1 00:00:02,320 --> 00:00:05,720 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,760 --> 00:00:08,840 Speaker 1: dot com, the Radio plus Mobile Act and on your radio. 3 00:00:09,080 --> 00:00:14,600 Speaker 1: This is a Bloomberg Business Flash World Handquarters. I'm Charlie 4 00:00:14,640 --> 00:00:18,239 Speaker 1: Padal the SMP NEZDAK all declining in. This update is 5 00:00:18,280 --> 00:00:22,000 Speaker 1: brought to you by Herko, and American industrial technology company 6 00:00:22,040 --> 00:00:26,599 Speaker 1: with global reach under long history of disruptive innovation. To 7 00:00:26,800 --> 00:00:29,720 Speaker 1: learn more about her Cove, is it h u r 8 00:00:29,960 --> 00:00:36,080 Speaker 1: c O dot com, slash Investors NASDAK ticker symbol h 9 00:00:36,200 --> 00:00:38,800 Speaker 1: u r C. Now let's head right over to the 10 00:00:38,840 --> 00:00:42,440 Speaker 1: first Word Breaking news desk for today's afternoon call, and 11 00:00:42,479 --> 00:00:47,320 Speaker 1: here's Bill Maloney. Good afternoon, Charlie. Equities are under pressure 12 00:00:47,360 --> 00:00:50,440 Speaker 1: around the world, thought of that North Korean nuclear test 13 00:00:50,600 --> 00:00:54,480 Speaker 1: and the FEDS rosen grens hawkish comments. Dallas currently down 14 00:00:54,520 --> 00:00:57,600 Speaker 1: three hundred points, SESSP s drop forty one and NAZAC 15 00:00:57,720 --> 00:01:00,440 Speaker 1: is lower by a hundred and four. But Dow in 16 00:01:00,640 --> 00:01:03,360 Speaker 1: S and P fell below their to fifty day moving averages. 17 00:01:03,680 --> 00:01:06,200 Speaker 1: The small cap six hundreds down two point six percent, 18 00:01:06,600 --> 00:01:09,520 Speaker 1: and the US ten yell hit one point six seven percent, 19 00:01:09,959 --> 00:01:13,960 Speaker 1: driving higher yielding stocks lower. All ten SP sectors fell, 20 00:01:14,080 --> 00:01:17,759 Speaker 1: led by losses in telecom, utilities and the materials down 21 00:01:17,760 --> 00:01:21,080 Speaker 1: Transports dropped two hundred nine points and as a biotext 22 00:01:21,120 --> 00:01:24,600 Speaker 1: fault anyone and the vix is up by thirty two percent. 23 00:01:25,080 --> 00:01:28,520 Speaker 1: Down Leaders to the downside included Verizon, Coca Cola, Bowling, 24 00:01:28,640 --> 00:01:32,880 Speaker 1: and Caterpillar. Finnisar surged as much as eighteen percent after 25 00:01:32,920 --> 00:01:37,080 Speaker 1: its results, while diamondov Shore felt ten percent amid declines 26 00:01:37,120 --> 00:01:39,880 Speaker 1: and energy Live from the first Breaking news desk on 27 00:01:39,959 --> 00:01:42,800 Speaker 1: Bill Maloney, Try alrighty, thank you very much, and to 28 00:01:42,880 --> 00:01:46,560 Speaker 1: hear live breaking news over your Bloomberg type squawk s 29 00:01:46,680 --> 00:01:50,920 Speaker 1: Q you a w K on your terminal. I'm Charlie Pellop. 30 00:01:51,000 --> 00:01:55,680 Speaker 1: That's sub Bloomberg Business Flash. You're listening to taking stock 31 00:01:55,880 --> 00:02:00,200 Speaker 1: with bim Box and Kathleen Hayes on Bloomberg Radio. If 32 00:02:00,200 --> 00:02:04,480 Speaker 1: you happen to be a shareholder of Peer one Imports, 33 00:02:04,480 --> 00:02:07,960 Speaker 1: the retailer um, you'd be forgiven if you feel as 34 00:02:08,000 --> 00:02:10,080 Speaker 1: if you walked off a pier. In the last two 35 00:02:10,120 --> 00:02:15,280 Speaker 1: trading sessions, Peer one Imports stock has lost nearly twenty 36 00:02:15,360 --> 00:02:18,200 Speaker 1: percent of its value. Here to tell us more about 37 00:02:18,320 --> 00:02:22,640 Speaker 1: the consumer discretionary sector of the economy is Sema Shaw 38 00:02:22,800 --> 00:02:27,640 Speaker 1: our consumer discretionary analyst for Bloomberg Intelligence. You can follow 39 00:02:27,760 --> 00:02:32,640 Speaker 1: Seema on Twitter at Sema m Shah. Bloomberg Intelligence, of 40 00:02:32,680 --> 00:02:35,760 Speaker 1: course providing unique in real time research and a variety 41 00:02:35,760 --> 00:02:38,520 Speaker 1: of industries as well as markets and government factors that 42 00:02:38,560 --> 00:02:42,440 Speaker 1: affect business. Our terminal customers can access this function by 43 00:02:42,480 --> 00:02:46,680 Speaker 1: just typing b I go on the Bloomberg Seema thank 44 00:02:46,720 --> 00:02:49,560 Speaker 1: you very much for joining me. Um. You heard what 45 00:02:49,600 --> 00:02:52,680 Speaker 1: I said about Peer one imports. I'm wondering if you 46 00:02:52,720 --> 00:02:55,959 Speaker 1: can kind of dissect those results, but in the context 47 00:02:56,360 --> 00:03:01,160 Speaker 1: of perhaps overall weakness and consumer discretionaries spending. Sure for 48 00:03:01,280 --> 00:03:04,520 Speaker 1: peer one pre announced their two key results they actually 49 00:03:04,520 --> 00:03:06,079 Speaker 1: supposed to report at the end of the month. There 50 00:03:06,080 --> 00:03:08,800 Speaker 1: sames to sales fell four percent, But this is in 51 00:03:08,840 --> 00:03:11,120 Speaker 1: spite of a rise in e commerce by three d 52 00:03:11,280 --> 00:03:14,240 Speaker 1: basis points in terms of penetration year over year. So 53 00:03:14,240 --> 00:03:16,480 Speaker 1: what that tells you is they've been spending money on 54 00:03:16,520 --> 00:03:19,600 Speaker 1: their omni channel investment, but they're not picking up extra 55 00:03:19,639 --> 00:03:23,720 Speaker 1: sales or extra traffic. So O, just the clarifi, omni 56 00:03:23,840 --> 00:03:26,720 Speaker 1: channel means they'll sell it to you anywhere, whether it's 57 00:03:26,760 --> 00:03:30,720 Speaker 1: over the exactly whatever works for you, And what's happening 58 00:03:30,760 --> 00:03:34,560 Speaker 1: is you're seeing them basically destroy value in the company 59 00:03:34,600 --> 00:03:36,560 Speaker 1: because they're spending money and they're not getting a return 60 00:03:36,640 --> 00:03:38,360 Speaker 1: on And what I think is happening is they're just 61 00:03:38,480 --> 00:03:42,000 Speaker 1: they're not seeing the traffic, and poor traffic is permeated 62 00:03:42,040 --> 00:03:46,000 Speaker 1: across the retail industry. Target mentioned it um In fact, 63 00:03:46,040 --> 00:03:48,040 Speaker 1: Barnes and Nobles mentioned it. I heard you talk about 64 00:03:48,080 --> 00:03:50,280 Speaker 1: them earlier, and what he said those very interesting is 65 00:03:50,560 --> 00:03:53,760 Speaker 1: many of these retailers have historically been located adjacent to 66 00:03:53,840 --> 00:03:57,000 Speaker 1: other retailers that drove traffic. So when their peers and 67 00:03:57,040 --> 00:03:59,640 Speaker 1: other categories, say Barnes and Noble and Best Buy, they 68 00:03:59,760 --> 00:04:03,640 Speaker 1: both see traffic decline, it multiplies the multiplier effects so 69 00:04:03,680 --> 00:04:06,800 Speaker 1: that the negative traffic experienced by both is even higher. 70 00:04:07,120 --> 00:04:09,760 Speaker 1: And I think that something to take into consideration. So 71 00:04:09,840 --> 00:04:12,760 Speaker 1: you have that aspect, and I think generally consumers do 72 00:04:12,880 --> 00:04:15,600 Speaker 1: have less extra money to spend, and if they do 73 00:04:16,080 --> 00:04:17,960 Speaker 1: they have to spend, they have a lot of necessary 74 00:04:17,960 --> 00:04:21,000 Speaker 1: discretionary items to spend it on first before spend it 75 00:04:21,040 --> 00:04:24,800 Speaker 1: on funt stuff. Before we get into the details of 76 00:04:24,800 --> 00:04:26,960 Speaker 1: that kind of discretionary spending. I'm wondering if you could 77 00:04:26,960 --> 00:04:29,719 Speaker 1: just sort of put together when what we've heard about 78 00:04:29,800 --> 00:04:32,159 Speaker 1: department stores, because we know that Macy's is in the 79 00:04:32,240 --> 00:04:37,120 Speaker 1: process of exitings or more right, so, as we've seen 80 00:04:37,160 --> 00:04:40,640 Speaker 1: people move online, a lot of retailers are closing locations 81 00:04:40,680 --> 00:04:42,400 Speaker 1: and the ones that they are leaving open have to 82 00:04:42,440 --> 00:04:47,080 Speaker 1: be very productive um generating positive cash flow, and they're 83 00:04:47,080 --> 00:04:50,760 Speaker 1: trying to eventually integrate those stores into being distribution center 84 00:04:50,800 --> 00:04:53,520 Speaker 1: so they can ship product from those locations to lower 85 00:04:53,960 --> 00:04:55,919 Speaker 1: freight costs and also to get the product to the 86 00:04:55,920 --> 00:04:58,680 Speaker 1: customer quickly and better compete with Amazon. So what you're 87 00:04:58,680 --> 00:05:00,520 Speaker 1: seeing across the board as the United of States just 88 00:05:00,560 --> 00:05:03,160 Speaker 1: has too many stores and too many categories. That's everybody 89 00:05:03,200 --> 00:05:05,680 Speaker 1: overbuilt in the late two thousand. Now they're trying to 90 00:05:05,680 --> 00:05:08,279 Speaker 1: close it and be nimbler so they can compete with 91 00:05:08,320 --> 00:05:10,640 Speaker 1: Amazon and the other players that are coming up. What 92 00:05:10,760 --> 00:05:15,680 Speaker 1: have you learned from the Goldman Sachs Consumer Conference. UM, 93 00:05:15,720 --> 00:05:18,640 Speaker 1: there is a lot of focus on omni channel, which 94 00:05:18,640 --> 00:05:21,080 Speaker 1: we discussed earlier. That's really where every retailers trying to 95 00:05:21,120 --> 00:05:23,159 Speaker 1: going in. I think in terms of the consumer, it's 96 00:05:23,200 --> 00:05:26,839 Speaker 1: been mixed. Tractors supply pre announced and said that things 97 00:05:26,839 --> 00:05:30,520 Speaker 1: were weak, and while they cited weather, energy related states, 98 00:05:30,520 --> 00:05:34,159 Speaker 1: and also agriculture. It seems like the negative effect from 99 00:05:34,200 --> 00:05:37,839 Speaker 1: those commodity shocks is spreading to community. So and then 100 00:05:38,040 --> 00:05:39,960 Speaker 1: and I think, you know, even the Dollar Store spoke 101 00:05:40,000 --> 00:05:42,960 Speaker 1: about UM a weaker consumer on the low end, So 102 00:05:43,000 --> 00:05:46,120 Speaker 1: I think that's pretty broad span of companies. And then 103 00:05:46,120 --> 00:05:49,840 Speaker 1: you have Restoration Hardware last night, which you know is 104 00:05:49,920 --> 00:05:52,680 Speaker 1: performed well today, but their core their core calms were 105 00:05:52,720 --> 00:05:55,920 Speaker 1: down three. So despite the fact that they are total 106 00:05:55,920 --> 00:05:57,880 Speaker 1: sales increase, a lot of it was from the acquisition 107 00:05:57,920 --> 00:06:00,760 Speaker 1: of Waterworks and some of their new store. So the 108 00:06:00,839 --> 00:06:04,279 Speaker 1: core business is still slow. And you're still seeing retailer 109 00:06:04,360 --> 00:06:07,000 Speaker 1: site driving traffic as a problem. And that's sort of 110 00:06:07,000 --> 00:06:10,599 Speaker 1: what we thought the Consumer conference Luxury Retailing tell us 111 00:06:10,640 --> 00:06:15,560 Speaker 1: about that UM Luxury retailing continues to be tough. Tourism, 112 00:06:15,600 --> 00:06:18,080 Speaker 1: you know, they're going to anniversary, which means that like 113 00:06:18,120 --> 00:06:20,680 Speaker 1: the start of the decline in tourism starts a like 114 00:06:20,760 --> 00:06:23,760 Speaker 1: Q three, so you'll see easier compares for these retailers, 115 00:06:23,800 --> 00:06:27,200 Speaker 1: so they might do better year year and versus street estimates. 116 00:06:27,200 --> 00:06:32,239 Speaker 1: But global, I guess a global tourism remains weak. Other 117 00:06:32,279 --> 00:06:34,159 Speaker 1: parts are the regions of the world continue to be 118 00:06:34,200 --> 00:06:36,240 Speaker 1: remained weak. And even the Chinese tourists who used to 119 00:06:36,279 --> 00:06:39,520 Speaker 1: be coming here and spending they've increased their tourism within 120 00:06:39,600 --> 00:06:43,440 Speaker 1: their own geography within Asia, so that also hurts retailers here, 121 00:06:43,480 --> 00:06:46,240 Speaker 1: and the US luxury consumer is not picking up the slack. 122 00:06:47,200 --> 00:06:49,719 Speaker 1: I've waited for last to just ask you about the 123 00:06:49,760 --> 00:06:53,240 Speaker 1: Amazon effect, because that ends up being something that's a 124 00:06:53,279 --> 00:06:56,599 Speaker 1: bigger and bigger footnote and pact, maybe a paragraph. Now, 125 00:06:57,000 --> 00:07:01,640 Speaker 1: Amazon stealing business from everybody, I think for the most part, yes, 126 00:07:01,760 --> 00:07:04,159 Speaker 1: maybe not in a specialized brand, maybe not in high 127 00:07:04,320 --> 00:07:07,760 Speaker 1: end jewelry, but I think what they They're number one, 128 00:07:07,880 --> 00:07:09,800 Speaker 1: and I think it's really, as I mentioned, a race 129 00:07:09,920 --> 00:07:12,480 Speaker 1: to number two in your category, and that's what people 130 00:07:12,520 --> 00:07:14,840 Speaker 1: are spending on on having an app, on having that 131 00:07:14,920 --> 00:07:18,520 Speaker 1: seamless transaction. But as I mentioned, was pure one. A 132 00:07:18,520 --> 00:07:21,280 Speaker 1: lot of these retailers are also seeing value destruction in 133 00:07:21,400 --> 00:07:24,200 Speaker 1: terms of their return on invested capital because they're not 134 00:07:24,240 --> 00:07:27,880 Speaker 1: getting that sales returned. So Amazon continues to be a 135 00:07:27,880 --> 00:07:30,520 Speaker 1: threatened They move into more and more categories, and you 136 00:07:30,600 --> 00:07:32,400 Speaker 1: have to be nimble if you want to compete with 137 00:07:32,440 --> 00:07:37,480 Speaker 1: them and survives. Much is our consumer discretionary analyst for 138 00:07:37,640 --> 00:07:42,360 Speaker 1: Bloomberg Intelligence. For more on Bloomberg Intelligence, just type V 139 00:07:42,480 --> 00:07:48,400 Speaker 1: I go on the Bloomberg Coming up on taking stock. 140 00:07:48,480 --> 00:07:52,840 Speaker 1: Former Minnesota Governor Jesse Ventura he is gung ho on 141 00:07:52,960 --> 00:07:56,640 Speaker 1: his marijuana manifesto. We've got details ahead.