WEBVTT - Markets, Labor, And Bonds (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.680 at Bloomberg dot com slash podcast. Let check out with 0:00:21.680 --> 0:00:24.800 the Annaka Tregon Managing Director, head of the Competence Center 0:00:24.920 --> 0:00:27.880 at Vance Launch at Kempen Anica. Thanks so much for 0:00:27.960 --> 0:00:30.479 joining us. First off, what is the competence Center? What 0:00:30.480 --> 0:00:34.239 do you guys do there? Hi, Good morning. Well, what 0:00:34.280 --> 0:00:38.199 we do is um Bridge bridge different expertise areas we 0:00:38.240 --> 0:00:40.920 have within our within our business because we are a 0:00:40.960 --> 0:00:44.479 private bank. We're actually Europe's oldest banks. We are we're 0:00:44.520 --> 0:00:46.839 a private bank. We're also an investment bank and have 0:00:46.920 --> 0:00:51.000 investment management, the institutional asset management where we deal a 0:00:51.040 --> 0:00:53.520 lot with the big funcion funds because the Dutch counsction 0:00:53.560 --> 0:00:56.200 sounds are very very big and bringing that all together 0:00:56.280 --> 0:00:59.280 to um see what the biggest intelligence comes out of 0:00:59.320 --> 0:01:02.240 battle and see how that can be helpful to our clients. 0:01:02.240 --> 0:01:04.680 It's actually cool looking at your resume, you worked at 0:01:04.720 --> 0:01:08.080 some of the oldest and most important banks in the world. 0:01:08.120 --> 0:01:12.000 We're at Rothschild, You're at Goldman sachs Um, and now 0:01:12.000 --> 0:01:15.360 you're at van Lanche. What are you focused on right now? Annaka? 0:01:15.400 --> 0:01:19.080 I mean, there's so much to watch here in the US, 0:01:19.160 --> 0:01:21.679 we're so concerned about the FED, in the macro picture. 0:01:21.720 --> 0:01:25.800 In Europe obviously energy and inflation is insane um. And 0:01:25.840 --> 0:01:28.399 then in Asia we learned this morning there's another lockdown 0:01:28.480 --> 0:01:30.880 in China, in a city with twenty one million people. 0:01:30.880 --> 0:01:34.440 Where do you look? Where do you look? I mean, 0:01:34.440 --> 0:01:37.080 there's there's so much to look at, and I think, 0:01:37.400 --> 0:01:38.880 you know, the only thing you can do is keep 0:01:38.880 --> 0:01:41.559 it very, very simple. And you know, the world's become 0:01:41.600 --> 0:01:44.520 obsessed with the latest inflation prints. The world is obsessed 0:01:44.560 --> 0:01:47.920 with how inflation prints are reacting to central bank policy 0:01:48.000 --> 0:01:50.680 rates moving, which almost every bank is, every central bank 0:01:50.760 --> 0:01:53.040 is doing the sides a few. That's that's what's different 0:01:53.080 --> 0:01:56.080 this time around. And I think talking about keeping it simple, 0:01:56.600 --> 0:01:59.000 the main thing that I think we're very often missing 0:01:59.000 --> 0:02:01.800 the mark on is the fact that it's it's illogical, 0:02:01.960 --> 0:02:06.480 it's nonsensical to see, how you know, spot inflation print 0:02:06.640 --> 0:02:11.440 are an adverted comments responding to the latest seventy basis 0:02:11.440 --> 0:02:13.880 points by the FED or the latest fifty basis points 0:02:13.880 --> 0:02:17.720 by the ECB, because it simply doesn't work that way. 0:02:17.800 --> 0:02:20.240 And I think the thing that we are most concerned 0:02:20.240 --> 0:02:23.520 about is the fact that central banks, particularly the FED, 0:02:23.840 --> 0:02:27.520 is so driven by trying to restore their credibility, so 0:02:27.639 --> 0:02:29.800 much so that they say, well, we continue to lift 0:02:29.880 --> 0:02:33.119 rate until inflation spot inflation near is our target of two. 0:02:34.080 --> 0:02:36.840 That's scary because there's a long work through mechanism and 0:02:36.919 --> 0:02:40.079 inflation today is a picture of you know, of of 0:02:40.240 --> 0:02:43.240 what the conditions were like one two years ago. So 0:02:43.960 --> 0:02:46.600 give us a sense, just from your perch in Europe here, 0:02:47.240 --> 0:02:51.600 how how our markets discounting the European Central Bank, the 0:02:51.639 --> 0:02:54.960 Bank of England in terms of their response and maybe 0:02:54.960 --> 0:02:58.480 what their goals should be, because again you've so many 0:02:58.520 --> 0:03:01.960 challenges for the Europeanic enemy in including the war in 0:03:02.120 --> 0:03:05.480 Ukraine and the impact on commodities, had it unique the 0:03:05.520 --> 0:03:09.800 central bankers and you're are thinking about it, well, we 0:03:09.840 --> 0:03:13.880 all forget actually the fact that around ECB actually started 0:03:13.919 --> 0:03:17.200 a strategic review and the reason they've charted a strategic 0:03:17.240 --> 0:03:20.080 reviewers they only have one mandate, it's not a dual mandate, 0:03:20.160 --> 0:03:23.480 and that mandates inflation full stop. And they had not 0:03:23.560 --> 0:03:26.800 been successful in getting inflation to the level they wanted. 0:03:26.800 --> 0:03:28.919 It was always too low. And suddenly, you know, out 0:03:28.919 --> 0:03:31.520 of nowhere, we've got the reverse problem. And the point 0:03:31.639 --> 0:03:33.799 is that you know that the problem was actually much 0:03:33.880 --> 0:03:36.600 less complex then when they were already doing a strategic review. 0:03:37.000 --> 0:03:39.440 Now it's far more complex. And I think the issue 0:03:39.880 --> 0:03:41.760 is really well sums up by the fact that on 0:03:41.760 --> 0:03:45.720 one hand, it's more hawkish behavior. KIWI has only recently 0:03:45.760 --> 0:03:48.640 just ended. Actually rates are obviously going up. On the 0:03:48.640 --> 0:03:51.480 other hand, you've got this, you know, this mechanism to 0:03:51.560 --> 0:03:54.120 protect southern Europe, which you could argue with nothing more 0:03:54.160 --> 0:03:57.000 than a sort of yield spread mechanism. But that feels 0:03:57.040 --> 0:03:59.560 like hitting the accelerator and the break at the same time. 0:04:00.040 --> 0:04:03.000 And I think that sort of sums up the troublesome 0:04:03.040 --> 0:04:06.680 situation in Europe. And you know what, Yeah, the murky 0:04:06.760 --> 0:04:09.040 picture that the ECB is trying to deal with. Murky 0:04:09.200 --> 0:04:11.640 is a great word to describe what the ECB has 0:04:12.000 --> 0:04:15.480 has to do is doing. Does um I don't know 0:04:15.600 --> 0:04:18.200 where to go with that when I think about um 0:04:18.680 --> 0:04:22.599 economy in Europe, I'm more concerned about people operating on 0:04:22.640 --> 0:04:25.240 the ground, especially in the UK where you are. I mean, 0:04:25.240 --> 0:04:28.840 if you look at financing costs, they're just shooting higher. 0:04:29.320 --> 0:04:31.760 If you look at the value of the pound, it's 0:04:31.839 --> 0:04:35.040 dropping like a lead balloon. And imagine what kind of 0:04:35.080 --> 0:04:38.279 position that puts your average, you know, midsize business owner 0:04:38.320 --> 0:04:43.159 in UM. He has to buy everything from France, Germany, 0:04:43.680 --> 0:04:47.000 Italy and uh, he has to finance in a in 0:04:47.040 --> 0:04:50.440 a climate that just makes it almost impossible to survive that. 0:04:50.440 --> 0:04:54.080 That must mean a huge recession ahead. And I mean 0:04:54.120 --> 0:04:57.600 compounded with that's you know, the sort of ripple effects 0:04:57.640 --> 0:05:01.000 of Brexit. You know, we're still figuring that out. Talk 0:05:01.040 --> 0:05:07.600 about just basic shipping, basic customs, delays, costs, I mean, 0:05:07.640 --> 0:05:09.719 we're still we're still figuring that all out. So it 0:05:09.880 --> 0:05:12.200 is a to your point, So that with a local 0:05:12.279 --> 0:05:14.279 man woman on the ground, you know, just trying to 0:05:14.320 --> 0:05:16.800 do their thing, trying to do their business, it is 0:05:16.839 --> 0:05:20.719 a really really challenging environment. The only thing which is 0:05:20.760 --> 0:05:23.240 sort of odd, I think sitting in Europe, which we're 0:05:23.240 --> 0:05:25.040 all trying to kind of get our heads around. On 0:05:25.040 --> 0:05:28.040 one hand, you've got all of this, which is extremely scary. 0:05:28.080 --> 0:05:29.880 On the other hands, try and book a restaurant on 0:05:29.920 --> 0:05:33.560 a Friday night, it's hopeless, you know, and obviously more 0:05:33.600 --> 0:05:35.839 in central London that is. But you know, try and 0:05:35.839 --> 0:05:38.320 book a holiday right during the holiday season. So it's 0:05:38.360 --> 0:05:41.600 this sort of bizarre situation where it doesn't look like 0:05:41.640 --> 0:05:43.920 a recession, it doesn't feel like one. When you want 0:05:43.960 --> 0:05:45.200 to go out and you know, get hold of a 0:05:45.240 --> 0:05:48.360 service somehow, or especially in the luxury goods market, I mean, 0:05:48.360 --> 0:05:50.800 good luck finding a pair of shoes or something. But 0:05:50.880 --> 0:05:52.479 on the other hand, you've got all these sort of 0:05:52.640 --> 0:05:56.159 very very scary factors coming together. And that's why everyone 0:05:56.240 --> 0:05:59.000 is talking about a cold winter for Europe, because I 0:05:59.000 --> 0:06:01.520 think the summer period is all about let's just go 0:06:01.720 --> 0:06:05.000 have fun, enjoy the summer of you know, close our 0:06:05.040 --> 0:06:07.200 eyes to all the scary staff and enjoy the sun. 0:06:07.640 --> 0:06:10.200 But what happens when the sun goes away? Or what 0:06:10.200 --> 0:06:12.520 happens when you book a flight on Luftanza flying in 0:06:12.560 --> 0:06:17.120 and out of Frankfort or her Munich tomorrow stranded there? 0:06:17.160 --> 0:06:20.000 Of course they're going on because they want Look, it 0:06:20.080 --> 0:06:23.080 makes perfect sense to me. I want a ten percent raise, right, 0:06:23.120 --> 0:06:25.440 wouldn't you if you look at inflation like that, you 0:06:25.480 --> 0:06:27.479 want you want that, you know, if you've got to 0:06:27.480 --> 0:06:29.200 if you want to stop it somewhere, stop it on 0:06:29.480 --> 0:06:32.200 profit margins. But that's just not as easy to do. Annika, 0:06:32.279 --> 0:06:33.960 great having you on. Thanks so much for joining us. 0:06:34.000 --> 0:06:36.479 Annikatre On their managing director. She is the head of 0:06:36.480 --> 0:06:38.880 the Competence Center at Van Lanche at kemp and the 0:06:38.920 --> 0:06:42.400 oldest bank in Europe. It's very cool and great perspective 0:06:42.800 --> 0:06:49.039 getting in that from Anika. Get right to our next guest, 0:06:49.080 --> 0:06:53.440 Johnathan Hurdle. He's executive chairman Hurtle and call Hurtle, Callahan 0:06:53.520 --> 0:06:58.320 and Company. I mean he's all in Penn State Batchelor 0:06:58.400 --> 0:07:02.440 degree mb A. Penn State opens the season. I believe 0:07:02.600 --> 0:07:07.040 tonight at per Due Penn State is a I think 0:07:07.040 --> 0:07:09.039 there are a three and a half point favorite to see. 0:07:09.040 --> 0:07:11.040 All right, John, thanks so much for joining us here. 0:07:11.480 --> 0:07:14.920 Um boy, you've been in this market a long time. 0:07:15.040 --> 0:07:18.240 You've seen the site longer than Paul, even longer than me, 0:07:18.240 --> 0:07:21.080 and that's saying something. What do you make about our 0:07:21.080 --> 0:07:24.760 current environment right here? Well, good morning Matt and Paul. 0:07:24.800 --> 0:07:26.640 It's nice to talk to you again. You know, I 0:07:26.680 --> 0:07:29.120 think we're still in the equoffex from the from the 0:07:29.200 --> 0:07:31.840 COVID crisis, and so it's going to take us a 0:07:31.840 --> 0:07:33.720 while to work through. Here. We had this period of 0:07:33.760 --> 0:07:37.880 time where we had six trillion dollars of fiscal stimulation 0:07:38.200 --> 0:07:41.720 while we had the most flexible and supportive monetary policy 0:07:41.720 --> 0:07:44.280 in history, and there's a lot of ramifications for that. 0:07:44.440 --> 0:07:47.000 So that's what we're going through right now. We had, 0:07:47.080 --> 0:07:49.200 you know, we have more than full employment. You think 0:07:49.200 --> 0:07:53.400 about the FED having a dual mandate full employment and 0:07:53.480 --> 0:07:56.520 contain inflation. Well, we have more than full employment. We've 0:07:56.520 --> 0:07:59.560 sort of overshot this and so now they're focused on 0:08:00.080 --> 0:08:03.000 percent on inflation control. And you know, we saw that 0:08:03.080 --> 0:08:06.680 with the Chairman's commentary. I'm actually in Jackson Hole right now, 0:08:06.760 --> 0:08:10.640 still out here, so you know, it was a you know, 0:08:10.800 --> 0:08:14.720 very clear message from the Chairman and that's what the 0:08:14.720 --> 0:08:17.800 markets reacting to right now. What do you think about 0:08:18.480 --> 0:08:22.280 UM their willingness to hold firm, I mean, especially if 0:08:22.320 --> 0:08:25.800 we start to see real job losses, you know, real 0:08:25.920 --> 0:08:30.200 families who all of a sudden can't finance their American 0:08:30.320 --> 0:08:33.440 dream lives. Um is the FED going to continue to 0:08:33.440 --> 0:08:35.440 put them out of work on purpose in order to 0:08:35.480 --> 0:08:39.960 retain drain and inflation. Well, it's it's that's the dynamic. 0:08:40.160 --> 0:08:42.280 How much will employment where they're going to look at 0:08:42.280 --> 0:08:45.200 that unemployment number, and you know, the risk is that 0:08:45.240 --> 0:08:48.760 they overshoot. We overshot in the pandemic, and that was 0:08:49.120 --> 0:08:51.839 understandable because I really think it's hard for people to 0:08:52.240 --> 0:08:54.679 turn back the clock and what was it like two 0:08:54.760 --> 0:08:57.360 years ago and how frightened everyone was, and we didn't 0:08:57.360 --> 0:08:59.720 know we were going to have a vaccine. But Jonathan, 0:08:59.760 --> 0:09:02.760 you made the point that we had six trillion dollars 0:09:02.760 --> 0:09:06.319 of fiscal stimulus. I mean, remember when TARP was unbelievably huge, 0:09:06.720 --> 0:09:11.920 that was eight billion. Six trillion dollars is absolutely loony tunes. 0:09:12.840 --> 0:09:15.440 Six trillion And by the way, you know, you have 0:09:15.480 --> 0:09:18.040 to give Larry Summers credit because he said we were 0:09:18.080 --> 0:09:20.680 trying to fill a two trillion dollars gap was six 0:09:22.040 --> 0:09:26.120 So there was that the government's tend to overreact. We're 0:09:26.120 --> 0:09:29.320 they're very not very good at fine tuning, and so 0:09:29.400 --> 0:09:33.040 they overreacted. They put six trillion at the same when 0:09:33.040 --> 0:09:37.400 the FED was being aggressively flexible and supportive. So that 0:09:37.720 --> 0:09:43.000 combination in retrospect um is unprecedented. But we were facing 0:09:43.080 --> 0:09:46.600 unprecedented times and to look backwards. This is a classic 0:09:46.679 --> 0:09:49.960 kind of a behavioral economics problem where we think it 0:09:50.040 --> 0:09:52.480 was more predictable than it was at the time. We 0:09:52.559 --> 0:09:55.760 look back global pandemic, World's coming to an end. We've 0:09:55.800 --> 0:09:58.360 got to be dramatic. We were too dramatic in retrospect. 0:09:59.480 --> 0:10:04.120 So it is a good investor supposed to do today. 0:10:04.160 --> 0:10:06.560 What are you telling your clients? Do you do you 0:10:06.600 --> 0:10:08.960 have to be all macro all the time? By the way, John, 0:10:09.120 --> 0:10:14.040 I mean I know, well yeah, so I mean if 0:10:14.080 --> 0:10:17.720 you look at allocations, that's going to control about of 0:10:17.720 --> 0:10:21.440 the variability and performance over time. So your allocations most 0:10:21.679 --> 0:10:24.640 unless you've got a concentrated position in ten stocks. But 0:10:24.679 --> 0:10:27.080 if you're a traditional investor, you still want to be 0:10:27.120 --> 0:10:30.720 overweight stocks because bond rates are rising, and so we 0:10:30.760 --> 0:10:34.840 want to be short duration, relatively short duration, fully invested 0:10:34.920 --> 0:10:39.560 in patient here. Alright, So are there some sectors here 0:10:39.559 --> 0:10:42.439 that we should be focusing on? Um? Do I need 0:10:42.480 --> 0:10:45.439 to get orfully diversified? Yeah? What do I want to 0:10:45.440 --> 0:10:48.479 be fully diversified here? I want to stay fully diversified. 0:10:48.480 --> 0:10:51.360 But personally, because inflation is rising, I want to be 0:10:51.440 --> 0:10:54.760 with the companies the secular growth companies that have real 0:10:54.800 --> 0:10:58.760 pricing power. The best hedge against inflation over the long 0:10:58.840 --> 0:11:02.560 run is a diversified equity portfolio because the managers can 0:11:02.640 --> 0:11:06.400 pass through the inflation increases in pricing. But you want 0:11:06.440 --> 0:11:08.360 to be with the companies who can do that so 0:11:08.440 --> 0:11:10.800 on the margin, not dramatically, but on the margin. I 0:11:10.840 --> 0:11:13.200 want to be with those high quality growth companies who 0:11:13.200 --> 0:11:15.360 have pricing power. By the way, we just got a 0:11:15.400 --> 0:11:17.520 minute left, but I'm looking at your resume. We see 0:11:17.559 --> 0:11:20.439 that you went straight out of the Marines to Goldman 0:11:20.480 --> 0:11:24.000 Sachs and nowadays you know Goldman Sachs. The kids they're 0:11:24.000 --> 0:11:26.839 are making videos and posting them on TikTok about how 0:11:26.840 --> 0:11:29.400 they work too hard and they have to do it 0:11:29.440 --> 0:11:30.960 from home. They don't want to go into the office. 0:11:31.200 --> 0:11:35.120 What do you think about today's class of bankers, of 0:11:35.200 --> 0:11:39.240 young bankers. I think Golden Sacks is a wonderful company. 0:11:39.280 --> 0:11:41.760 I've been away from there for a long time, but 0:11:42.280 --> 0:11:46.080 I just would say this that you know, hard work matters, 0:11:46.480 --> 0:11:48.840 and uh, you know, whether they're working too hard or 0:11:48.880 --> 0:11:53.160 not is deal specific. But we've gotta that's your apprenticeship, 0:11:53.200 --> 0:11:56.160 that's where you weren learn your trade and the people 0:11:56.200 --> 0:11:58.880 are going to work hard and smart or going to succeed. 0:11:59.000 --> 0:12:01.720 So you know, I realized. I also think that you 0:12:01.840 --> 0:12:04.800 mentioned earlier that we're getting people coming back to work. 0:12:04.880 --> 0:12:08.520 This is another part of that COVID echo effect. It's 0:12:08.520 --> 0:12:10.240 going to take a couple of years here for people 0:12:10.280 --> 0:12:12.160 to figure this out, but we're gonna have people back 0:12:12.160 --> 0:12:14.200 at work. It's good. I'd like to describe it as 0:12:14.200 --> 0:12:17.280 two thousand nineteen No one improved and we're gonna go 0:12:17.320 --> 0:12:19.120 back to pre COVID, but it's we're going to have 0:12:19.240 --> 0:12:21.720 the ability to work more flexibly from home when we 0:12:21.760 --> 0:12:24.400 need to because we've all developed that. So that's a 0:12:24.600 --> 0:12:28.280 that's a very significant improvement in our lives. So we'll 0:12:28.280 --> 0:12:30.679 get there, all right, John, great stuff, as always, always 0:12:30.679 --> 0:12:34.559 appreciate getting your perspective. John Hurdle, Executive Chairman Hurdle, Callahan 0:12:34.679 --> 0:12:41.560 and Company and a proud Nitnity lion. All right, let's 0:12:41.559 --> 0:12:44.680 talk the flowers business, and we talk to floral business, 0:12:44.720 --> 0:12:47.520 floors business. We talked to Chris McCann, who else. He's 0:12:47.559 --> 0:12:51.000 the CEO of one eight hundred Flowers. Chris, thanks so 0:12:51.080 --> 0:12:54.040 much for joining us here. Just tell us how your 0:12:54.080 --> 0:12:57.240 company one eight hundred flowers, how it kind of evolved 0:12:57.679 --> 0:13:00.280 and was impacted by the pandemic and kind of what's 0:13:00.360 --> 0:13:03.040 your outlook right here? Well, thank you, it's good to 0:13:03.080 --> 0:13:06.559 be here, gentlemen. It's been a turbulent couple of years, 0:13:06.559 --> 0:13:09.120 that's for sure. The interesting thing is we pretty get 0:13:09.120 --> 0:13:11.840 down into the kind of these three categories, these three 0:13:11.840 --> 0:13:16.320 sectors pre COVID, during COVID, and post COVID. And during 0:13:16.320 --> 0:13:18.840 the pre COVID stage, we've been we committed to growing 0:13:18.840 --> 0:13:22.600 our business or increasing the growth rate from a low 0:13:22.760 --> 0:13:25.480 single digit to a double digit growth rate. We made 0:13:25.480 --> 0:13:29.079 the appropriate investment to that and achieved that. That helped 0:13:29.080 --> 0:13:33.040 position us well for then the unprecedented surgeon demand that 0:13:33.200 --> 0:13:37.000 we saw during the pandemic where we set record levels 0:13:37.000 --> 0:13:40.719 and revenue record levels, and profits record levels and customers 0:13:41.120 --> 0:13:44.280 customer database. And then we've moved now into the late 0:13:44.360 --> 0:13:48.559 stage COVID or or hopefully post COVID stage, and as 0:13:48.600 --> 0:13:50.440 we're coming out of that, we have the comps that 0:13:50.480 --> 0:13:52.760 we're dealing with which we're holding onto the business and 0:13:52.800 --> 0:13:55.880 retaining the business that we gained during the pandemic, but 0:13:56.000 --> 0:13:58.960 we're doing so in this inflationary environment. That's you know, 0:13:59.040 --> 0:14:03.600 causing challenges for us on the close Morgent line. And well, 0:14:03.600 --> 0:14:05.720 and this is why, this is why I love having 0:14:05.720 --> 0:14:08.040 you on, Chris, because it's not just about the flower business. 0:14:08.120 --> 0:14:11.400 I think your business is representative of a lot of 0:14:12.040 --> 0:14:16.640 companies that have grown really successful brands. Um. You know, 0:14:17.280 --> 0:14:22.120 businesses that thrived during the lockdowns, but now are going 0:14:22.240 --> 0:14:25.520 to have trouble maintain the same growth in the face 0:14:25.640 --> 0:14:29.360 of higher labor costs, higher energy costs, um, you know, 0:14:29.440 --> 0:14:33.280 supply chain issues. Where do you see uh or do 0:14:33.360 --> 0:14:34.840 you see any kind of light at the end of 0:14:34.840 --> 0:14:36.560 the tunnel in terms of that, I'm sure you've got 0:14:36.720 --> 0:14:39.600 people who want to be paid more. Um. Delivery costs 0:14:39.640 --> 0:14:42.120 must be higher and higher as gasoline, although they're coming 0:14:42.120 --> 0:14:46.520 down again, but gasoline prices went up um uh. And 0:14:46.640 --> 0:14:48.760 you know you've got to be getting these flowers from 0:14:48.800 --> 0:14:51.880 all over the world. Yeah, so we certainly see great 0:14:51.920 --> 0:14:54.600 opportunity in front of us. Know. Well, you know, even 0:14:54.600 --> 0:14:57.120 though you pointed out people who you know, the challenges 0:14:57.160 --> 0:15:00.480 against copying, against the record us A we had, we 0:15:00.480 --> 0:15:03.120 still grew for the year four percent over last year, 0:15:03.440 --> 0:15:06.920 which was over the year just prior to the pandemic, 0:15:07.480 --> 0:15:10.560 so and we're holding onto that customer base, we're holding 0:15:10.600 --> 0:15:13.760 onto that higher revenue stream. So now we're dealing with 0:15:13.800 --> 0:15:17.160 the unprecedented cost persons that came in and we're mitigating 0:15:17.200 --> 0:15:19.640 those as fast as we can. Good news is we're 0:15:19.640 --> 0:15:22.200 starting to see is I just heard the report, We're 0:15:22.200 --> 0:15:25.520 starting to see more and more indicators that the inflation 0:15:25.640 --> 0:15:28.640 is eating. We're seeing ocean freight rates drop, was seeing 0:15:29.280 --> 0:15:33.240 labor moderate and availability of labor getting better. So we're 0:15:33.240 --> 0:15:35.000 seeing the light at the end of the tunnel. But 0:15:35.080 --> 0:15:37.640 in addition to that, we're making sure that we're making 0:15:37.640 --> 0:15:40.600 the investments in our business for the future. We're spending 0:15:40.600 --> 0:15:44.880 money to automate our facilities, are distribution centers, spending money 0:15:44.880 --> 0:15:48.080 to build inventory early and bring inventory in early to 0:15:48.120 --> 0:15:51.520 make sure we're helping without labor challenges that we've had. So, 0:15:51.840 --> 0:15:53.720 you know, a company like ours, we're not just sitting 0:15:53.720 --> 0:15:56.120 by and hoping things get better. We're making sure we 0:15:56.240 --> 0:15:58.520 change our business to meet through to come and demand today. 0:15:58.680 --> 0:16:03.120 So what is it like working in this rising rate environment? 0:16:03.160 --> 0:16:06.119 Do you make sure UM You've got all your financing 0:16:06.120 --> 0:16:09.080 needs taken care of before rates get out of control? 0:16:09.440 --> 0:16:12.280 UM you know, is it. I mean, I'm sure you're 0:16:12.600 --> 0:16:15.080 generating a ton of cash, so it's not that as 0:16:15.160 --> 0:16:16.360 much of a problem for you as it is for 0:16:16.400 --> 0:16:18.560 other businesses. But you still got to be looking at 0:16:18.560 --> 0:16:21.680 these rates right oh, constantly, and we're constantly in the 0:16:21.800 --> 0:16:24.080 conversations with our banks making sure that we have the 0:16:24.080 --> 0:16:27.840 appropriate banking facilities we need well, you know, for right now, 0:16:27.920 --> 0:16:30.720 for example, ramping out our inventory for the holiday season, 0:16:31.080 --> 0:16:33.880 so we rely on the appropriate revolval facilities for that 0:16:34.320 --> 0:16:36.080 to make sure we can do that. In addition to 0:16:36.120 --> 0:16:39.000 the free cash flow that were generated, and we're looking 0:16:39.040 --> 0:16:40.960 to make sure that we continue to grow out business 0:16:41.000 --> 0:16:42.920 and make the investment for the long term because we 0:16:42.960 --> 0:16:45.480 see great opportunity in front of us. You know, the 0:16:45.520 --> 0:16:48.560 world changed with this pandemic, and one of the benefits 0:16:48.560 --> 0:16:51.200 of the change is that it's made people realize that 0:16:51.240 --> 0:16:53.440 we need to stay connected to each other and build 0:16:53.440 --> 0:16:57.400 and maintaining relationships. That's what our business does. We inspire 0:16:57.440 --> 0:17:01.320 our customers to stay connected. So, Chris, talk to us 0:17:01.320 --> 0:17:04.280 about some of the challenges that you and are facing. 0:17:04.480 --> 0:17:08.120 I'm thinking labor number one. You mentioned number two, fertilizer. 0:17:08.160 --> 0:17:10.440 We hear a lot of inflation costs there, right, inflation 0:17:10.440 --> 0:17:13.320 costs there, and you know, supply availability talks just about 0:17:13.359 --> 0:17:15.520 some of the challenges from the supply side, you guys 0:17:15.560 --> 0:17:18.800 aren't dealing with. The supply chain for us has been 0:17:18.840 --> 0:17:21.280 certainly has been challenging, and mostly he's on the food 0:17:21.320 --> 0:17:23.920 group side about business, not so much on the floral side. 0:17:24.040 --> 0:17:27.200 You mentioned fertilizer itself, that's close with some of our 0:17:27.280 --> 0:17:30.840 plants supplies the challenge, but it's not a major challenge. 0:17:30.840 --> 0:17:32.800 And on the fresh cut floral side, it's not been 0:17:32.840 --> 0:17:35.560 a major challenge for us. Again, I think that which 0:17:35.560 --> 0:17:38.320 is because just so people know it's not just flowers 0:17:38.320 --> 0:17:41.720 that you're delivering. You also have obviously, you know, balloons 0:17:41.760 --> 0:17:44.960 and teddy bears and you know melon balls, right, that's 0:17:44.960 --> 0:17:47.560 what you're talking about, you know. In our food group, 0:17:47.600 --> 0:17:52.400 which is headlined by Harry and David um Cheryl's Cookies 0:17:52.440 --> 0:17:55.879 wanting to one a hundred baskets. Newest acquisition we just 0:17:55.960 --> 0:18:00.960 made a few months ago, Vital Choice sustainably caught seafood, 0:18:01.040 --> 0:18:04.240 wild caught seafood. So we bring all these different Coli 0:18:04.280 --> 0:18:06.479 made foods to the table, and the packaging for that 0:18:06.600 --> 0:18:08.960 is where the supply chain gets disrupted a little bit, 0:18:09.520 --> 0:18:12.359 so we made made all of the adjustments when that 0:18:12.760 --> 0:18:15.000 necessary to make sure they were in a good position 0:18:15.040 --> 0:18:17.679 for this holiday and we're looking forward to It is 0:18:17.680 --> 0:18:21.080 the dollar at all, um, you know, a tailwind for you? 0:18:21.160 --> 0:18:22.840 It does it give you a little bit more strength 0:18:22.880 --> 0:18:26.240 to have this incredibly strong currency or do you operate 0:18:26.560 --> 0:18:30.480 um in terms of purchases mostly in the US. Oh, 0:18:30.800 --> 0:18:33.240 it always helps to have a stong currency, but mostly 0:18:33.240 --> 0:18:36.280 where we operate within the US. We employed some products 0:18:36.280 --> 0:18:39.080 from Major and that's you know, caused problems last year. 0:18:39.080 --> 0:18:41.679 It's looking much better this year, both as far as 0:18:41.800 --> 0:18:44.000 cost to come out of these costs as well as shipping. 0:18:44.880 --> 0:18:48.280 But I'll always take the tail wind. If ever there 0:18:48.320 --> 0:18:51.560 was a time to buy a British or European company, Chris, now, 0:18:51.640 --> 0:18:54.680 is it? I don't know. I look at somebody inflation 0:18:54.760 --> 0:18:56.520 rates that they're looking at over there. I'm not sure 0:18:56.520 --> 0:18:59.280 I can jump to that so quick. Hey, Chris, I'm 0:18:59.320 --> 0:19:01.240 just looking at your price chart. It looks like you're 0:19:01.240 --> 0:19:07.000 one of those, you know, um kind of a pandemic 0:19:07.040 --> 0:19:09.280 type of stock. You know people Your stock trade up 0:19:09.359 --> 0:19:12.240 dramatically up to close above thirty five on during the 0:19:12.240 --> 0:19:14.440 early days of the pandemic has traded down since what's 0:19:14.480 --> 0:19:19.360 kind of the message that you're you're giving your shareholders. Well, 0:19:19.200 --> 0:19:22.119 we've just keep focusing on the down the core of 0:19:22.160 --> 0:19:24.959 the business. And again, as we look and we've doubled 0:19:24.960 --> 0:19:27.080 the size at a customer base in the last couple 0:19:27.080 --> 0:19:29.480 of years, we've doubled the size of the business overall, 0:19:29.960 --> 0:19:33.240 We've doubled the size of our passport loyalty membership program, 0:19:33.600 --> 0:19:37.240 We've significantly expanded our product offering. And when we look 0:19:37.320 --> 0:19:41.000 at the underlying health of the business, we still see 0:19:41.000 --> 0:19:44.679 the relationships with building with the customers, customers cohorts that 0:19:44.720 --> 0:19:47.600 are buying from more than one brand coming back more 0:19:47.680 --> 0:19:50.040 frequently than like two to three times out of the 0:19:50.080 --> 0:19:53.400 average customer. So that underlying health of the business tells 0:19:53.440 --> 0:19:56.639 us as we work through this challenging inflation every period, 0:19:56.960 --> 0:20:00.040 we are extremely well positioned company to get back go 0:20:00.119 --> 0:20:02.680 on tracks from a higher growth rate in a higher 0:20:02.680 --> 0:20:05.399 profitability rate. You're always gonna keep the one eight hundred. 0:20:05.520 --> 0:20:07.480 I just type in flowers dot com when I want 0:20:07.520 --> 0:20:09.240 to go to your website, but it's obviously one eight 0:20:09.320 --> 0:20:12.360 hundred flowers dot com. You own both domains. We own 0:20:12.440 --> 0:20:14.480 both do means the brand that we really built is 0:20:14.520 --> 0:20:17.240 one hundred Flowers. It's a question we It's a question 0:20:17.280 --> 0:20:18.719 we go through all the time. We want to make 0:20:18.760 --> 0:20:22.000 sure our brands are always appropriate and elevant for the day. 0:20:22.040 --> 0:20:24.320 Level off already, all right, great stuff as always, Chris 0:20:24.480 --> 0:20:27.560 always loved getting h update on your business and the 0:20:27.640 --> 0:20:30.240 retail space in general. Chris McCann, he's the CEO of 0:20:30.359 --> 0:20:33.720 one eight hundred Flowers f l w S is the 0:20:33.840 --> 0:20:38.120 tigger to type into your Bloomberg terminal. Always a fascinating discussion. 0:20:38.200 --> 0:20:44.600 One eight hundred Flowers. We all know the brand. Well. 0:20:44.640 --> 0:20:49.400 We did get some pretty good m manufacturing data this morning. 0:20:49.440 --> 0:20:51.639 Let's break it down with Tim Fury, the chairman of 0:20:51.720 --> 0:20:54.679 the Institute of Supply Management. Tim, I s M. Come 0:20:54.720 --> 0:20:57.160 in a little bit better expected, steady with last month. 0:20:57.240 --> 0:21:00.080 What do you make of it? We'd beat expectation, and 0:21:00.440 --> 0:21:02.640