WEBVTT - HPE Earnings, Mnuchin Chases Wall Street Glory 0:00:02.440 --> 0:00:11.080 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence 0:00:11.160 --> 0:00:12.879 with Alex Steel and Paul Sweeney. 0:00:13.000 --> 0:00:16.240 The real app performance has been in US corporate high yield. 0:00:16.400 --> 0:00:18.759 Are the companies lean enough? Have they trimmed all the fats? 0:00:18.800 --> 0:00:22.680 The semiconductor business is a really cyclical business. 0:00:22.120 --> 0:00:25.680 Breaking market headlines and corporate news from across the globe. 0:00:25.760 --> 0:00:28.360 Do investors like the M and A that we've seen? 0:00:28.600 --> 0:00:31.640 These are two big time blue chip companies. 0:00:31.800 --> 0:00:35.440 The window between the peak and cut changing super fast. 0:00:35.560 --> 0:00:40.520 Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio. 0:00:41.800 --> 0:00:44.159 I'm Paul Sweeney and I'm John Tucker filling in for 0:00:44.240 --> 0:00:44.920 Alex Steele. 0:00:45.080 --> 0:00:47.720 On today's Bloomberg Intelligence Show. We dig inside the big 0:00:47.760 --> 0:00:50.360 business stories impacting Wall Street and the global markets. 0:00:50.400 --> 0:00:52.720 Each and every week we provide in depth research and 0:00:52.800 --> 0:00:55.240 data on some of the two thousand companies at one 0:00:55.320 --> 0:00:58.280 hundred and thirty industries our analysts cover worldwide. 0:00:58.400 --> 0:01:01.360 Today, we'll look at why the athletic perrol retailer Lululemon 0:01:01.560 --> 0:01:03.320 raised his profit outlook for the full year. 0:01:03.480 --> 0:01:05.960 Plus, We're going to discuss where we are in the 0:01:06.120 --> 0:01:08.319 US with developing the carbon market, but. 0:01:08.280 --> 0:01:12.320 First we dive into information technology. HPE reported better than 0:01:12.360 --> 0:01:14.440 expected second quarter revenue this week. 0:01:14.600 --> 0:01:17.200 The results were fueled by sales of servers built for 0:01:17.480 --> 0:01:19.640 artificial intelligence work for more. 0:01:19.720 --> 0:01:21.920 Co hosts Alex Steele and I were joined by wou Jinho, 0:01:22.000 --> 0:01:25.399 Bloomberg Intelligence senior technology analysts. We first asked him for 0:01:25.560 --> 0:01:27.759 his key takeaways from HPE's earnings. 0:01:28.200 --> 0:01:31.040 I will tell you I don't think many people gave 0:01:31.640 --> 0:01:34.200 heughlet Packard the benefit of the doubt in terms of 0:01:34.319 --> 0:01:37.680 the AI server story. We saw that in the multiple 0:01:37.720 --> 0:01:42.479 relative to Dell, HPE had a multiple less than eight. Dell, 0:01:42.720 --> 0:01:46.280 even with the pullback, was at seventeen. So you know 0:01:46.400 --> 0:01:49.200 they delivered on the story. AI servers doubled on a 0:01:49.200 --> 0:01:52.000 sequential basis, and it seems as if the momentum could 0:01:52.000 --> 0:01:53.600 be carried through into the second half of the year. 0:01:53.840 --> 0:01:56.680 And Woods reading your react note, which is a great 0:01:56.720 --> 0:01:58.880 part of BI folks, You know of a big piece 0:01:58.880 --> 0:02:00.280 of news hits, you want to know what the bi 0:02:00.360 --> 0:02:02.160 analysts are thinking, and they get out with what they 0:02:02.200 --> 0:02:04.800 call or react a quick thought on a big piece 0:02:04.800 --> 0:02:07.880 of news. And your react Wood in your research note said, 0:02:08.280 --> 0:02:11.160 maybe they didn't take this revenue beat far enough in 0:02:11.240 --> 0:02:13.359 their in their guidance going forward, tell us about that. 0:02:13.680 --> 0:02:16.560 Yeah, so if we think about the magnitude of the beat, 0:02:16.639 --> 0:02:18.799 it was about four hundred million dollars in the quarter. 0:02:19.120 --> 0:02:21.440 They only raise the guidance for about by about three 0:02:21.520 --> 0:02:24.800 hundred million, So something doesn't tie here. A couple of 0:02:24.800 --> 0:02:28.560 things I think may have happened was probably networking maybe 0:02:28.639 --> 0:02:30.320 coming in a little bit lighter in the second half, 0:02:30.360 --> 0:02:32.680 which is becoming a drag on the second half growth, 0:02:32.840 --> 0:02:35.040 and that was somewhat to be expected. The one thing 0:02:35.080 --> 0:02:37.480 I will say, and similar to what I said in Dell, 0:02:38.040 --> 0:02:40.600 is that there might be still some conservatism as it 0:02:40.639 --> 0:02:44.400 relates to the AI server sales going into the second 0:02:44.400 --> 0:02:46.400 half of the year. Part of it. They addressed it 0:02:46.480 --> 0:02:49.160 on the call. There's some constraints in terms of the 0:02:49.240 --> 0:02:52.360 data centers where they can put start putting these AI servers. 0:02:52.360 --> 0:02:54.200 And this is something new, and I think this is 0:02:54.240 --> 0:02:56.280 going to be a bigger thing, a bigger deal going 0:02:56.320 --> 0:02:59.080 into twenty twenty five. Are there enough data centers that 0:02:59.120 --> 0:03:01.440 can really support these AI service going forward? 0:03:01.840 --> 0:03:02.480 Will there be? 0:03:02.800 --> 0:03:05.520 I say yes, the cloud guys as well as enterprise 0:03:05.600 --> 0:03:08.680 guys will will eventually figure it out, but it takes 0:03:08.720 --> 0:03:09.959 time to build these out. 0:03:10.120 --> 0:03:13.480 Where do you think HPE should trade relative to Dell? 0:03:13.639 --> 0:03:16.040 You know going forward, Well, there is a leverage issue 0:03:16.040 --> 0:03:18.280 here in terms of the debt that they're taking on 0:03:18.720 --> 0:03:21.720 the pending Juniper deal, they are going to be taking 0:03:21.760 --> 0:03:25.560 on more debt, which is going to anchor the valuation 0:03:25.760 --> 0:03:28.840 just a bit. Dell has a more favorable capital structure 0:03:28.840 --> 0:03:31.240 which helps quite a bit. But I will tell you 0:03:31.280 --> 0:03:34.040 if the AI story really starts to take off relative 0:03:34.560 --> 0:03:36.960 to someone like a Delaware, a super Micro, we could 0:03:36.960 --> 0:03:38.880 start seeing multiples rise a little bit more. 0:03:39.360 --> 0:03:42.880 This might be a super silly question, but as someone 0:03:42.880 --> 0:03:45.840 who has to like input all of these earnings for 0:03:45.960 --> 0:03:49.120 software and for services and enterprise when it comes to AI, 0:03:49.720 --> 0:03:52.680 who is a legit competitor with Hpe? Is it just Dell? 0:03:52.880 --> 0:03:55.680 Are there smaller guys out there that do something similar? 0:03:56.640 --> 0:03:59.240 I'll tell you that that's an excellent question. Right. So 0:03:59.440 --> 0:04:01.560 the three pulicly trade names that compete hut to head 0:04:01.600 --> 0:04:05.839 with Dell are super Micro, Dell, Hpe, and Lenovo. Right, 0:04:06.240 --> 0:04:08.880 But what we heard from a copy text out of 0:04:08.920 --> 0:04:12.680 Taiwan and video striking deals with these white box manufacturers, 0:04:13.480 --> 0:04:17.280 like like a fox cod or a Quanta to directly 0:04:17.320 --> 0:04:22.080 build these AI servers for these clouds. So you are 0:04:22.200 --> 0:04:24.800 going to start seeing heightened competition in the landscape. 0:04:25.240 --> 0:04:28.520 So you know, HPE is this it? I mean in 0:04:28.520 --> 0:04:30.440 the sense that can we sit back and say, I 0:04:30.480 --> 0:04:33.919 think these guys have it. They have an AI product 0:04:34.120 --> 0:04:37.800 in their product lineup, and these guys can, in fact, 0:04:37.960 --> 0:04:40.520 in the long term be players in this business. 0:04:40.600 --> 0:04:43.960 So I think there's just been a The narrative on 0:04:44.160 --> 0:04:47.320 HPE has been a little bit off for quite some 0:04:47.360 --> 0:04:49.480 time now. We have to keep in mind that they've 0:04:49.480 --> 0:04:52.760 been in a super computing game for quite a few years. 0:04:53.040 --> 0:04:57.080 After the acquisition of Kray, now a couple of things 0:04:57.080 --> 0:04:59.200 on the traditional service side, they didn't have the product 0:04:59.279 --> 0:05:02.320 lineup to compete against like a super Micro and Dell. 0:05:02.720 --> 0:05:05.920 But we're still in the early innings. And one thing 0:05:05.960 --> 0:05:08.080 that I will tell you they are going to have 0:05:08.120 --> 0:05:11.520 their discovered conference and schedule to be on stage is 0:05:11.720 --> 0:05:14.320 the CEO of Nvidia, and that should really help prop 0:05:14.400 --> 0:05:17.560 up the product narrative on the AI server side. Look, 0:05:17.560 --> 0:05:20.840 we're still in the early innings, second, third, fourth, fifth inning. 0:05:21.200 --> 0:05:22.600 HPE is going to be in the center of this. 0:05:23.120 --> 0:05:26.600 I am curious how does the first mover advantage thing 0:05:26.760 --> 0:05:30.040 play out? Like, if I'm a company, am I married 0:05:30.080 --> 0:05:32.719 to Dell? How easy is it for me to switch 0:05:33.200 --> 0:05:34.960 when Hpe kind of comes roaring? 0:05:35.360 --> 0:05:38.040 So I want to take it in a different way. Right, 0:05:38.120 --> 0:05:40.159 at the end of the day, it's a hardware, please. 0:05:41.080 --> 0:05:43.400 You know a laptop is a laptop is a laptop, right, 0:05:43.600 --> 0:05:46.680 you know my HP laptop is similar to a Dell laptop, 0:05:47.400 --> 0:05:49.600 and you know it depends on the bells and whistles. 0:05:49.839 --> 0:05:52.600 AI is actually going to be a different animal, especially 0:05:52.640 --> 0:05:54.720 for the corporate enterprise, and you're going to have to 0:05:54.760 --> 0:06:00.080 start wrapping around services around with the hardware itself. There 0:06:00.120 --> 0:06:04.000 are probably three companies that can actually do that, Lenovo, Dell, 0:06:04.160 --> 0:06:08.440 and Hpe, And you'll need the extensive services that can 0:06:08.480 --> 0:06:12.880 help not only supply the hardware, not only supply the 0:06:12.960 --> 0:06:18.720 maintenance and repair, but AI will need ex software expertise 0:06:18.880 --> 0:06:22.120 to help build out these AI models for these corporations. 0:06:23.080 --> 0:06:26.040 And you know there aren't many IT services companies that 0:06:26.080 --> 0:06:26.520 can do that. 0:06:26.880 --> 0:06:29.280 Hpe is one of them thanks to Wouji and Hull 0:06:29.320 --> 0:06:32.080 Bloomberg Intelligence Senior Technology Analyst. 0:06:32.360 --> 0:06:34.960 We next take a look at the Swedish Swiss company a. 0:06:35.240 --> 0:06:40.080 B b ABB is a technology leader in electrification and automation, 0:06:40.680 --> 0:06:44.080 enabling a more sustainable and resource efficient future. 0:06:44.240 --> 0:06:47.160 Guest host Jessman and I were joined by ABB chairman 0:06:47.279 --> 0:06:50.480 Peter Vasser. We first asked Peter where the focus this 0:06:50.560 --> 0:06:51.799 company is these days. 0:06:52.279 --> 0:06:56.119 It's clearly it's the energy transition, which is not only 0:06:56.120 --> 0:06:59.039 the hard to abate tech betas, it's in general the 0:06:59.120 --> 0:07:03.960 move from a more fossile driven energy system into electric 0:07:04.640 --> 0:07:08.919 energy system and there we obviously contribute with our products 0:07:08.960 --> 0:07:12.440 and systems, which gives us energy savings between twenty and 0:07:12.480 --> 0:07:15.360 forty or even fifty percent. So that's one angle. 0:07:15.400 --> 0:07:16.240 The other one is. 0:07:16.440 --> 0:07:20.680 All linked to new technologies around automation and robotics, because 0:07:20.720 --> 0:07:24.400 we are world leading company in both areas, and that 0:07:24.480 --> 0:07:28.560 has to do with the reshuring, bringing things closer home 0:07:28.600 --> 0:07:32.160 again where the markets are, but also in some countries, 0:07:32.200 --> 0:07:35.440 dealing with the demographics because we have less and less 0:07:35.480 --> 0:07:39.760 people working in the working age, and therefore robotics and 0:07:39.800 --> 0:07:43.160 the automation becomes very important. And the last one is AI, 0:07:43.360 --> 0:07:48.200 which will revolutionize obviously all what's related to automation in 0:07:48.240 --> 0:07:48.760 the future. 0:07:49.440 --> 0:07:52.200 We'll talk to us more about what you think is 0:07:52.280 --> 0:07:55.880 the best way to try to scale manufacturing when it 0:07:55.920 --> 0:07:58.880 comes to the EVE charging space. 0:07:59.640 --> 0:08:03.640 Think what we really need on the e moobility side. 0:08:03.720 --> 0:08:08.080 Let me put it this way, is really work on 0:08:08.120 --> 0:08:11.080 two fronts. One is a technical side on the charging side, 0:08:11.200 --> 0:08:14.520 but the other one is also on the user friendliness side, 0:08:14.520 --> 0:08:18.320 so that they become actually more reliable, they are much 0:08:18.360 --> 0:08:21.840 more modern. On the manufacturing side, I think we have 0:08:21.960 --> 0:08:26.440 had clearly in some countries and regions there was some 0:08:26.560 --> 0:08:30.560 scarcity of manufacturing capacity which I think have been sold. 0:08:30.680 --> 0:08:33.000 Was not an issue for ABB in that sense, but 0:08:33.120 --> 0:08:34.839 it's the product evolution which is. 0:08:34.880 --> 0:08:35.760 Very key now. 0:08:35.800 --> 0:08:37.880 On the other side, I think one that should not 0:08:38.000 --> 0:08:42.480 forget that the whole network of electrification needs to be 0:08:42.600 --> 0:08:46.120 up to speed. You cannot just actually consume much more energy. 0:08:46.280 --> 0:08:50.200 You also need to build the transmission lines that the 0:08:50.320 --> 0:08:53.640 power actually comes in. Where we have got let's say 0:08:53.679 --> 0:08:57.320 the charge is installed either for a private passenger cars 0:08:57.440 --> 0:09:01.160 or for busses, ships, trains, whatever you want to call it. 0:09:01.440 --> 0:09:03.960 So I think we need much more infrastructure investments on 0:09:04.000 --> 0:09:07.000 the one side, and really really to actually get to 0:09:07.120 --> 0:09:12.560 EV charging and the passenger cars based on electrification much 0:09:12.600 --> 0:09:14.000 more developed in the future. 0:09:14.840 --> 0:09:17.880 Peter, who are some of your bigger customers that you're 0:09:17.880 --> 0:09:19.200 working with these days. 0:09:19.480 --> 0:09:21.400 We are here in the United States, so we have 0:09:21.480 --> 0:09:24.440 all kinds of our manufacturing companies in that sense. But 0:09:24.640 --> 0:09:29.560 on the industrial side, any any company you can think of, 0:09:30.720 --> 0:09:34.120 which are they are in manufacturing space. For example, they 0:09:34.240 --> 0:09:38.559 use our actification products, they use our automation products. So 0:09:38.640 --> 0:09:41.560 you have all the industrial companies and that's where we 0:09:41.640 --> 0:09:44.760 make the difference. The other side, utilities are very key. 0:09:45.040 --> 0:09:47.120 As I just said, they need to make sure we 0:09:47.200 --> 0:09:48.000 have an off supply. 0:09:48.559 --> 0:09:50.960 And I know I'm just looking at our PGeo function 0:09:51.040 --> 0:09:53.600 where I can see where your revenue comes by geography, 0:09:53.679 --> 0:09:56.200 you're everywhere. You see certain parts of the world that 0:09:56.240 --> 0:09:59.959 are more in front of you know, kind of making 0:10:00.240 --> 0:10:01.680 the transition then some others. 0:10:01.960 --> 0:10:04.679 Yeah, I think I would say that Europe has started 0:10:04.720 --> 0:10:08.480 this rather early with the new Green Deal in Europe, 0:10:08.960 --> 0:10:13.000 but also moving into a very different energy systems paid 0:10:13.040 --> 0:10:16.160 some price with the wars in Russia, so energy prices 0:10:16.200 --> 0:10:18.720 have gone up and that some rethinking has taken place. 0:10:19.480 --> 0:10:23.320 I think here in the US you quite clearly see 0:10:23.360 --> 0:10:27.200 the demand is there in all industries now supported by 0:10:28.440 --> 0:10:32.960 the various acts you have here, either the Inflation Act 0:10:33.080 --> 0:10:36.040 or then also the Industrial Act, and that is driving 0:10:36.120 --> 0:10:40.360 investments now. It's much earlier days than in Europe for example. 0:10:40.720 --> 0:10:43.000 Aha is a little bit of mixed back, I have 0:10:43.080 --> 0:10:46.240 to say. So you see some countries at the leading edge, 0:10:46.400 --> 0:10:50.520 like smaller company countries like Singapore. In China, which is 0:10:50.559 --> 0:10:54.120 our second biggest market after the US, you see actually 0:10:54.160 --> 0:10:56.679 a lot of efforts now being put in place to 0:10:57.840 --> 0:11:01.640 change the electric system in in China, a lot of 0:11:01.679 --> 0:11:05.520 EV cards are coming in and you can see that 0:11:05.559 --> 0:11:09.600 those really are now generating the growth in China by 0:11:09.720 --> 0:11:13.880 city subdued compared to the US at this stage. So indeed, 0:11:13.920 --> 0:11:16.720 we are operating across the world in more than one 0:11:16.760 --> 0:11:20.400 hundred countries. We get good insights. At the moment, the 0:11:20.520 --> 0:11:25.200 driving forces are really the US and Europe, with let's 0:11:25.240 --> 0:11:29.080 say Asia apart from India are lacking somewhat. 0:11:29.280 --> 0:11:32.680 So where else do you go to expand from here? 0:11:32.720 --> 0:11:34.480 When you already are in so many places? 0:11:34.760 --> 0:11:37.840 It's quite clearly US is our key number one market 0:11:38.240 --> 0:11:40.880 and that's where we have a developing We have over 0:11:40.920 --> 0:11:43.160 the last ten years, we have put more than fourteen 0:11:43.200 --> 0:11:48.080 billion dollars into the US in terms of investments. We 0:11:48.200 --> 0:11:52.040 have got forty manufacturing sites in twenty states. We're operating 0:11:52.080 --> 0:11:55.280 in all states with our services, et cetera. So that's 0:11:55.320 --> 0:11:58.640 a key market. We see the electrification market in the 0:11:58.760 --> 0:12:01.839 US as key, but the industrial one which has a 0:12:01.920 --> 0:12:06.079 lot to do with bringing home let's say, manufacturing capabilities 0:12:06.120 --> 0:12:10.199 and capacity. And then the second one is clearly India, 0:12:10.240 --> 0:12:13.840 which at the moment is in terms of growth outstripping 0:12:14.559 --> 0:12:17.840 all other countries in a big way. They are very 0:12:17.960 --> 0:12:21.200 low in manufacturing capacity and that's where a lot of 0:12:21.320 --> 0:12:25.560 investments now for the high end manufacturing goes in. And 0:12:25.600 --> 0:12:28.680 then the third one will be Europe quite clearly as 0:12:28.920 --> 0:12:33.160 the European change Indian energy system, but also the demographic 0:12:33.600 --> 0:12:37.560 issues which we have in Europe which will take out 0:12:37.640 --> 0:12:41.960 about fifty million kind of working people over the next 0:12:42.000 --> 0:12:44.800 ten years and that needs to be replaced by automation 0:12:44.960 --> 0:12:47.560 and robotics. So there's a lot of investments on going there. 0:12:48.040 --> 0:12:50.880 Thanks to Peter Vassar, chairman of ABB, coming. 0:12:50.679 --> 0:12:54.520 Up a look at new carbon offset guidelines from the US. 0:12:54.320 --> 0:12:57.120 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:57.400 --> 0:13:00.880 research and data on two thousand companies and thirty industries. 0:13:01.040 --> 0:13:03.840 You can access Bloomberg Intelligence via big on the terminal. 0:13:03.880 --> 0:13:07.079 I'm Paul Sweeney, Mad, I'm John Tucker. This is Bloomberg. 0:13:11.080 --> 0:13:14.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:15.040 --> 0:13:18.120 weekdays at ten am Eastern on AFFL car playing Enroud 0:13:18.160 --> 0:13:21.199 Auto with the Bloomberg Business app Listen on demand wherever 0:13:21.320 --> 0:13:24.440 you get your podcasts, or watch us live on YouTube. 0:13:26.040 --> 0:13:28.400 Oh, Paul Sweeney Ant, I'm John Tucker, filling in for 0:13:28.559 --> 0:13:29.240 Alex Steele. 0:13:29.520 --> 0:13:33.320 We look next at the Canadian athletic apparel retailer Lululemon Athletica. 0:13:33.559 --> 0:13:36.040 Lulu Lemon raised its profit outlook for the full year 0:13:36.080 --> 0:13:39.200 while also beating market expectations for earnings in the first quarter, 0:13:39.520 --> 0:13:42.600 and this came despite investor concerns over the company's slowing 0:13:42.720 --> 0:13:43.400 sales growth. 0:13:43.520 --> 0:13:45.240 For more, guest host John Tucker and I were joined 0:13:45.240 --> 0:13:48.840 by Punham Goyle, senior US retail analyst at Bloomberg Intelligence. 0:13:49.040 --> 0:13:52.160 We first danced Poonham for her key takeaways from Lululemon's 0:13:52.160 --> 0:13:52.800 earnings report. 0:13:53.160 --> 0:13:55.320 So, I think the earnings are better than expected because 0:13:55.360 --> 0:13:57.959 while we do see slowing growth at Lululemon, where it's 0:13:57.960 --> 0:14:02.040 accelerating from the mid teams to low double digits near 0:14:02.120 --> 0:14:05.880 ten percent. There was concern that is that because of 0:14:06.000 --> 0:14:09.079 a slower macro and the fact that lul Lemon is 0:14:09.200 --> 0:14:13.640 losing out to competition Aloyoga, et cetera. We discovered that 0:14:13.840 --> 0:14:15.520 part of that is true, but part of that is 0:14:15.640 --> 0:14:17.640 not true, and I think that's why investors have a 0:14:17.679 --> 0:14:18.760 little more confidence. 0:14:19.560 --> 0:14:22.080 How big is the US market for them? And are 0:14:22.160 --> 0:14:23.920 they selling overseas and how much? 0:14:24.920 --> 0:14:27.680 Yeah, so the US market the America is eighty percent 0:14:27.760 --> 0:14:31.360 of their business. International is twenty percent, with China half 0:14:31.440 --> 0:14:31.600 of that. 0:14:32.280 --> 0:14:34.840 And is demand picking up or slowing in China or 0:14:34.920 --> 0:14:36.880 is it new to the Lulu Lemon market. 0:14:37.840 --> 0:14:41.280 So international was a bright spot this quarter. International sales 0:14:41.400 --> 0:14:45.720 grew about thirty five percent, and within that, China was 0:14:45.800 --> 0:14:48.440 up Mainland China was up forty five percent, So a 0:14:48.600 --> 0:14:51.560 lot of growth there. It's a bright spot for lul Lemon. 0:14:51.680 --> 0:14:54.720 International is part of their three pronged strategy to double 0:14:54.800 --> 0:14:58.640 sales into twenty twenty seven. It's been doing very, very 0:14:58.680 --> 0:15:00.040 well and we expect that to cont. 0:15:00.600 --> 0:15:02.600 And I'm looking at your research here, Poonam. You're talking 0:15:02.600 --> 0:15:05.240 about you know when you talk about that doubling sales 0:15:05.920 --> 0:15:07.480 to twelve and a half billion, you know by twenty 0:15:07.520 --> 0:15:11.360 twenty six the company and you're saying strong international growth. Okay, 0:15:11.400 --> 0:15:14.720 I get that men's growth. Talk thus about Lululemon and 0:15:14.800 --> 0:15:16.960 Men's I mean, it's just not John and I don't 0:15:16.960 --> 0:15:17.560 know where to go with this. 0:15:17.640 --> 0:15:19.400 Do real men go to Lululemon? 0:15:20.360 --> 0:15:24.160 Is what it's Real men are going to Lululemon. You know, 0:15:24.240 --> 0:15:26.720 it's one of their bright spots right now. And they 0:15:26.920 --> 0:15:29.760 actually think that Men's could become overtime. I think you'll say, 0:15:29.840 --> 0:15:32.560 take some time fifty percent of the business. So there's 0:15:32.760 --> 0:15:35.200 a lot of opportunity in men's. And you know when 0:15:35.240 --> 0:15:37.600 you walk those stores and I looked at the men's inventory, 0:15:37.720 --> 0:15:40.840 it actually looks great. It's not just about outfitting the 0:15:40.920 --> 0:15:43.440 men to go to the gym. It's about outfitting the 0:15:43.520 --> 0:15:47.320 men to go into work with casual, comfortable where that 0:15:47.520 --> 0:15:47.840 they can. 0:15:49.960 --> 0:15:52.160 Everybody who listens to this program of views is on 0:15:52.240 --> 0:15:56.520 YouTube knows Paul is the company fashion place. Yes, if 0:15:56.560 --> 0:15:59.560 you saw somebody in like Lululemon come into the office, 0:16:00.120 --> 0:16:01.040 might be a film. 0:16:00.920 --> 0:16:02.680 It might be a problem. But I'm going to refer 0:16:02.720 --> 0:16:04.920 to to Punum because she knows fashion here and she 0:16:05.040 --> 0:16:07.880 knows what works. So if I'm Lulu Lemon, talk to 0:16:08.000 --> 0:16:12.000 us just about what they're saying about the consumer out there, Punham. 0:16:12.920 --> 0:16:14.960 So the consumer, We've been talking about this for a 0:16:15.000 --> 0:16:18.680 while now. The consumer is selective. They're choosing where to shop, 0:16:18.880 --> 0:16:21.200 when to shop, how to shop, and if they see 0:16:21.240 --> 0:16:23.680 the right product, they are still purchasing it. The one 0:16:23.760 --> 0:16:26.440 thing that struck out during the call was that traffic 0:16:26.640 --> 0:16:29.400 was up in the quarter, which means people are still 0:16:29.520 --> 0:16:32.360 going to lul Lemon. They still have purchase intent. But 0:16:32.720 --> 0:16:35.480 there were some product missteps which they're working to correct 0:16:35.520 --> 0:16:37.920 into the second half of the year, where they didn't 0:16:38.000 --> 0:16:40.240 have the right colors, or they didn't have enough colors 0:16:40.240 --> 0:16:42.960 I should say, they didn't have enough depth and sizes. 0:16:43.000 --> 0:16:45.000 They were running out of the small sizes. So these 0:16:45.040 --> 0:16:47.560 are problems that I would think are execution related and 0:16:47.800 --> 0:16:50.080 are being fixed and can be fixed into the back half. 0:16:50.440 --> 0:16:52.720 So while there is still part of a macro problem, 0:16:53.200 --> 0:16:56.280 the story isn't that Little Lemon people are not going 0:16:56.320 --> 0:16:58.560 to shop there. People still are interested in the apparel. 0:16:58.600 --> 0:17:01.160 They just have to fix the product a little and 0:17:01.560 --> 0:17:03.600 really improve our execution into the back half. 0:17:04.000 --> 0:17:07.000 They're known for form fitting, but just to get back 0:17:07.040 --> 0:17:10.040 to the men's fashion, they have anything for old fat guys. 0:17:11.680 --> 0:17:15.480 Well. Their ABC men's franchise is really popular and it's 0:17:15.640 --> 0:17:19.239 not form fitting. It's about the casual flare and they 0:17:19.320 --> 0:17:22.399 have done very well there. And you don't need to 0:17:22.440 --> 0:17:25.320 wear a tight leggings for men's that's not the appeal there. 0:17:25.400 --> 0:17:27.880 That's for the women. But I'd say even for the woman, 0:17:27.960 --> 0:17:30.080 you know what worked really well in the corner where 0:17:30.160 --> 0:17:33.280 they're loose fitting pants and their biker shorts. So yes, 0:17:33.400 --> 0:17:35.840 leggings is a big business for them, but they are 0:17:36.000 --> 0:17:37.840 broadening that. Eight. 0:17:37.920 --> 0:17:39.480 Let's switch gears just a little bit. I saw it 0:17:39.560 --> 0:17:42.680 yesterday reporting in the Wall Street Journal Punium Dollar Tree 0:17:43.560 --> 0:17:46.560 is among the potential sales spin off of Family Dollar. 0:17:46.800 --> 0:17:49.480 What is going on with the dollar stores here? I 0:17:49.640 --> 0:17:52.680 would have thought that if a part of the consumer 0:17:52.840 --> 0:17:56.159 market is weak and the lower end economically, that perhaps 0:17:56.240 --> 0:17:59.520 that would be good for the dollar stores. But what's 0:17:59.560 --> 0:17:59.959 going on there? 0:18:00.680 --> 0:18:04.159 So they're really two very different types of dollar stories. 0:18:04.240 --> 0:18:07.920 Gen Bartashus covers the space, but from my coverage every 0:18:08.040 --> 0:18:11.320 years ago, I can tell you that dollar Tree targets everyone, right. 0:18:11.480 --> 0:18:13.320 I would shop at Dollar Tree, Paul, You would shop 0:18:13.359 --> 0:18:15.720 a Dollar Tree. You buy that one twenty five item 0:18:15.800 --> 0:18:19.800 there and you go treasure hunt. But a family Dollar customer, 0:18:19.960 --> 0:18:22.920 that's their principal discount store. That is where they buy 0:18:22.960 --> 0:18:25.000 their groceries, that is where they buy their day to 0:18:25.080 --> 0:18:28.400 day needs. So as that customer's wallet is being stretched, 0:18:28.760 --> 0:18:30.840 that business does come into more pressure. 0:18:31.280 --> 0:18:34.760 Thanks to Pootamgoyle, senior US e commerce and retail analysts 0:18:34.840 --> 0:18:36.639 at Bloomberg Intelligence, we have. 0:18:36.680 --> 0:18:39.840 Something here at Bloomberg called Bloomberg New Energy Finance. The 0:18:39.920 --> 0:18:43.880 idea behind it is to provide data on commodities, power, transport, industries, 0:18:44.040 --> 0:18:46.240 building and agriculture and new technology. 0:18:46.400 --> 0:18:49.560 And this week we looked at new carbon offset guidelines 0:18:49.600 --> 0:18:53.160 for the US. US government recently outlined seven key principles 0:18:53.200 --> 0:18:56.960 that US buyers and sellers should follow to responsibly take 0:18:57.040 --> 0:18:59.080 part in the voluntary carbon market. 0:18:59.280 --> 0:19:01.080 For more on what they this means, guest host Jess 0:19:01.119 --> 0:19:03.480 Mettin and I we're joined by Kyle Harrison, head of 0:19:03.560 --> 0:19:07.560 sustainability research at bloomerk n EF. We first asked Kyle 0:19:07.640 --> 0:19:09.800 to talk to us about where we are in the 0:19:09.880 --> 0:19:10.960 developing carbon market. 0:19:11.480 --> 0:19:13.600 So for several decades now, we've had what's called a 0:19:13.760 --> 0:19:16.280 voluntary carbon market. This is where companies can go and 0:19:16.320 --> 0:19:19.879 they can buy verified emission reduction certificates in order to 0:19:20.080 --> 0:19:23.520 achieve a for example, carbon neutrality goal where they're neutralizing 0:19:23.560 --> 0:19:25.680 their emissions, and so they'll go out and they'll buy 0:19:25.680 --> 0:19:28.080 these carbon credits. But the market has gotten a lot 0:19:28.119 --> 0:19:30.880 of criticism over the past couple of years for low 0:19:30.960 --> 0:19:31.960 integrity projects. 0:19:32.359 --> 0:19:35.800 So when a Hollywood sled flies on their private jet 0:19:35.840 --> 0:19:37.960 and say, oh, but I offset it with a carbon footprint, 0:19:38.320 --> 0:19:38.920 what does that mean. 0:19:39.280 --> 0:19:41.760 So they're going out and they're buying these carbon credits, 0:19:41.800 --> 0:19:44.000 and they're investing in a project somewhere else in the 0:19:44.040 --> 0:19:47.760 world that is reducing or removing or avoiding carbon emissions. 0:19:48.080 --> 0:19:50.959 But the challenge has always been the integrity of those investments, right, 0:19:51.000 --> 0:19:54.760 It's been in projects that aren't necessarily leading to decarbonization. 0:19:55.359 --> 0:19:57.160 And so this market has gotten a lot of criticism. 0:19:57.600 --> 0:19:59.919 But there's been a lot of efforts from the privates 0:20:00.040 --> 0:20:02.720 actor specifically over the past couple of years to boost 0:20:02.800 --> 0:20:04.880 that integrity, and now they have support from the US 0:20:04.960 --> 0:20:06.480 government with this announcement last week. 0:20:06.920 --> 0:20:08.080 So what happens next. 0:20:08.440 --> 0:20:11.240 So, as you guys mentioned, it's a big ringing endorsement 0:20:11.359 --> 0:20:13.920 for this market. What the US government did is it 0:20:14.000 --> 0:20:17.640 publicly supported a couple of initiatives, such as the Integrity 0:20:17.680 --> 0:20:20.560 Council on Voluntary Carbon Markets. This is a group of 0:20:20.800 --> 0:20:25.200 non governmental organizations as well as financial institutions and corporations 0:20:25.240 --> 0:20:27.760 that are working and creating their own standards for what 0:20:27.840 --> 0:20:30.800 a good quality carbon credit looks like if you follow 0:20:30.960 --> 0:20:34.680 that Integrity Council principle or that framework. As a corporate buyer, 0:20:34.760 --> 0:20:36.720 I know I can buy those credits and I'm not 0:20:36.720 --> 0:20:39.240