WEBVTT - SRG's Flickinger Says Legal Strategy Erred on ODP-SPLS (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World hand Quarters.

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<v Speaker 1>I'm Charlie Palot. What a difference a day makes. Stocks

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<v Speaker 1>tumbled from the biggest gain in two months today, Disappointing

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<v Speaker 1>numbers out of Disney and Macy's raised outs about the

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<v Speaker 1>strength of the American consumer. SMP five hundred index down

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<v Speaker 1>one percent, falling nineteen points. Nass Stack also down one percent,

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<v Speaker 1>dropping forty nine points down, Industrials down two hundred seventeen

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<v Speaker 1>a drop there of one point two percent. The ten

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<v Speaker 1>year up eight thirty seconds yield one point seven three percent,

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<v Speaker 1>Gold up fourteen dollars the ounce to twelve seventy eight,

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<v Speaker 1>gain of one point one percent, and crude up a

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<v Speaker 1>dollar forty two a barrel forty six oh eight. Again

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<v Speaker 1>there of three point two percent. I'm Charlie Pellotton. That's

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<v Speaker 1>a Bloomberg Business flash. You're listening to taking stock with

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<v Speaker 1>Catholic Days and Pim Fox on Bloomberg Radio. Is the

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<v Speaker 1>US consumer just running out of gas? Or are the

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<v Speaker 1>nation's biggest retailers just losing ground? To the biggest online

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<v Speaker 1>retailers like Amazon, Macy's, renewing concerns about the retail industry

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<v Speaker 1>leading to a stock route for many companies from Walmart

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<v Speaker 1>to Ross stores, the share price closing down to thirty

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<v Speaker 1>one dollars and change today. Joining us now to put

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<v Speaker 1>it all together is Bert Flickinger, Managing Director, Strategic Resource Group,

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<v Speaker 1>joining us in our New York studio. So, Bert, let's

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<v Speaker 1>just dive right into Macy's. Are they doing something wrong?

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<v Speaker 1>Are they? Or is it just the fact that the consumer,

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<v Speaker 1>no matter how how much you hit it right on

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<v Speaker 1>the bull's eye, just isn't spending right now, Kathleen, Macy's

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<v Speaker 1>is doing just about everything right. But to your point,

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<v Speaker 1>no matter how much the consumer would have saved in

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<v Speaker 1>gasoline over the last year, that still doesn't offset having

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<v Speaker 1>an essentially zero interest rates and bank accounts and load

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<v Speaker 1>and no interest rates. So consumer literally has to save

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<v Speaker 1>three to four percent more per year for retirement or

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<v Speaker 1>for weddings or whatever it is. So that comes directly

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<v Speaker 1>out of consumer spending, and Macy's and the others are

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<v Speaker 1>taking a tremendous toll. Is Shue and Charlie Pellett referenced Bert,

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<v Speaker 1>I want to get sort of an understanding of the

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<v Speaker 1>online commerce world because a Warren Buffett, chairman of Berkshire Hathaway,

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<v Speaker 1>at the April thirtieth annual meeting, this is what he

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<v Speaker 1>said about Amazon. He said, it's a big force that

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<v Speaker 1>will disrupt more businesses. Now, let's just concede that he

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<v Speaker 1>does own two percent of Walmart. But he said if

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<v Speaker 1>I owned a bunch of shopping malls or something like that,

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<v Speaker 1>I would be thinking plenty hard about what they looked

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<v Speaker 1>like ten or twenty years from now. You also said

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<v Speaker 1>they have a really Amazon has a real advantage because

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<v Speaker 1>it has intense focus on having hundreds of millions of

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<v Speaker 1>generally very be customers getting very quick delivery. That doesn't

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<v Speaker 1>sound like a ringing endorsement for a brick and mortar

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<v Speaker 1>store like Walmart. Definitely not for Walmart, not for Walmart

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<v Speaker 1>dot Com. And it's all of us forecast for Bloomberg

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<v Speaker 1>and two thousand seven, the retail recession that lasted the

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<v Speaker 1>balance of this this decade. We've also all forecast the

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<v Speaker 1>retail accelerating retail ice age. It's continuing now from nineteen

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<v Speaker 1>and Buffet's point, at the Berkshire Hathaway meeting. You'll have

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<v Speaker 1>a number of shopping centers filed for bankruptcy and liquidation, uh,

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<v Speaker 1>number of retailers, and they're gonna be catastrophic consequences for

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<v Speaker 1>the public sector because you'll you'll have public budgets impaired

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<v Speaker 1>without the sales tax ticking time bombs on pension plans.

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<v Speaker 1>Retail employees more people than any other industry, the layoffs

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<v Speaker 1>and the corresponding collateral consequences will ripple through the economy,

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<v Speaker 1>and it will be all the all the all the while,

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<v Speaker 1>fifty four million Americans are is on Prime subscribers, all

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<v Speaker 1>the while they're paying almost a hundred dollars a year,

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<v Speaker 1>all the while, all the while pim and increasing at

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<v Speaker 1>nearly a compounded growth rate in all the key areas

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<v Speaker 1>you referenced. So uh. And of course, you can't in

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<v Speaker 1>order to be be a successful mall operator, to be

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<v Speaker 1>in fact, to be a very successful store in one

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<v Speaker 1>of those malls, there has to be a lot of

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<v Speaker 1>stores around. You can't just be Macy's and a couple

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<v Speaker 1>of others. And you've also said that this is one

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<v Speaker 1>of the problems that there's some some other tenants some

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<v Speaker 1>of the retailers that are going down the tubes. And

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<v Speaker 1>that's another thing hurting companies like Macy's. Kathleen is you're

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<v Speaker 1>referencing Macy's problem is that neighborhood's going bad. So for example,

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<v Speaker 1>New Milford Mall outside of Pittsburgh, Simon Property Good owner

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<v Speaker 1>mall still filed for bankruptcy because their occupancy rate drafted

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<v Speaker 1>by about thirty percent when two key mall owners uh

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<v Speaker 1>uh mall retailers left. So Macy's is a co anchor,

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<v Speaker 1>just didn't have enough customer account to keep going. And

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<v Speaker 1>the number of inlines are closing. So it's you and

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<v Speaker 1>pen We have reported in Syriatum uh Sports Authority, Eastern

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<v Speaker 1>Mountain Sports Sports Shelle uh and and and so many

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<v Speaker 1>other category dominant and anchor retailers are closing that Macy's

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<v Speaker 1>can't carry them all by itself and is paying a

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<v Speaker 1>tremendous price even though they're doing well. In his Charlie

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<v Speaker 1>Pellet indicated Disney is really the leading indicator for us

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<v Speaker 1>in terms of the health of the consumer, and if

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<v Speaker 1>Disney can't turn the corner, they're real concerns about the

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<v Speaker 1>consumer and the economy in general. Steve Old who used

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<v Speaker 1>to be I believe the head of Office Depot. That's

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<v Speaker 1>why I'm mentioning him to you. He says, he's said

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<v Speaker 1>in the past that e commerce and smaller specialty shops

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<v Speaker 1>we're killing department stores. Is there anything that you see

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<v Speaker 1>that would make that statement untrue? Well, also also with

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<v Speaker 1>the president of Gallery Lafayette UM in Europe and worldwide,

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<v Speaker 1>department stores are dead because the shopper basis is going

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<v Speaker 1>in different directions. But it's also a lack of antitrust enforcements,

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<v Speaker 1>so with Amazon and sales taxes, but us also it's

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<v Speaker 1>a brilliance of Bezos. So for example, Bezos has invested

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<v Speaker 1>in five million distribution centers square footage just New York,

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<v Speaker 1>New Jersey, Philadelphia. A lot of its robotic sized, so

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<v Speaker 1>their cost to your point on Prime, they can get

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<v Speaker 1>the merchandise faster, So Staples doesn't get affirmed by Judge

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<v Speaker 1>Emmett's solvent that was that the merger's blocked. Was that

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<v Speaker 1>a mistake We got about thirty seconds left. Uh, it

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<v Speaker 1>probably was a mistake. But to pimps point, I can

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<v Speaker 1>order a cartridge from Amazon and Prime and get it

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<v Speaker 1>in nine hours. It takes help increase Amazon's dominance by

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<v Speaker 1>blocking this merger and Amazons less so. Uh, they should

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<v Speaker 1>have invoked a wild got chall should have invoked to

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<v Speaker 1>fill company doctrine for office depo office max. Uh, there's

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<v Speaker 1>some questions and for in my professional view on antitrust

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<v Speaker 1>representation for another day. Thank you very much. I think

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<v Speaker 1>the star the stores will be around a little at

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<v Speaker 1>least a little bit longer we can have that, uh conversation.

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<v Speaker 1>He'll be a real retail renaissance after the rationalizations starting

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<v Speaker 1>in all right, Well, we'll hope you're all around until then.

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<v Speaker 1>Bert Flicking Cherre, thank you very much, Managing Director, Strategic

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<v Speaker 1>Resource Group. Shares of Macy's today down, Shares of Amazon

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<v Speaker 1>today up one and a half percent. You're listening to

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<v Speaker 1>taking Stock and this is Bloomberg Radio coming up. Bloomberg

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