v Speaker 5>That said, the M and A deal maker had been

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<v Speaker 5>expecting twenty twenty five since Inauguration Day that this would

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<v Speaker 5>be a much friendlier M and A market under President

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<v Speaker 5>Trump and Liberation Day hit and that put a lot

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<v Speaker 5>of things on pause. In the past month or so,

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<v Speaker 5>we have seen people warming up to the idea of

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<v Speaker 5>exploring deals or like you know, pulling triggers. So there

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<v Speaker 5>isn't a there is an element of a friendlier regulatory environment.

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<v Speaker 2>All right, Crystal appreciated. Crystal sed the US deals reporter

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<v Speaker 2>from Bloomberg News talking about Performance Group attracting a takeover

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<v Speaker 2>interest from US Food. Again, this is a potentially could

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<v Speaker 2>create a distribution company with combined sales of something on

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<v Speaker 2>the order of like one hundred billion dollars.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch US Live

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<v Speaker 2>Did you know the use remnants from the manufacture of

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<v Speaker 2>denim in the US currency.

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<v Speaker 3>No.

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<v Speaker 2>Really, Well, if you hold up a bill you'll see

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<v Speaker 2>like little shreds. It looks like, you.

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<v Speaker 3>Know, is that only in the US or does that

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<v Speaker 3>happen all?

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<v Speaker 4>I don't know.

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<v Speaker 2>I know that's definitely the case with US currency. And

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<v Speaker 2>that brings us to a discussion about Levi Strauss with

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<v Speaker 2>their herrings. Mary Ross Gilbert is senior equity analyst covering

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<v Speaker 2>retail for Bloomberg.

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<v Speaker 4>Did you know that?

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<v Speaker 6>I did not.

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<v Speaker 7>I mean, I know what you're talking about, those little threads, and.

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<v Speaker 2>Yes, no, that's from that's from the byproduct of manufacturing Denham.

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<v Speaker 2>They use it at the Treasury. Mary was Mary Ross

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<v Speaker 2>Gilbert yesterday? Was she was wearing?

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<v Speaker 4>Where were you wearing yesterday?

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<v Speaker 5>Uh?

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<v Speaker 2>Ralph Lauren? And today the Brooks brothers No gap, Okay.

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<v Speaker 7>Very nice, but it's a it's a it's a malbond

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<v Speaker 7>gap collab so sold out.

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<v Speaker 2>It looked like the Brooks Brothers thing. But anyway, so

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<v Speaker 2>Levi what did we learn from Levi Strauss and their earnings?

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<v Speaker 7>So I think what we learned in the earnings report

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<v Speaker 7>first of all, you know, very optimistic view. But if

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<v Speaker 7>you really dissect it, for example, the guidance that they

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<v Speaker 7>raised on the revenue line. They now expect full your

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<v Speaker 7>revenue to be up one to two versus down one

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<v Speaker 7>to two. Most of it looked like a change a

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<v Speaker 7>shift in their view on the currency headwind, and then

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<v Speaker 7>the other piece was because they had a strong second quarter.

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<v Speaker 7>So the way we look at it is there's probably

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<v Speaker 7>upside above their guidance and consensus view, which is in

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<v Speaker 7>that range. So you know, we think that the way

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<v Speaker 7>the business has been reset, look, Dockers is out of

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<v Speaker 7>the picture now.

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<v Speaker 6>They got rid of some underperforming lines.

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<v Speaker 7>They really honed in their skew count, their stock keeping

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<v Speaker 7>u an account, and really honed on profitable merchandise, and

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<v Speaker 7>they've really taken their tops business. They've infused more fashion

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<v Speaker 7>and style and it's a growing category for them, as

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<v Speaker 7>is non den and bottoms, and of course their core

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<v Speaker 7>denim business jeans business, which.

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<v Speaker 6>They are at the leading edge of the latest trends.

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<v Speaker 7>And you know, even slim and straight are still a thing,

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<v Speaker 7>but the biggest growth is really coming from loose and

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<v Speaker 7>baggy and that actually translated with shorts too for summer,

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<v Speaker 7>and that kind of explains why they also had a

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<v Speaker 7>strong second quarter and they saw it globally, so you know,

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<v Speaker 7>very very good and across wholesale too, So that was

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<v Speaker 7>nice to see that. But DTC directed consumer really led

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<v Speaker 7>and that was up double digits.

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<v Speaker 3>Have you heard John skin and jeans are out and

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<v Speaker 3>baggy is in. If you look at all the young

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<v Speaker 3>folks like gen Z, they do wear baggy.

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<v Speaker 2>I've got these stretch fabrics. Okay, good's disappointed, which I

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<v Speaker 2>find myself.

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<v Speaker 3>Okay, that's good. Levi's welcomes all styles. Okay, so more

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<v Speaker 3>than half of Levi's merchandise merchandise needs for the rest

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<v Speaker 3>of the year according to the company, they've already been imported.

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<v Speaker 3>But what will happen when that runs out? Have they

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<v Speaker 3>released any plans when that happens? And with tariffs set

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<v Speaker 3>in place by then?

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<v Speaker 7>Assuming yeah, Isabelle, So you brought up a key point

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<v Speaker 7>and that is what is the impact of terriffs? So

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<v Speaker 7>just to give you a little perspective, Levi's is very

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<v Speaker 7>well diversified. They only source about one percent from China,

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<v Speaker 7>so very little exposure there. Vietnam is probably five to

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<v Speaker 7>nine percent. Of course, we have news that that tariff

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<v Speaker 7>freight Trump has set, but it's not carved in stone

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<v Speaker 7>and there's no effective date yet.

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<v Speaker 6>And as we got news today.

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<v Speaker 7>That Vietnam is saying, hey, we don't want a twenty

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<v Speaker 7>percent tariff.

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<v Speaker 6>We wanted to be ten to fifteen.

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<v Speaker 7>Nonetheless, with Vietnam being five to nine percent, and then

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<v Speaker 7>Mexico's probably that is under their Canada agreement, so chances

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<v Speaker 7>are they're not affected, and then everywhere else they're assuming

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<v Speaker 7>ten percent. So the unmitigated impact is only about fifty

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<v Speaker 7>basis points for the year, but with mitigation mitigation measures

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<v Speaker 7>already taken effect, that's going to reduce it down to

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<v Speaker 7>just twenty basis points. So they are one of the

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<v Speaker 7>companies if I look at my universe of apparel branded

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<v Speaker 7>retailers that are sort of the least impacted by tariffs.

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<v Speaker 7>LUs things change, but we still think that the impact

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<v Speaker 7>will will still not be as significant as it might

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<v Speaker 7>be for others.

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<v Speaker 2>I mean, is a company like this willing to take

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<v Speaker 2>a hit to margins before raising prices for consumers? Is

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<v Speaker 2>it like thirty seconds?

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<v Speaker 7>Yeah, John, you know, they're actually strategically raising prices on

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<v Speaker 7>some of their new innovation, and that's where they're able

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<v Speaker 7>to sort of build it in with that product.

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<v Speaker 6>And I think that's working effectively.

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<v Speaker 2>All right, Mary, boy, he's a pleasure. I can't wait

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<v Speaker 2>to see what you're wearing next week. Mary Ross Gilbert,

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<v Speaker 2>a senior equity analyst covering that sounded kind of creepy, sorry,

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<v Speaker 2>covering retail for us here at Bloomberg Intelligence.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:10:21.400 --> 0:10:24.480
<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

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<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand wherever

0:10:27.880 --> 0:10:31.000
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<v Speaker 2>You know what time of the year it is. It's

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<v Speaker 2>time for the mid year assessments for the global communications

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<v Speaker 2>and network equipment specifically. Who better to do that than

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<v Speaker 2>Wujin Ho. He's the senior technology analyst from Bloomberg Intelligence

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<v Speaker 2>and joining us on this Friday morning from our campus

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<v Speaker 2>in Princeton, New Jersey. All right, midyear updates. So what's

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<v Speaker 2>the update, Wou Jin.

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<v Speaker 8>Well, I will tell you. Look, the fundamentals are actually

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<v Speaker 8>fairly positive. You have AI drivers driving certain names like

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<v Speaker 8>Arista Networks and Celestica, and also the enterprise campus switching

0:11:10.000 --> 0:11:13.720
<v Speaker 8>and the data center searching have upgrade drivers as well.

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<v Speaker 8>That's going to benefit someone like a Cisco and an HPE.

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<v Speaker 8>Now the issue is, and your prior guest was talking

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<v Speaker 8>about tariffs and export restrictions. Tariffs actually really spooked me out.

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<v Speaker 8>And does that throw a monkey ranch and enterprise IT

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<v Speaker 8>spending into the second half of the year and temper

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<v Speaker 8>the growth and earnings expectations.

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<v Speaker 3>So how much could tariff's and economic uncertainty really trip

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<v Speaker 3>up the global networking sector sales in the latter half

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<v Speaker 3>of the year. Do we have a number in mind, Yeah.

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<v Speaker 8>Don't have a number in mind. There's a couple of things.

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<v Speaker 8>The networking sector has actually done a very very good

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<v Speaker 8>job in managing and navigating tariffs. Right from a sales perspective,

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<v Speaker 8>we really haven't seen estimate cuts as a result of it.

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<v Speaker 8>From a gross margin perspective, we're thinking about one hundred

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<v Speaker 8>and two hundred basis points, and that's already reflected into

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<v Speaker 8>consensus expectations. What I don't know right, but there are

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<v Speaker 8>a lot of enterprise IT spending surveys that are out

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<v Speaker 8>there saying that they are going to start ciphoning, potentially

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<v Speaker 8>siphoning off some of their spending plans. One of the

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<v Speaker 8>things that I will say is that enterprise enterprise networking

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<v Speaker 8>tends to be a more mature and commoditized market. So

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<v Speaker 8>if there's going to be a couple of areas of

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<v Speaker 8>spending that could be curtailed, PCs obviously, but also networking

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<v Speaker 8>would be second in line.

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<v Speaker 2>Hey, Wujin, we've been making a big deal about well,

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<v Speaker 2>it is a big deal that in Vidia across the

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<v Speaker 2>ford trillion dollar market cap. Can that be sustained given

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<v Speaker 2>what you just said, Let's let's talk about the multiple expansions.

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<v Speaker 4>Sure.

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<v Speaker 8>So I'm not the Invidia analyst, I can talk from

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<v Speaker 8>a high level in terms of what's going on in

0:12:58.440 --> 0:13:02.880
<v Speaker 8>Nvidia as well as some of the drivers to earnings growth.

0:13:03.600 --> 0:13:07.680
<v Speaker 8>If we look at some of the AI initiatives that

0:13:07.720 --> 0:13:10.560
<v Speaker 8>are going on, whether it's by the hyperscale cloud guys

0:13:11.200 --> 0:13:15.440
<v Speaker 8>or some of the sovereigns and these neo clouds like

0:13:15.480 --> 0:13:19.760
<v Speaker 8>core Waves, they're building out these one hundred thousand GPU

0:13:19.920 --> 0:13:23.240
<v Speaker 8>type of installments. This is the lasting based on my

0:13:23.440 --> 0:13:26.160
<v Speaker 8>work and my colleagues works, this is lasting over the

0:13:26.200 --> 0:13:29.839
<v Speaker 8>next couple of years. The only gaming time town for

0:13:30.600 --> 0:13:34.840
<v Speaker 8>high end GPUs to train AI models is in Vidia.

0:13:35.200 --> 0:13:38.520
<v Speaker 8>So is there a sales momentum as well as earnings

0:13:38.520 --> 0:13:40.800
<v Speaker 8>momentum to support it. Yes, there is for Nvidia as

0:13:40.840 --> 0:13:42.520
<v Speaker 8>well as the rest of the supply chain.

0:13:43.280 --> 0:13:45.840
<v Speaker 3>In the note you mentioned or it was mentioned that

0:13:46.960 --> 0:13:49.400
<v Speaker 3>we aren't seeing any trade overhang risks when it comes

0:13:49.400 --> 0:13:51.320
<v Speaker 3>to demand in the latter half of the year, and

0:13:51.360 --> 0:13:55.120
<v Speaker 3>they aren't really reflected in consensus and invaluations. Why do

0:13:55.160 --> 0:13:56.080
<v Speaker 3>you think that's the case?

0:13:56.960 --> 0:14:00.920
<v Speaker 8>Yeah, I don't know, right. I think what happened was

0:14:00.960 --> 0:14:05.240
<v Speaker 8>in the after following the first quarter results. You know,

0:14:06.960 --> 0:14:11.960
<v Speaker 8>the companies have not yet really fully reflected the tariff

0:14:12.000 --> 0:14:16.080
<v Speaker 8>impacts into their expectations and consensus have carried that through

0:14:16.160 --> 0:14:19.160
<v Speaker 8>through the through the rest of the year. There has

0:14:19.240 --> 0:14:23.440
<v Speaker 8>been very little indication after following first quarter results with

0:14:23.560 --> 0:14:27.120
<v Speaker 8>regards to a pullback in demand or more importantly, a

0:14:27.200 --> 0:14:30.000
<v Speaker 8>pull forward in demand that's going to affect the second half. So,

0:14:31.080 --> 0:14:35.120
<v Speaker 8>you know, my guess is is that I'm waiting for

0:14:35.200 --> 0:14:37.600
<v Speaker 8>what the second quarter results according to tell Us in

0:14:37.680 --> 0:14:38.600
<v Speaker 8>terms of the second half.

0:14:38.720 --> 0:14:40.160
<v Speaker 4>We thanks, so I appreciate it.

0:14:40.600 --> 0:14:44.160
<v Speaker 2>Woljin the hold the senior technology and it's from Bloomberg

0:14:44.240 --> 0:14:48.360
<v Speaker 2>Intelligence joining us there from our Princeton, New Jersey canvas.

0:14:50.240 --> 0:14:53.920
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:14:54.040 --> 0:14:57.120
<v Speaker 1>weekdays at ten am Eastern on Apple Coarclay, and Android

0:14:57.120 --> 0:15:00.440
<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand wherever

0:15:00.480 --> 0:15:03.600
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:15:04.640 --> 0:15:05.240
<v Speaker 4>Do you have a pet?

0:15:06.040 --> 0:15:07.120
<v Speaker 9>I used to growing up?

0:15:07.400 --> 0:15:09.760
<v Speaker 3>Now I live alone in and I used to growing up,

0:15:09.760 --> 0:15:11.440
<v Speaker 3>but now it's hard in New York City. You have

0:15:11.480 --> 0:15:14.600
<v Speaker 3>to take them out in the morning, at noon, after work,

0:15:14.800 --> 0:15:17.640
<v Speaker 3>and for some even before bed. Do you have a pet.

0:15:18.200 --> 0:15:20.320
<v Speaker 4>Used to to? You know?

0:15:20.400 --> 0:15:22.800
<v Speaker 2>I was so upset when we lost her that I

0:15:22.920 --> 0:15:25.880
<v Speaker 2>just I can't bring myself to heartbreak replacer.

0:15:27.200 --> 0:15:27.920
<v Speaker 4>Well, it's a bummer.

0:15:29.040 --> 0:15:33.200
<v Speaker 2>Janna Rosario Pena is our consumer staples analysts, and she's

0:15:33.240 --> 0:15:35.520
<v Speaker 2>here to tell us about just how much we spend

0:15:36.120 --> 0:15:36.880
<v Speaker 2>on pets.

0:15:37.120 --> 0:15:39.360
<v Speaker 4>It's like a staggering figure, isn't it.

0:15:39.600 --> 0:15:42.600
<v Speaker 9>Yes, yes, and it's going to keep growing up over

0:15:42.640 --> 0:15:46.240
<v Speaker 9>the next five years. We expect globally that the market

0:15:46.400 --> 0:15:50.200
<v Speaker 9>my reach about five hundred billion dollars by twenty.

0:15:50.200 --> 0:15:51.920
<v Speaker 4>Only five hundred billion, that's it.

0:15:52.040 --> 0:15:54.520
<v Speaker 2>What God's name of people's I mean, yeah, it's obvious

0:15:54.640 --> 0:15:57.840
<v Speaker 2>dog food and stuff like that, But is there anything

0:15:58.000 --> 0:16:00.800
<v Speaker 2>like else I need to know about, like dressing? Their

0:16:00.840 --> 0:16:03.600
<v Speaker 2>pets up in little crazy costumes and stuff like that

0:16:03.640 --> 0:16:08.760
<v Speaker 2>and little boots. Yes, so there's been a couple of things.

0:16:09.600 --> 0:16:13.840
<v Speaker 9>Food remains the biggest expense for pet ownership. It's about

0:16:14.000 --> 0:16:19.160
<v Speaker 9>thirty forty percent of the expenditure. But there are other

0:16:19.400 --> 0:16:23.240
<v Speaker 9>things that come with owning a pet. Now people are

0:16:23.400 --> 0:16:28.760
<v Speaker 9>more willing to get into discretionary like you know, vests

0:16:29.040 --> 0:16:34.680
<v Speaker 9>and shoes for their dogs and creates and the things

0:16:34.760 --> 0:16:35.080
<v Speaker 9>like that.

0:16:35.360 --> 0:16:37.480
<v Speaker 3>Also, healthcare is a big thing.

0:16:38.080 --> 0:16:41.160
<v Speaker 9>People are more willing to spend more on the healthcare

0:16:41.200 --> 0:16:42.560
<v Speaker 9>of their pet than they used to.

0:16:43.520 --> 0:16:46.360
<v Speaker 3>Why is that Is it because more dogs are getting sick?

0:16:46.520 --> 0:16:49.120
<v Speaker 3>Or is it more because of the insurance company? Like

0:16:49.160 --> 0:16:52.680
<v Speaker 3>why does trend? Well, it's a couple of things. First

0:16:52.720 --> 0:16:54.320
<v Speaker 3>of all, the humanization of pets.

0:16:55.120 --> 0:16:59.360
<v Speaker 9>Now people consider them as family, so they're willing to

0:16:59.480 --> 0:17:02.280
<v Speaker 9>spend a little bit more to you know, keep their

0:17:02.640 --> 0:17:07.119
<v Speaker 9>family member around. So there's a greater acceptance of that

0:17:07.280 --> 0:17:09.440
<v Speaker 9>kind of attitude.

0:17:10.240 --> 0:17:13.600
<v Speaker 2>Who benefits the most from all this what particular companies.

0:17:14.640 --> 0:17:16.600
<v Speaker 2>I think when we used to feed our dog.

0:17:16.600 --> 0:17:19.919
<v Speaker 3>The human food, actually when I was younger, No, you

0:17:19.960 --> 0:17:22.560
<v Speaker 3>don't feed them human Yeah, maybe that's why my dog

0:17:22.640 --> 0:17:24.000
<v Speaker 3>wasn't the healthiest.

0:17:23.560 --> 0:17:27.400
<v Speaker 9>Well human grade food, I will guess. So it really

0:17:27.440 --> 0:17:33.160
<v Speaker 9>depends if you're looking at food. The big food companies Nestley, Colgate, Mars,

0:17:33.280 --> 0:17:38.399
<v Speaker 9>General Males, they have you know, food offerings in different

0:17:38.440 --> 0:17:41.600
<v Speaker 9>price points. But on the more premium side you have

0:17:41.760 --> 0:17:44.800
<v Speaker 9>things like fresh pet that they have the fresh frozen

0:17:44.840 --> 0:17:47.720
<v Speaker 9>which is really like human great food that you just

0:17:48.480 --> 0:17:49.520
<v Speaker 9>you know, take it out of the.

0:17:49.440 --> 0:17:53.439
<v Speaker 3>Fridge and you give it to your dog. We know that,

0:17:53.440 --> 0:17:57.280
<v Speaker 3>I exadly, I shouldn't have said that, So we know

0:17:57.320 --> 0:18:01.119
<v Speaker 3>that Americans love their pets, and everyone knows that. To

0:18:01.200 --> 0:18:04.040
<v Speaker 3>your point, people are delaying having children because they have

0:18:04.119 --> 0:18:06.440
<v Speaker 3>pets are in part because they have pets and because

0:18:06.480 --> 0:18:08.879
<v Speaker 3>the economy is tough. Where does the US that.

0:18:09.000 --> 0:18:14.680
<v Speaker 9>Globally, Yes, so we're still about forty percent of the market.

0:18:15.080 --> 0:18:18.360
<v Speaker 9>You know, we're probably going to grow about thirty five

0:18:18.400 --> 0:18:20.639
<v Speaker 9>percent compared to like the thirty eight percent that we

0:18:20.760 --> 0:18:23.800
<v Speaker 9>expect over the next five years. So we're still going

0:18:23.880 --> 0:18:28.119
<v Speaker 9>to be the biggest, the most mature part of the industry.

0:18:28.160 --> 0:18:31.440
<v Speaker 9>There's others that might grow faster than that. There's other

0:18:31.520 --> 0:18:36.080
<v Speaker 9>regions outside of Europe and the United States. However, that

0:18:36.560 --> 0:18:38.320
<v Speaker 9>size of the pie is smaller.

0:18:38.359 --> 0:18:40.719
<v Speaker 4>Obviously, you know, it's not just dogs.

0:18:40.760 --> 0:18:43.800
<v Speaker 2>There was a fascinating Bloomberg profile of a guy I

0:18:43.840 --> 0:18:48.119
<v Speaker 2>think it must have been Florida who sells designer geckos,

0:18:48.320 --> 0:18:52.879
<v Speaker 2>and some of them fetch a fortune, like five grand

0:18:52.960 --> 0:18:53.840
<v Speaker 2>for a little get go.

0:18:54.359 --> 0:18:56.920
<v Speaker 4>What's the most popular pet? Is it the dog?

0:18:57.200 --> 0:19:00.199
<v Speaker 9>It's steel dogs and cats, you know, And that is

0:19:00.240 --> 0:19:03.960
<v Speaker 9>like mainly, you know, where we focused on. Of course,

0:19:04.000 --> 0:19:08.320
<v Speaker 9>there's like others like hamsters and cobras and things like that,

0:19:08.440 --> 0:19:09.880
<v Speaker 9>but that doesn't by.

0:19:09.800 --> 0:19:10.440
<v Speaker 4>The way, just.

0:19:11.960 --> 0:19:14.960
<v Speaker 2>Parenthetically, don't put the hamster near the cobra.

0:19:15.440 --> 0:19:17.800
<v Speaker 3>Oh my fish is also I don't want to imagine that,

0:19:17.880 --> 0:19:20.400
<v Speaker 3>she seem Obviously, fish is also fun. I think it's

0:19:20.440 --> 0:19:22.880
<v Speaker 3>good training for young kids. You know, they just feed

0:19:22.920 --> 0:19:26.560
<v Speaker 3>it once today. The cleaning of the aquarium is always tough, though,

0:19:26.800 --> 0:19:30.000
<v Speaker 3>don't you smell them responsibility for sure. Okay, so we

0:19:30.080 --> 0:19:31.800
<v Speaker 3>know that e commerce sales. You wrote in your note

0:19:31.800 --> 0:19:33.960
<v Speaker 3>that in the US it might reach twenty seven percent

0:19:34.000 --> 0:19:36.919
<v Speaker 3>of the total from twenty percent in twenty twenty. So

0:19:36.960 --> 0:19:38.840
<v Speaker 3>we have that, we have the pharma market, we have

0:19:38.880 --> 0:19:43.040
<v Speaker 3>the food market really just growing. What could be what

0:19:43.080 --> 0:19:46.200
<v Speaker 3>could be the hindrance here. What headwinds are you seeing

0:19:46.200 --> 0:19:46.760
<v Speaker 3>in this space.

0:19:46.920 --> 0:19:50.680
<v Speaker 9>Well, we actually see certain pockets of the market being

0:19:50.840 --> 0:19:53.720
<v Speaker 9>a little bit more conflicted, particularly in the past year

0:19:54.480 --> 0:19:58.399
<v Speaker 9>discretionary spending. You know, we did make fun of the

0:19:58.520 --> 0:20:04.800
<v Speaker 9>vests and even you know, popular fashion brands are expanding

0:20:04.840 --> 0:20:08.320
<v Speaker 9>their their you know, their names into pets. But that

0:20:08.520 --> 0:20:11.960
<v Speaker 9>part of the spending has been a little bit subdued,

0:20:12.040 --> 0:20:14.600
<v Speaker 9>I want to say. And part of it is because

0:20:15.240 --> 0:20:19.439
<v Speaker 9>the population, the pet population has been you know, not

0:20:19.600 --> 0:20:21.840
<v Speaker 9>growing as much as they used to, like back in

0:20:22.080 --> 0:20:25.399
<v Speaker 9>at the beginning of the pandemic. But another thing is

0:20:25.440 --> 0:20:29.280
<v Speaker 9>obviously economic, uh, you know, the economic situation. People are

0:20:29.640 --> 0:20:32.040
<v Speaker 9>curbing their spending, so that is like one of the

0:20:32.080 --> 0:20:35.760
<v Speaker 9>first few things. In terms of premium we still think

0:20:35.800 --> 0:20:40.320
<v Speaker 9>it's gonna premium food. We still continue to think that

0:20:40.440 --> 0:20:43.520
<v Speaker 9>it's probably going to get to fifty seven sixty percent

0:20:43.560 --> 0:20:47.000
<v Speaker 9>of the food in the US, like the overall food,

0:20:47.440 --> 0:20:50.280
<v Speaker 9>but the cadence is probably going to be more like

0:20:50.359 --> 0:20:54.399
<v Speaker 9>twenty seven on rather than shorter term. We think people

0:20:54.440 --> 0:21:00.639
<v Speaker 9>are going to probably get with kibbles rather than you know,

0:21:00.800 --> 0:21:03.040
<v Speaker 9>the fresh frozen part.

0:21:03.400 --> 0:21:08.120
<v Speaker 2>Diana, thank you, Diana, Rosaria Penya. The consumer staples analyst,

0:21:08.800 --> 0:21:11.600
<v Speaker 2>how the world is going to spend five hundred billion

0:21:11.680 --> 0:21:13.240
<v Speaker 2>dollars other pets.

0:21:13.640 --> 0:21:18.320
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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