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

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

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Speaker 1: I'm Charlie Pelot. The dial, the SMPNAZDAC all moving, Laura,

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Speaker 1: right now, Let's head right over to the first word,

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Speaker 1: Breaking News Desk four, Today's afternoon call. Then here he

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Speaker 1: is Bill Maloney, Good afternoon, Charlie. That's right in new

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Speaker 1: US averages are under pressure today, with down currently down

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Speaker 1: forty four points, SUP drop seven in, NAZAC declines twenty.

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Speaker 1: The small cap six hundred is down four points. In

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Speaker 1: the U S ten yield at one point five percent.

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Speaker 1: Seven out of tennes s B sectors are lower, led

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Speaker 1: by losses and energy, financials and healthcare defensive groups, Consumer

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Speaker 1: staples and telecom lad down. Transports fall thirty five, NASA,

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Speaker 1: botechs drop one point eight percent, Utilities are a little changed,

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Speaker 1: and the VIX is higher by five percent. Down Leaders

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Speaker 1: of the downside included ex On Mobile, Chevron, and American Express.

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Speaker 1: Leaders included Disney, Walmart, and McDonald's. On the earnings front,

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Speaker 1: SunPower plunge as much as that's in Motion's two thousand

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Speaker 1: and eight after its earnings, while YELP gained percent after

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Speaker 1: its results. Live from the first breaking news ESK on

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Speaker 1: Bill Maloney, Charlie, thank you very much, Bill Maloney, and

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Speaker 1: to hear live breaking news over your Bloomberg type squawk

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Speaker 1: to you by Marks Panneth l LP rank among the

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Speaker 1: top three four rensick accounting firms in New York. Find

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Speaker 1: the New York Law Journal for the sixth year in

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Speaker 1: a row. Visit Marx Panneth dot com. I'm Charlie Pellett

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Speaker 1: and that's a bloombird business flash. This is taking stock

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Speaker 1: with Pim's Box and Kathleen Hays on Bloomberg Radio. Detail

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Speaker 1: on retail, Yes, discounting, heavy discounting and declining foot traffic

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Speaker 1: at two major retailers, though the shares moving in opposite

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Speaker 1: to action. Shares of Ralph Lauren higher right now by

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Speaker 1: nine and a quarter percent, Michael Core's down two and

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Speaker 1: three quarters of a percent. Here to explain all of

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Speaker 1: this is Dana Telsea, chief executive of Telsey Advisory Group. Dana,

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Speaker 1: thanks very much for being with me. Thank you very

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Speaker 1: much for having me all right, can you explain what

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Speaker 1: is going on with retailing? Because Michael Cores has said

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Speaker 1: they're cutting back sales to department stores and Ralph Lauren

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Speaker 1: is closing I believe about ten of their retail shops.

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Speaker 1: Why are they doing this? I think overall everyone is

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Speaker 1: looking to figure out ways to enhance sales, drive margins,

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Speaker 1: and minimize their exposure to promotions, friends and family events.

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Speaker 1: Everyone's thinking about their brand and how to maintain and

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Speaker 1: enhance the health of their brands. But isn't that what

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Speaker 1: they always do? I mean, is there any difference now

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Speaker 1: than trying to enhance your brand five years ago? It

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Speaker 1: is a difference, I think. Right now, we've just seen

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Speaker 1: so many retailers working working to be able to appeal

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Speaker 1: to the consumer. Prices, the vocabulary that many consumers know

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Speaker 1: when goods are full price versus marked down. Retailers want

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Speaker 1: to be able to sell goods at full price, not

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Speaker 1: marked down. We've seen a lot of department stores and brands, frankly,

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Speaker 1: in the desire to have sell through and drive traffic there.

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Speaker 1: They've been doing it with markdowns and promotions. And so

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Speaker 1: now what's gonna what's going to change, lower inventory levels,

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Speaker 1: personal personalization and customization or products, and being able to

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Speaker 1: differentiate between department store distribution and your own store distribution. Now,

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Speaker 1: as part of that effort enclosing stores, is that an

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Speaker 1: admission that they all expanded much too quickly or did

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Speaker 1: they meet the market demand at the time, and now

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Speaker 1: they're just right the ship. Different times call for different

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Speaker 1: business strategies, And certainly what was happening five and ten

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Speaker 1: years ago and even fifteen years ago was totally different today.

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Speaker 1: The advent of what we're having with smart phones being

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Speaker 1: able to make purchases or seeing something on Instagram or

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Speaker 1: basically the instantaneous feedback reaction and ability to purchase goods

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Speaker 1: is very different from having to go to a store.

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Speaker 1: It used to be the customer needed to go to

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Speaker 1: the store to make a purchase. Now the store is

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Speaker 1: coming to the customer. So at the time the way

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Speaker 1: companies grew was opening stores, it was square footage growth,

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Speaker 1: but same store sales gave you total sales increase. Now

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Speaker 1: it's all about total sales and do it when the

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Speaker 1: customer wants where the customer wants. All right, So, Dana,

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Speaker 1: let's say someone from Michael Core's were to call you

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Speaker 1: and talk about their new two hundred and twenty one

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Speaker 1: stores and the acquisition of their China business, would you

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Speaker 1: send them back and say, do a rethink on that.

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Speaker 1: I think they've done a rethink on it already. I

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Speaker 1: think they're one of the ones who have basically said

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Speaker 1: they're not really seeing the opportunity to expand stores much more.

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Speaker 1: They've reached their penetration that they would like. We've seen

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Speaker 1: come Pani's acquired their foreign distributors or licensed partners in

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Speaker 1: order to be able to enhance the brand and the

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Speaker 1: brand image, and that's what Cores is doing. I think

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Speaker 1: the focus for Cores these days is all about continuing

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Speaker 1: to offer newness in the product as a way to

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Speaker 1: regain a faster rate of sales growth. Now, Coach just

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Speaker 1: yesterday said it's going to pull out of two hundred

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Speaker 1: and fifty department stores. What does that mean for the

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Speaker 1: future of companies such as Macy's and Coals they report

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Speaker 1: results tomorrow, Yes, it's going to be the department store

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Speaker 1: a week at the end of the week with North

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Speaker 1: trom Macy's, Coals and J. C. Penny's coming up. What

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Speaker 1: we're seeing many of the department stores doing is searching

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Speaker 1: for what are the new categories that they should sell,

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Speaker 1: what should be private label, what should be exclusive. Maybe

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Speaker 1: you look at what you're seeing at Macy's. We're testing

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Speaker 1: some in store best buy shops. Look at what you're

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Speaker 1: seeing at Nordstrom in the Grove in Los Angeles testing

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Speaker 1: selling a Tesla, or look at J. C. Penny putting

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Speaker 1: in appliances. What what changed the landscape was the fact

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Speaker 1: that in the eighties and the nineties, as more women

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Speaker 1: entered the workforce, a carol became front and center of

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Speaker 1: these department stores. Now, with active being a category that

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Speaker 1: women wear to work and we're on the weekends, there

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Speaker 1: needs to be other category extensions that are being offered.

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Speaker 1: And there you go. You have different categories now being

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Speaker 1: offered and sold in department stores. Do you see also

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Speaker 1: a change in merchandizing, because one of the areas that

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Speaker 1: was mentioned in the Michael Corp's report was slow down

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Speaker 1: in wristwatch sales and also lower average tickets as the

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Speaker 1: shoppers were all looking to buy smaller handbags. The smaller

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Speaker 1: handbag trend has been going on for a while. That's

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Speaker 1: not something new. Certainly we've been seeing the watch category

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Speaker 1: being challenged. The Swiss watch export data that comes out

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Speaker 1: on a monthly basis certainly shows that. And the increase

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Speaker 1: in the number of wearables and brands that are doing

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Speaker 1: wearables is first to come in the back half of

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Speaker 1: this year. So I think, if anything, we're seeing some

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Speaker 1: of the brands extend into multiple category ras, whether it's apparel,

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Speaker 1: whether it's foot where, whether it's handbags, or even whether

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Speaker 1: it's jewelry. And that's why you're seeing companies like Coach,

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Speaker 1: like Cores being talking about the potential for acquisitions, strong

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Speaker 1: balance sheets and ways to continue to help to drive

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Speaker 1: additional EPs and margin enhancement. Thank you very much. Dana

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Speaker 1: Telsey is the chief executive and the founder of Telsey

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Speaker 1: Advisory Group. Giving us detail on retail shares of Ralph

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Speaker 1: Lauren there higher right now by more than nine percent,

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Speaker 1: Michael Core's stock down two and a half percent. This

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Speaker 1: is taking Stockheim pim Fox, and this is Bloomberg. Bloomberg.

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