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

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Let's get back to tech stocks. Semiconductor stocks in particular,

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Speaker 2: they are just ripping. I mean, we've got million trillion

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Speaker 2: dollar market caps from Micron Technology.

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Speaker 3: What's going on out there? I mean, they're not enough chips.

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Speaker 2: I guess I don't know. Let's turn to somebody who

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Speaker 2: knows what's going on out there. Jake Silverman, semiconductor analysts

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Speaker 2: for Bloomberg Intelligence. He joins us here in studio, Jake,

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Speaker 2: what's going on with your world here today?

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Speaker 3: Why are there not enough chips?

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Speaker 2: Yeah?

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Speaker 3: Just make more chips.

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Speaker 4: I wish it was so simple, but then they wouldn't

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Speaker 4: be getting those press right.

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Speaker 2: Yeah.

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Speaker 4: Yeah, So really, I think, I guess focusing on on

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Speaker 4: the value, we're in a particularly strong upcycle. I think

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Speaker 4: the argument around why the stock should be worth a

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Speaker 4: trillion dollars is that Micron and the other memory makers

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Speaker 4: are no longer really in a cyclical situation, it's possible

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Speaker 4: what we're seeing is a structural change in the memory

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Speaker 4: market where it may be more the earnings may be

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Speaker 4: more sustainable through the cycle over the at least the

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Speaker 4: next three to five years. And so if you argue

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Speaker 4: in that, if you argue that, what you're arguing for

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Speaker 4: is that maybe the valuation multiple has to expand beyond

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Speaker 4: what we're seeing today. I mean, we're already at around

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Speaker 4: ten x. I guess a little bit below that I

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Speaker 4: think forward earnings, and so maybe some people are thinking

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Speaker 4: it could go up to fifteen x or more, and

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Speaker 4: that's what they're betting on right now.

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Speaker 5: Jake, it's really incredible to see these milestone numbers every

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Speaker 5: day from the sector, and I think the segment is

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Speaker 5: up something like eighty percent this year, and most people

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Speaker 5: have pointed to the facts that the earnings have been

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Speaker 5: parabolic too. How much further do you think that we

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Speaker 5: have to go before the market enthusiasm is starting to

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Speaker 5: outpace earnings?

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Speaker 3: Yeah, it's interesting.

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Speaker 4: So I think one of the things you look at is,

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Speaker 4: first of all, it's the earnings are very real, right,

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Speaker 4: and so it's not like the socks just seeing tons

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Speaker 4: and tons of multiple expansion purely out of speculation that

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Speaker 4: earnings are going to eventually reach that point or we're

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Speaker 4: actually seeing is real earnings growth.

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Speaker 3: And so the.

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Speaker 4: Multiple when you compare say the forward pe multiple for

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Speaker 4: the Socks Index compared to the s and P five

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Speaker 4: hundred isn't as much of a gap as what we've

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Speaker 4: seen before in the past. A peak at the peak

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Speaker 4: of the valuation for the Socks Index, you typically see

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Speaker 4: something like seven to eight x in terms of a difference.

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Speaker 4: Right now, I think we're on five or six. So

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Speaker 4: you know, some of the exuberants is you know, there's

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Speaker 4: certain stocks maybe that are a little bit more stretched,

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Speaker 4: but the earnings are real. We're seeing that with memory,

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Speaker 4: You're seeing that with a lot of the AI stocks

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Speaker 4: that do the CPUs and GPUs and networking. So yeah,

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Speaker 4: there's a few gives and takes within that bucket, and

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Speaker 4: the socks is a broad bucket includes a lot of names.

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Speaker 2: So I've been pitched chip stocks for forty years and

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Speaker 2: what I and that you gotts say the same thing

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Speaker 2: every time, which makes sense to me.

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Speaker 3: Hey, it's a cyclical business. You got to get the

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Speaker 3: cycle right.

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Speaker 2: Okay, But now you're mentioning just earlier that may be changing.

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Speaker 2: So when you talk to longtime tech investors, how do

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Speaker 2: they get their head around rethinking this sector, maybe rerating

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Speaker 2: the sector as not so sickle go anymore.

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Speaker 3: Yeah, it's so.

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Speaker 4: I still think we're probably going to see cycles and semiconductors.

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Speaker 4: I think what we're really seeing is a structural tailwind

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Speaker 4: if you're betting on semiconductors today. For the most part,

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Speaker 4: even the more boring analog names that you've seen, like

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Speaker 4: Analog Devices and Texas Instruments, they're all starting to catch

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Speaker 4: these AI tailwinds. But I think what people are trying

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Speaker 4: to really understand is what is the do we still

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Speaker 4: see upward revisions and capex based on investor models? How

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Speaker 4: long does the cycle continue? But when you think about memory,

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Speaker 4: one of the things that makes it a little bit

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Speaker 4: more different than some of the other semiconductor companies is

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Speaker 4: because they are still integrated device manufacturers IMS. They still

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Speaker 4: manufacture the chips that they then sell, so they're doing

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Speaker 4: the design and the manufacturing. And one of the things

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Speaker 4: is that in the past we saw an under investment

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Speaker 4: in the amount of capacity, and so now as we

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Speaker 4: have a structural tail end, we need to actually expand

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Speaker 4: the capacity, and you're.

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Speaker 3: Seeing this with TSMC two.

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Speaker 4: There's not enough there's not enough capacity in their fabs

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Speaker 4: to meet the demand that we're seeing. And so now

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Speaker 4: we're looking at these long term agreements because we've seen

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Speaker 4: billions of dollars burned in prior down cycles for memory makers,

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Speaker 4: and so they want reassurances that, look, if we're going

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Speaker 4: to spend billions of dollars on these fabs, we want

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Speaker 4: to get the ROI for them. And so these structural

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Speaker 4: agreements potentially change the cyclicality in the future, but are

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Speaker 4: also while allowing to get them some visibility and potentially

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Speaker 4: reduce that risk that maybe this is potentially a little

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Speaker 4: bit of a bubble and even if it's not going

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Speaker 4: to just burst like dot Com, at the same time,

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Speaker 4: you know, maybe there are losses to be had in

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Speaker 4: the future if they don't sign these agreements.

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Speaker 5: Who do you see right now is the most formidable

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Speaker 5: competitor to Nvidio or competitors if there are any.

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Speaker 4: Yeah, I think Broadcom is probably one of the best positions,

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Speaker 4: just because they have such a strong relationship with Google

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Speaker 4: designing their TPU. But you know, I think Marvel is

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Speaker 4: definitely a company you shouldn't sleep on as well, because

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Speaker 4: they've worked with Trainium, they have several different deals. But

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Speaker 4: I mean, you know, even AMD is going to probably

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Speaker 4: gain some share, and a lot of these a lot

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Speaker 4: of these hyperscalers and neoscalers that maybe want to design

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Speaker 4: their own chips are probably thinking about how do we

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Speaker 4: reduce the cost per GIGWOTT in our data centers? And

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Speaker 4: so Nvidia definitely has some competition, but you know, it's

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Speaker 4: always a situation where in video always evolves and adapts

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Speaker 4: to meet the challenges, and you know it's hard to

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Speaker 4: bet against them.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Big day for Boeing here, I think Boeing wins FAA

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Speaker 2: approval to increase seven three seven max production rate, which

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Speaker 2: is big news because that's the cash cow for this company,

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Speaker 2: and that's kind of been If you pick one thing

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Speaker 2: you want to see Boeing get right it's a seven

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Speaker 2: three seven Max production there.

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Speaker 3: So that's a good thing. Sit full of joints.

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Speaker 2: He covers all that stuff for a Bloomberg News to

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Speaker 2: us about Boeing what's going on there.

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Speaker 6: So for Boeing, this is a very important step because

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Speaker 6: ramping up seventy seven Max production has been their key

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Speaker 6: target since the FA cap production back in twenty twenty four.

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Speaker 6: So they've been talking about raising production from thirty eight

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Speaker 6: to forty two the last fall. Now they're looking at

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Speaker 6: raising the forty seven in this summer and then getting

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Speaker 6: to fifty two. And so as Boeing ramps up production,

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Speaker 6: they can sort of deliver more planes and generate more

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Speaker 6: cash for themselves, and that's sort of key to paying

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Speaker 6: down their huge debt and also generating free cash flow

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Speaker 6: for the company. And so this is one of the

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Speaker 6: key steps for the company as it looks to sort

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Speaker 6: of transition from its last few years of crisis to

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Speaker 6: sort of a more cash generating, profitable enterprise.

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Speaker 5: Said, Boeing has had so many victories since President Trump

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Speaker 5: returned to the White House. This completion with the FAA.

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Speaker 5: You also mentioned in your story all of the orders

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Speaker 5: that it's gotten from trade agreements. How much of this

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Speaker 5: has to do with the fact that they have a

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Speaker 5: favorable relationship with the administration.

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Speaker 6: So Boeing has increasingly sort of I mean, Boeing famously

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Speaker 6: gave President Trump a Salesman of the Decade the Century award,

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Speaker 6: and they basically sort of said that he's been key

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Speaker 6: to unlocking lots of agreements and lots of sales, and

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Speaker 6: Boeing has sort of won, including last week when they

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Speaker 6: went to China, when President Trump went to China and

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Speaker 6: Boeing won that two hundred plane commitment. It is smaller

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Speaker 6: than what analysts we're expecting, I mean analysts we're expecting

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Speaker 6: over five hundred planes. But the CEO today talked about

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Speaker 6: how that the two hundred plane order is a key

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Speaker 6: step towards getting those bigger plane orders because China's market

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Speaker 6: is the world's second largest market and Boeing has been

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Speaker 6: shut out of it for the last decade, and so

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Speaker 6: this is a sort of key step towards unlocking that

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Speaker 6: market and getting that back again.

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Speaker 3: Bowing CEO Kelly orst Ortberg.

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Speaker 2: He's speaking at a Bernstein Strategic Decision conference in New York.

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Speaker 2: He says he met with President Trump on the knee

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Speaker 2: ramp up weapons out but calling the demand for weapons

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Speaker 2: system quote through the roof, talk to us up. We

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Speaker 2: don't talk about the military side, the defense side.

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Speaker 3: Of Boeing on talk to us about that business for.

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Speaker 6: Them, so Boeing has been focused on a number of

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Speaker 6: there's a number of pieces to it, including the F

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Speaker 6: fifteen jet, the F forty seven, which is the new

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Speaker 6: generation fighter jet, the KC forty six tankers, and so

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Speaker 6: Boeing has been sort of trying to move away from

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Speaker 6: those fixed fixed price contracts that they were sort of

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Speaker 6: famous for to sort of more the bigger sort of

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Speaker 6: contracts that are more sort of free wheeling and allowing

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Speaker 6: them to sort of ramp up costs if they sort

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Speaker 6: of the cost go up. The company is also sort

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Speaker 6: of poised to gain from their replenishment of munitions and

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Speaker 6: maintenance because of the war in Iran. So essentially the

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Speaker 6: longer the war goes on, the more munitions they will

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Speaker 6: sort of get stand to gain from, as well as

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Speaker 6: the aircraft that are being deployed will have to go

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Speaker 6: through interone cycles and other sort of overhauls, and that

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Speaker 6: will also unlock some cash. So for Boeing, the defense business.

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Speaker 6: The CEO today talked about low basically single digit margins

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Speaker 6: and going back to those levels, and so that's again

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Speaker 6: a key turnaround for that defense unit.

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Speaker 5: Boeing had been struggling with its reputation after a series

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Speaker 5: of fatal crashes. Do you think that at this point,

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Speaker 5: you know, people have kind of moved on from this

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Speaker 5: in terms of public perception. Have they done enough to

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Speaker 5: mitigate that is?

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Speaker 6: I mean, obviously there is still Boeing still has to

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Speaker 6: deal with the pr from those fatal crashes. At the

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Speaker 6: same time, I mean, airlines have been ordering planes. I mean,

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Speaker 6: Boeing's talking today talked about how their decade the backlog

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Speaker 6: for the the commercial aircraft stretches well into the next decade.

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Speaker 6: So airlines seem to have moved on from that. Airlines

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Speaker 6: are ordering lots of Boeing planes and are looking to

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Speaker 6: get those Boeing planes. And the FA has given more

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Speaker 6: authority to Boeing, and so that's a sign that the

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Speaker 6: FA trusts the company more and we look to see

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Speaker 6: if that sort of continues as time momentum continues. I mean,

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Speaker 6: some crucial things we're looking out for is a certification

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Speaker 6: of the smallest and the largest variants of the sevent

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Speaker 6: three seven, so the Max seven and the Max tent,

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Speaker 6: which are still uncertified, the long delayed. The company today

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Speaker 6: talked about how we're in the final stage of the

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Speaker 6: certification of that jet and we will see deliveries to

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Speaker 6: customers next year, and that again is a key step

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Speaker 6: towards unlocking those orders because seven, the Max ten competes

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Speaker 6: against the eight through twenty one Neo, which is basically

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Speaker 6: Airbus is most profitable, best selling plane, and so that

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Speaker 6: will give Boing another sort of quiver, and it's arrow

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Speaker 6: like an arrow, and it's quiver to be able to

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Speaker 6: sort of take on that challenge and take some more

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Speaker 6: sort of market share from Air of Us.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us a

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Speaker 1: lot weekdays at ten am Eastern on appleclock Lay and

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Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, we got earnings coming out of the retailers

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Speaker 2: of Abercrombie fitched one of them better than feared results,

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Speaker 2: I guess is the way to think about it. Mary

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Speaker 2: Ross Gilbert Joins is senior Eca equity analysts covering the

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Speaker 2: retail space for Bloomberg Intelligency space out there in La Mary,

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Speaker 2: thanks for joining us here. Talk to us about Abercrombie

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Speaker 2: and Fitch. What did they do?

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Speaker 3: What's going on? I see the stock trading higher today.

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Speaker 7: Yes, so, Paul, what's going on with Abercrombie and Fitch.

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Speaker 7: I think that's probably a good tagline, better than feared.

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Speaker 7: I mean, look, they missed on the comp sales line.

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Speaker 7: Comps were down one percent and when you look at

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Speaker 7: and the estimate was for a slight increase almost flat

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Speaker 7: for the quarter. But they did have a couple of

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Speaker 7: things going on. One they had the implementation or the

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Speaker 7: upgrade of their ERP system that cost him about fifty

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Speaker 7: points in the top line. But I don't think that

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Speaker 7: really affected the comp because it was really third party

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Speaker 7: sales there. So think about sales that are made to Nordstrom,

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Speaker 7: you know, for the Abercrombie brand as an example. And

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Speaker 7: then what we saw with Hollister. So Hollister comps were

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Speaker 7: down two percent, but they were also impacted mainly in

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Speaker 7: the in the Middle East where we saw weakness there

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Speaker 7: and other parts of Europe. They didn't get into specifics

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Speaker 7: on those other parts except highlighting their largest market in

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Speaker 7: the UK, which they indicated had strong sales. So we're

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Speaker 7: still seeing I think when you look at the guidance

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Speaker 7: for the second quarter, maintaining guidance for the full year.

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Speaker 7: So guidance for the second quarter is at the high

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Speaker 7: end of consensus estimates for about a four percent growth,

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Speaker 7: and there's likely upside to that. And so I think

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Speaker 7: seeing overall strength, you know, strong sell through of their

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Speaker 7: collaboration with Sperry in the quarter and their files, you

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Speaker 7: know how they're broadening the categories, going after more categories

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Speaker 7: and that's what the consumer wants, and I think those

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Speaker 7: are all very very encouraging for the brand, and that's

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Speaker 7: the reason why you're seeing strength. We think they're in

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Speaker 7: the shares.

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Speaker 5: Mary, We're hearing time and time again consumers becoming more selective,

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Speaker 5: trading down to cheaper items. But Abercrombie has been kind

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Speaker 5: of a standout. What are they doing to outperform peers

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Speaker 5: and are of the are any of the markdowns and

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Speaker 5: promotions that they're putting out kind of starting to pressure

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Speaker 5: margins at all?

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Speaker 7: Yeah, we're not seeing the pressure. I think what's happening

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Speaker 7: is they're raising prices to help, you know, mitigate the

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Speaker 7: impact from tariffs, and so some of those are coming through.

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Speaker 7: But we did notice, and I think other analysts noticed

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Speaker 7: as well, there were more promotions this year, or I

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Speaker 7: should say not necessarily more, but the magnitude of the

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Speaker 7: promotions were a little bit higher, meaning the discount was

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Speaker 7: higher than it was let's say, a year ago. Though

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Speaker 7: the company indicated that their promo activities were absolutely on

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Speaker 7: plan for the quarter, but that doesn't mean that, you know,

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Speaker 7: it was. It definitely seemed higher than the rate of

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Speaker 7: discounts for the first quarter. But generally, I think they're

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Speaker 7: seeing some real resilience. And let's when you look at

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Speaker 7: their cohort. So for the Abercrombian Fitch brand, that's the

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Speaker 7: millennial customer, but they're a higher income customer, so they

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Speaker 7: tend to earn over one hundred thousand, probably you know,

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Speaker 7: one hundred to two hundred. And then when you look

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Speaker 7: at the Hollister brand, and that's a little more value oriented,

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Speaker 7: and there they did have some discounting going on there,

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Speaker 7: but that is really hits the gen Z. So kind

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Speaker 7: of think about your high school age consumer. So I

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Speaker 7: think that they're really hitting the mark on styles, collaborations

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Speaker 7: and their marketing campaigns, and that's something they plan to

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Speaker 7: invest more. That's where you're seeing the hit on margin

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Speaker 7: is really the marketing investment and then also the effect

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Speaker 7: of tariffs. And then they are concerned of course that

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Speaker 7: on the back half they will have a freight headwind.

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Speaker 7: But in the first quarter it was a tailwind and

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Speaker 7: there is going to be a small tailwind I think

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Speaker 7: that they expect in the second quarter.

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Speaker 2: So Mary, what are your companies, the retail companies you follow,

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Speaker 2: What are they saying about inflation, particularly for their consumers

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Speaker 2: that are paying more at the gas pump, and how

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Speaker 2: that may be impacting spending.

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Speaker 7: Paul Sweeny, That is a great question, and what we've

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Speaker 7: seen so far looking at off Price is that they

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Speaker 7: are definitely drawing in more consumers. And when you really

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Speaker 7: go after the business like Rossted, then you get a

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Speaker 7: huge beat. I mean, the comp sales that they reported

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Speaker 7: double digit was just wow, off the chart at seventeen percent,

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Speaker 7: but they were very aggressive, transitioning to spring much faster

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Speaker 7: and really going after that demand. So and I think

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Speaker 7: they are getting trade down. They're also bringing in more

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Speaker 7: higher end brands, for example Mark Jacobs, and that is

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Speaker 7: drawing more of a higher end consumer that you usually

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Speaker 7: see it at TJX. So I think we're going to

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Speaker 7: get more from the value side when American Eagle reports

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Speaker 7: on Thursday, and also from Gap. And we think that

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Speaker 7: Old Navy, you know, should also have some good results

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Speaker 7: there on the value side because they just continue to

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Speaker 7: innovate with great styles, new categories, performance, you know, with

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Speaker 7: their athletic wear, and they're just getting great traction.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: More retail numbers coming out today.

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Speaker 2: Dick's sporting goods sales were higher, but margin fresher stock

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Speaker 2: trading down a little bit.

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Speaker 3: They bought this foot locker thing. I think they need to,

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Speaker 3: you know, kind of get that going.

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Speaker 2: Lindsay Dutch, she follows this company, all the consumer hardlines companies.

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Speaker 2: She's a senior an don't still there a Bloomberg Intelligence. So, Linda,

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Speaker 2: what'd you learn from Dick's Sports.

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Speaker 8: Hey, Paul, thanks for having me. My read on the

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Speaker 8: corner was it was a solid quarter, especially for the

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Speaker 8: legacy business and even progress on that foot Locker deal

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Speaker 8: that you were mentioning. I think the disappointment is really

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Speaker 8: in the guidance rating and there wasn't a big enough

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Speaker 8: boost based on the performance of the legacy business, which

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Speaker 8: was outstanding in the first quarter.

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Speaker 5: Lindsay, consumers have been pulling back on some of their

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Speaker 5: discretionary spending. Why is sporting goods with Dick's Sporting Goods

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Speaker 5: still holding up relatively Well.

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Speaker 8: Yeah, so Dick sort of reiterated they're not seeing customers

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Speaker 8: shooting trade down at all in their assortment. They're continuing

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Speaker 8: to go after premium sports footwear, apparel and the hardline's goods.

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Speaker 8: They're seeing strengthen that business. A six percent same store

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Speaker 8: sales growth, you know, really outstanding in the quarter. And

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Speaker 8: then even for foot Locker, you know, we saw a

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Speaker 8: positive same store sales gain first time in two years

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Speaker 8: for that business. Dix acquired it last year and that's

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Speaker 8: more of a lifestyle brand and they're seeing momentum there

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Speaker 8: as well.

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Speaker 2: What was the problem should remind us for foot Locker,

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Speaker 2: because I think every one of our listeners and viewers

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Speaker 2: spent quite a bit of time and money at Footlocker

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Speaker 2: over the years.

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Speaker 8: Yeah, so, I think what Dicks really brings the table

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Speaker 8: for foot Locker is brand relationships. So they have very

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Speaker 8: strong brand relationships with players like Nike, but also many

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Speaker 8: other brands in that f leisure space. They're they're keeping

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Speaker 8: Footlocker a lifestyle stores, so not going to match the

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Speaker 8: sports focus that they have, and they're like a S

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Speaker 8: stores are going after lifestyle customers basketball. So and they've

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Speaker 8: really done a lot of work refreshing stores and making

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Speaker 8: the stores better to shop, and their assortment with their

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Speaker 8: new relationship ties is really going to show in the

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Speaker 8: second half of this year, and they're expecting a meaningful

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Speaker 8: acceleration in that business.

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Speaker 5: We're seeing promotions becoming increasingly prevalent across the retail sector again,

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Speaker 5: our margins becoming a bigger risk for consumer companies.

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Speaker 8: I agree, I've seen elevated promotion across the board. I think,

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Speaker 8: you know, Dick since COVID and the spike in demand

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Speaker 8: that we saw forth leisure they have really tried to

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Speaker 8: be strategic and keep promotions limited. They are are continuing

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Speaker 8: to try to do that this year, but we did

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Speaker 8: see some gross margin pressure in the first quarter that

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Speaker 8: was a little bit unexpected. Part of that is investments

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Speaker 8: in the business, and part of it is also elevated

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Speaker 8: fuel costs. Dix is not necessarily increasing those promotions, it

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Speaker 8: certainly makes it harder to get that customer in the

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Speaker 8: door and to spend with them.

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Speaker 2: So John Tucker's trying to get me all fired up

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Speaker 2: about the World Cup here, I'm just not there yet,

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Speaker 2: but I've got a couple of weeks to build the momentum.

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Speaker 3: Here. What's somebody like a Dick spoorting goods?

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Speaker 2: What are they saying about the world cub zet drive sales.

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Speaker 8: I think it is a positive potential catalyst, you know,

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Speaker 8: for this summer selling season and right before back to school.

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Speaker 8: You know, maybe it'll get new customers in the store

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Speaker 8: that will then then shop back to school with Dix.

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Speaker 8: You know, nothing has been quantified, you know, they have,

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Speaker 8: you know, anecdotally mentioned that some of the World Cup

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Speaker 8: merchandise has done very well that they've had, So I

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Speaker 8: think it could be a positive momentum on growth going

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Speaker 8: into this second quarter. They already have a lot of

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Speaker 8: strength in the business, so it's just another tailwind, you know,

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Speaker 8: for that legacy brand.

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Speaker 5: Lindsay, we've been talking a lot on the show today

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Speaker 5: about this disconnect between high income consumers and lowing consumers.

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Speaker 5: Is there anything that you've seen across retailer earnings that

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Speaker 5: have kind of highlighted that that problem is getting worse.

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Speaker 8: I don't know about getting worse, but maybe definitely at

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Speaker 8: least stagnant and not improving. So Dix does cater towards

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Speaker 8: a higher income customer base, and you know, we did

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Speaker 8: see that strength in the first quarter. By contrast, Bath

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Speaker 8: and body Works also reported this morning they had a

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Speaker 8: sales decline. They were down about three percent, and that

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Speaker 8: was slightly better than expected. But when you think about

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Speaker 8: their customer base, they're much more exposed to a lower

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Speaker 8: income consumer, and it's been much harder for a Bath

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Speaker 8: and body Works as opposed to a Dix to draw

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Speaker 8: the customer in. You know, for their assortment, they saw

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Speaker 8: a mid teens decline and body care alone, So I

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Speaker 8: think that does really show that there's a wide gap

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Speaker 8: between a higher income and lower income consumer.

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Speaker 3: Right now, body Works did that go? Did it go

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Speaker 3: bankrupt at one point?

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Speaker 8: So they split out of L brands with Victoria's Secret

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Speaker 8: right yes, And so they split in twenty twenty one.

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Speaker 8: And obviously Bath and Body was you know, the gem,

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Speaker 8: the high growth business. Since twenty twenty two, we've seen

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Speaker 8: some challenges in that business. Demand still appears very soft

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Speaker 8: to start the year. I'm seeing very very high promotions

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Speaker 8: for that brand this year and then just trying to

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Speaker 8: draw that customer. And as I mentioned, sales were down

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Speaker 8: in the first quarter. They're expected to be down again

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Speaker 8: in the second quarter and possibly into second half.

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Speaker 5: I'm looking at chairs of Bath and Body up five

440
00:23:43,440 --> 00:23:47,119
Speaker 5: point six percent on results that were better than feared.

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Speaker 5: How low had expectations gotten, lindsay.

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Speaker 8: So the new management team there, they have been pretty

443
00:23:55,000 --> 00:23:58,120
Speaker 8: conservative with their expectations. So, you know, Back and Body

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00:23:58,119 --> 00:24:02,360
Speaker 8: beat in the fourth quarter, they beat again today. I

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Speaker 8: think the beat, you know, is positive, but they're not

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Speaker 8: really showing signs at the turnaround that they're trying to

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00:24:08,200 --> 00:24:11,840
Speaker 8: implement is really working. And I think, you know, they

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00:24:11,880 --> 00:24:16,040
Speaker 8: keep anecdotally talking about positive proof points, but I think

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00:24:16,160 --> 00:24:17,840
Speaker 8: a lot of investors are looking to see that in

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00:24:17,840 --> 00:24:20,639
Speaker 8: the numbers as early as the second half, and so

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00:24:21,000 --> 00:24:24,440
Speaker 8: there's optimism that the business will start to turn around

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00:24:24,560 --> 00:24:26,480
Speaker 8: very soon. And I think it's going to be a

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Speaker 8: show me story when we get to the second half.

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