WEBVTT - Ackman’s Pershing Square Seeks Up to $10 Billion in NYSE IPO 

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<v Speaker 2>I mean, one thing that we'll know that we can

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<v Speaker 2>look at to return to normal is dealmaking, is fundraising.

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<v Speaker 2>That'll be a sign that people feel comfortable, companies feel

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<v Speaker 2>comfortable with the current market environment. And it looks like

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<v Speaker 2>at least one person feels good about how things are

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<v Speaker 2>shaping up. Bill Ackman has filed to take public his

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<v Speaker 2>hedge fund firm, Pershing Square and a new closed end

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<v Speaker 2>fund at the same time. Billy Lipschultz is Bloomberg News

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<v Speaker 2>a senior equities reporter. He's been covering IPOs for years,

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<v Speaker 2>and this is something we had been anticipating, Billy, because

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<v Speaker 2>there was this effort to list the hedge fund, Pershing

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<v Speaker 2>Square back in twenty twenty four that didn't get very

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<v Speaker 2>far well.

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<v Speaker 3>So back in twenty four, the initial thought process from

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<v Speaker 3>our understanding from Perching Square was we're going to raise

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<v Speaker 3>a lot of money in a closed end fund, so

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<v Speaker 3>that way we can have an even higher feebase. We

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<v Speaker 3>want to raise more than twenty billion dollars. Then that

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<v Speaker 3>number became like ten, then it became five. Then it

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<v Speaker 3>didn't actually get off the ground. So that was for

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<v Speaker 3>the closed end fund. Now we're seeing them come back

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<v Speaker 3>with this i'll call a novel pitch that if you

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<v Speaker 3>invest in the closed end fund, we'll give you some

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<v Speaker 3>shares to the actual management company. As a way to

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<v Speaker 3>entice people to buy. Their pitch was, you know, we

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<v Speaker 3>had a few billion dollars in demand last time. We

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<v Speaker 3>now have two point eight billion dollars in private demand.

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<v Speaker 3>As long as we can bridge the app to more

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<v Speaker 3>than five billion dollars in this closed end fund ups

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<v Speaker 3>our fees and also gives us something else to give investors,

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<v Speaker 3>and it ultimately takes the company public.

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<v Speaker 4>So it's fee. What's the motivated here is it fees?

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<v Speaker 3>It's creating a vehicle. Well, it goes back to kind

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<v Speaker 3>of the pitch that I'm.

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<v Speaker 4>Just trying to assess whether or not like this is

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<v Speaker 4>a sign of healthy markets and it's a good move.

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<v Speaker 3>It's something that they need to do. So point blank,

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<v Speaker 3>Pershing Square failed to raise a handful of billions of

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<v Speaker 3>dollars in a closed end fund two years ago.

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<v Speaker 4>He's not coming at this from a position of strength,

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<v Speaker 4>or is he? I know, I'm really pressing.

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<v Speaker 3>I mean maybe, Okay, things that we know they wanted

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<v Speaker 3>to raise tens of billions of dollars before they did not,

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<v Speaker 3>they had discussed potentially taking.

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<v Speaker 5>The management company public.

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<v Speaker 3>Now with this process both can happen. Potentially raising five

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<v Speaker 3>to ten billion dollars increases the amount of fees that

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<v Speaker 3>the company can generate the management company, and it takes

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<v Speaker 3>the management company public.

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<v Speaker 2>A lot of people know Bill Ackman as an activist investor.

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<v Speaker 2>They think of Herbal Life, they think of all these

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<v Speaker 2>other companies that he kind of targeted, made his case against,

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<v Speaker 2>or made his case four.

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<v Speaker 6>He no longer really does that, does he.

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<v Speaker 3>No, it's pretty much holding a handful of companies. So

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<v Speaker 3>whether it's Toole or Alphabet Brookfield like kind of buying

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<v Speaker 3>a concentrated portfolio and holding it.

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<v Speaker 5>He's also now even.

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<v Speaker 6>Like Warren Buffett, kind of using that playbook.

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<v Speaker 3>That's exactly what he's trying to lean into. Though a

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<v Speaker 3>bit more vocal on social media with his views, which

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<v Speaker 3>depending who you talk to, is bullish or bearish, but

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<v Speaker 3>really trying to cater with this offering to retail investors.

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<v Speaker 5>Point Blake is kind of the view of this pitch.

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<v Speaker 4>So now he's going to listen to retail investors, and

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<v Speaker 4>you know, right.

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<v Speaker 5>He engages with them. Though he does engage, he shares

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<v Speaker 5>a lot of things on social media.

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<v Speaker 4>I'm just still trying to wrap my head of why

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<v Speaker 4>he'd want to go public with anything and then be

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<v Speaker 4>open to so much more scrutiny and regulation or whatever.

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<v Speaker 3>Well, I think that's kind of the discussion going back

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<v Speaker 3>to twenty twenty four when they sold a stake in

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<v Speaker 3>the company Perching Proper, that was viewed as a way.

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<v Speaker 5>To start the process to going public.

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<v Speaker 3>So there was always a vision to ipoing or taking

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<v Speaker 3>public the management company in some capacity. And it does

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<v Speaker 3>benefit by if you're a management company and you're collecting

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<v Speaker 3>a two percent management fee. The more assets you have

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<v Speaker 3>under management, the more fees you have, the more attractive

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<v Speaker 3>the company does.

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<v Speaker 4>Then. So what's the timeline now, are.

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<v Speaker 3>So base case at a bare minimum, you need fifteen

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<v Speaker 3>days from this filing before you can launch an IPO

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<v Speaker 3>process takes about a week or so.

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<v Speaker 5>When you look at the calendar.

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<v Speaker 3>Two and a half weeks from now you get closer

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<v Speaker 3>to some of the holidays, So maybe this is something

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<v Speaker 3>that we see starts to hit the road after the

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<v Speaker 3>Easter holiday when people are back in their seats. But

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<v Speaker 3>at a minimum, this process cannot formally start for at

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<v Speaker 3>least fifteen days and then we'll move from there, but

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<v Speaker 3>we're expecting it probably just looking at the calendar.

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<v Speaker 5>Call it right on the other side of April, okay.

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<v Speaker 2>Ageain, and I mean some sign of confidence from Bill

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<v Speaker 2>Ackman that he's moving forward with this in a period

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<v Speaker 2>where there's a lot of uncertainty about acid prices, about

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<v Speaker 2>the global economy, and.

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<v Speaker 3>That's something that they kind of call out in his

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<v Speaker 3>eight page line let are basically saying that you know,

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<v Speaker 3>most of the time companies who are looking at ipoing

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<v Speaker 3>will not go when there's volatility in the market. Their

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<v Speaker 3>pitches well, if you're giving us money to turn around

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<v Speaker 3>and invest, well, we should be buying low and then

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<v Speaker 3>ultimately profiting from there.

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<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 4>Coles they had results. In fact, they reported worse than

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<v Speaker 4>expected sales for the last quarter. They continue to struggle

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<v Speaker 4>to revive years of declining sales. Let's figure out the

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<v Speaker 4>cold story this morning. Mary Ross Gilbert, senior equity analysts

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<v Speaker 4>with BI covering retail. We actually may just did an

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<v Speaker 4>informal survey in the studio. Charlie Pellett the last time

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<v Speaker 4>he was in at Coles was ten years years ago.

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<v Speaker 2>Scarlet ten twelve years ago.

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<v Speaker 4>Yeah, okay me. Actually I do go there, but probably

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<v Speaker 4>about six months ago. Who is Coal's customer, I mean

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<v Speaker 4>clearly not us.

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<v Speaker 7>So, John. The Cole's customer is largely a low to

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<v Speaker 7>middle income consumer. And I just went there yesterday just

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<v Speaker 7>to see what the store look like. And I did

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<v Speaker 7>observe that their customers are definitely seeking value. You don't

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<v Speaker 7>always see a lot of bags because they're in there

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<v Speaker 7>carefully choosing, trying to find value. And so this is

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<v Speaker 7>why the company has brought on deal bars. Those are

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<v Speaker 7>ten dollars and under items. And now they've announced that

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<v Speaker 7>they're also bringing in toy bars, so they want to

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<v Speaker 7>also feature items again ten dollars an under with different

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<v Speaker 7>price points of like four ninety nine, five ninety nine,

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<v Speaker 7>et cetera. So they're really trying to gain you know,

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<v Speaker 7>traffic and conversion. But really they're also leaning into their

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<v Speaker 7>private brands. So for example, I did observe that Els

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<v Speaker 7>Louren Conrad, which is their women's label. It's a really

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<v Speaker 7>a fun label and they did a great presentation in

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<v Speaker 7>the store yesterday. The problem is that the rest of

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<v Speaker 7>the store is still it's not really cohesive, so we

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<v Speaker 7>don't really not there in terms of where we need

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<v Speaker 7>to be where you can see a real cohesive strategy.

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<v Speaker 7>And we saw a lot of clearance in the stores

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<v Speaker 7>as well, so they still have a road ahead, as

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<v Speaker 7>you highlighted with the four years of stacked comparable sales declines.

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<v Speaker 6>Yeah, that's quite a track record to have to turn around. Mary.

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<v Speaker 2>According to a company presentation at the earnings, Coles admitted

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<v Speaker 2>that it lost competitive ground during high traffic shopping windows

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<v Speaker 2>including Black Friday, Cyber Monday, and the week falling Christmas.

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<v Speaker 2>When I read that, I thought that that was a

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<v Speaker 2>fairly startling admission. How do you interpret that.

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<v Speaker 7>I wasn't so prize candidly because we were there on

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<v Speaker 7>Black Friday, and I could see that shoppers were trying

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<v Speaker 7>to spend because you get sort of a free the

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<v Speaker 7>minute you walk in the door. You get a free

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<v Speaker 7>Coal's cash and you scratch it to figure out how

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<v Speaker 7>much cash you get, and trying to find a way

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<v Speaker 7>to spend it was a challenge because there were a

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<v Speaker 7>number of excluded items and while they've increased the number

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<v Speaker 7>of brands that are not excluded, they're still a fair amount.

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<v Speaker 7>So there was some confusion and not a lot of

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<v Speaker 7>customers were walking out with bags, is what we observed.

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<v Speaker 7>So we we felt like, you know, it was hard pressed,

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<v Speaker 7>let's say, to find find a way to spend the money.

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<v Speaker 7>So they really needed to do a better job, and

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<v Speaker 7>that's what they admitted on finding values, and that's why

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<v Speaker 7>they say that their margins this year, you know, are

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<v Speaker 7>going to be hard pressed because they need to get

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<v Speaker 7>the sales lift right. They've done such a great job

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<v Speaker 7>on managing expenses and they'll continue to do so, but

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<v Speaker 7>until they get the sales moving in the right direction,

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<v Speaker 7>they're not really going to see that margin improved. Because

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<v Speaker 7>they do have to be more promotional, have sharper values,

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<v Speaker 7>and so that's going to impact margin to a certain extent.

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<v Speaker 7>But it's important so that they can be competitive because

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<v Speaker 7>we saw strong results in off price. As you note.

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<v Speaker 4>You could hear me early this morning going ouch as

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<v Speaker 4>I filled up the car. Was when did I say

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<v Speaker 4>three sixty a gallon? Did that come up in the

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<v Speaker 4>call with the executives?

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<v Speaker 6>Good question.

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<v Speaker 4>I mean, it's probably the last thing they need for

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<v Speaker 4>their customers to be paying lots more for other stuff.

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<v Speaker 7>John, You're absolutely right, and this customer is really going

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<v Speaker 7>paycheck to paycheck, and so when you do have gas

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<v Speaker 7>prices going up, that's going to impact their discretionary income.

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<v Speaker 7>And that's the importance that they really have those those

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<v Speaker 7>sharp values in the store. So that's what they're hoping

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<v Speaker 7>to achieve. They're really leaning into their private brand and

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<v Speaker 7>they've got a campaign buy Coals, which features their brands

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<v Speaker 7>like so for juniors, and that actually did well because

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<v Speaker 7>they really featured that heavily in the stores. We observed

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<v Speaker 7>it yesterday and so you know, I think and that

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<v Speaker 7>also helps on the margin side to a certain extent.

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<v Speaker 7>But again, you know, they really need overall sales to rise,

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<v Speaker 7>to really get margins to move in the right direction.

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<v Speaker 2>This is a company, as you pointed out, has been

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<v Speaker 2>struggling for about four years with same store sales, you know,

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<v Speaker 2>not performing very well. You just look at the sales

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<v Speaker 2>growth over the last couple of years and it's a

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<v Speaker 2>bunch of negative numbers starting from twenty twenty three on.

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<v Speaker 2>What is needed here to really change the trajectory of Coals?

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<v Speaker 2>I mean, how much longer can it go in this

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<v Speaker 2>same direction before it becomes a candidate for takeover by

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<v Speaker 2>another company or by private equity, or I mean something

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<v Speaker 2>needs to change perhaps, But yeah, you raise.

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<v Speaker 7>A valid point because when you think about it, they

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<v Speaker 7>do have a juicy real estate portfolio said that might

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<v Speaker 7>be attractive to some strategic buyers potentially, so there could

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<v Speaker 7>be some interest here. We also think that with over

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<v Speaker 7>eleven hundred stores, do they really need to be operating

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<v Speaker 7>that many stores. They did say on the call that

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<v Speaker 7>they have no plans to close or open any stores. Really.

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<v Speaker 7>They might have a replacement store here or there, but

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<v Speaker 7>their objective is really to get this box more productive

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<v Speaker 7>and also raise digital sales. They really want to take

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<v Speaker 7>advantage and grow digital sales too, So it's really about

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<v Speaker 7>reaching a point of stability on the top line. And

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<v Speaker 7>so there are, like I said, leaning into private brands

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<v Speaker 7>and they have a number of initiatives, but it's going

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<v Speaker 7>to take time. So they're already guiding toward comparable sales

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<v Speaker 7>declines of about one to three percent in the first quarter.

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<v Speaker 7>And when you look at this stacked four year comp

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<v Speaker 7>decline they're going against or cycling, that's a seventeen percent decline.

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<v Speaker 7>So that shows you the magnitude of the decline. And

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<v Speaker 7>that's even after gaining a two billion dollar revenue business

0:12:15.080 --> 0:12:17.960
<v Speaker 7>with Sofa. So that means that when you look at

0:12:18.040 --> 0:12:20.960
<v Speaker 7>the declines and the rest of the business, it's much

0:12:21.040 --> 0:12:24.360
<v Speaker 7>steeper than the seventeen percent, and so that's a critical

0:12:24.400 --> 0:12:27.160
<v Speaker 7>thing to note. And when you think about Sofa, their

0:12:27.200 --> 0:12:30.840
<v Speaker 7>comp sales were flat in the quarter previously, we are

0:12:30.920 --> 0:12:33.840
<v Speaker 7>seeing increases, so that business is really matured at this

0:12:34.040 --> 0:12:37.840
<v Speaker 7>point and that's why they've got a number of initiatives there,

0:12:37.880 --> 0:12:41.320
<v Speaker 7>bringing in more brands to really ignite and try to

0:12:41.360 --> 0:12:42.360
<v Speaker 7>grow that business.

0:12:42.800 --> 0:12:45.640
<v Speaker 6>Stay with us more from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:12:52.800 --> 0:12:55.880
<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

0:12:55.920 --> 0:12:59.200
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0:12:59.240 --> 0:13:02.400
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0:13:03.240 --> 0:13:05.240
<v Speaker 2>You know, when we look at all the volatility in

0:13:05.280 --> 0:13:08.840
<v Speaker 2>the markets, it's kind of striking how much investors have

0:13:08.880 --> 0:13:11.280
<v Speaker 2>to juggle in terms of the different factors out there,

0:13:11.320 --> 0:13:13.760
<v Speaker 2>and you know, the narratives that they need to contend with.

0:13:13.840 --> 0:13:15.600
<v Speaker 4>What do we call it the confluence?

0:13:15.840 --> 0:13:19.160
<v Speaker 2>Confluence, that's a great word. Matt Griffin knows the confluence

0:13:19.280 --> 0:13:22.480
<v Speaker 2>very well. Matthew Griffin is our Bloomberg Equities reporter and

0:13:22.520 --> 0:13:25.240
<v Speaker 2>he's one of the authors of today's Big Take story,

0:13:25.760 --> 0:13:28.600
<v Speaker 2>which is about how market cracks are widening as war,

0:13:28.800 --> 0:13:31.240
<v Speaker 2>AI and credit fears are colliding all at once.

0:13:31.320 --> 0:13:32.319
<v Speaker 6>Matthew, great to see.

0:13:32.120 --> 0:13:35.280
<v Speaker 5>You, Scarlett, great to be on Thanks for having me so.

0:13:35.360 --> 0:13:38.400
<v Speaker 2>The war and Iran just introduces a new shock into

0:13:38.400 --> 0:13:42.400
<v Speaker 2>the global economy, one that already has investors feeling kind

0:13:42.440 --> 0:13:46.600
<v Speaker 2>of nervous, kind of confused, certainly, very uncertain about all

0:13:46.600 --> 0:13:48.640
<v Speaker 2>the different things that are taking place, whether it's inflation,

0:13:48.760 --> 0:13:52.080
<v Speaker 2>whether it is the jobs market, whether it's AI or

0:13:52.160 --> 0:13:52.840
<v Speaker 2>private credit.

0:13:53.679 --> 0:13:57.200
<v Speaker 8>Yes, and what I would say about this is that

0:13:57.760 --> 0:14:01.520
<v Speaker 8>it really means two things for market right now. One is,

0:14:01.679 --> 0:14:04.400
<v Speaker 8>even if the war ends tomorrow, even if oil prices

0:14:04.480 --> 0:14:09.400
<v Speaker 8>go back down into the sixties per barrel, it's not

0:14:09.640 --> 0:14:11.800
<v Speaker 8>all clear for investors in the way that maybe you

0:14:11.840 --> 0:14:14.719
<v Speaker 8>think about last spring Trump paused the tariffs, you have

0:14:15.360 --> 0:14:17.200
<v Speaker 8>the best day for the S and P five hundred

0:14:17.280 --> 0:14:19.800
<v Speaker 8>since two thousand and eight because a lot of the

0:14:19.840 --> 0:14:23.480
<v Speaker 8>headwinds facing markets just vanish. That's not true now when

0:14:23.560 --> 0:14:25.840
<v Speaker 8>you have private credit concerns, when you have fears of

0:14:25.840 --> 0:14:29.200
<v Speaker 8>AI disruption. And then another thing is that the war

0:14:29.440 --> 0:14:33.160
<v Speaker 8>also heightens some of those other risks. It makes it

0:14:33.640 --> 0:14:38.320
<v Speaker 8>harder to refinance loans, private credit loans that aren't working.

0:14:38.360 --> 0:14:41.640
<v Speaker 8>If central banks can't cut rates, it puts more pressure

0:14:41.680 --> 0:14:44.200
<v Speaker 8>on consumers. So it all just adds up to a

0:14:44.240 --> 0:14:46.520
<v Speaker 8>really tough spot for Wall Street right now.

0:14:46.720 --> 0:14:47.880
<v Speaker 4>So what's the playbook.

0:14:48.640 --> 0:14:53.600
<v Speaker 8>Well, what the head of US rates at Ameravet told

0:14:53.680 --> 0:14:57.880
<v Speaker 8>us is the playbook is out the door. And I

0:14:58.000 --> 0:15:01.920
<v Speaker 8>know that maybe isn't a definite answer, but I think

0:15:01.960 --> 0:15:07.240
<v Speaker 8>everyone is scrambling to figure out what to do here.

0:15:08.000 --> 0:15:11.600
<v Speaker 8>You know one thing that I you know, heard from

0:15:11.640 --> 0:15:15.720
<v Speaker 8>an investor myself is diversification is really important because there's

0:15:15.840 --> 0:15:18.440
<v Speaker 8>just a lot that isn't working right now, so you

0:15:18.520 --> 0:15:21.560
<v Speaker 8>want to make sure you you know, have some exposure

0:15:21.600 --> 0:15:23.400
<v Speaker 8>to things that do. But I don't think there is

0:15:23.520 --> 0:15:24.320
<v Speaker 8>a right answer.

0:15:24.800 --> 0:15:26.840
<v Speaker 2>One of the final quotes you have in the story

0:15:27.000 --> 0:15:29.480
<v Speaker 2>is pretty telling. It's for Matt Maley, who talks about

0:15:29.520 --> 0:15:31.880
<v Speaker 2>how a lot of people are not so so concerned

0:15:31.880 --> 0:15:34.520
<v Speaker 2>because they say, yeah, okay, oil is spiking, but it's

0:15:34.520 --> 0:15:36.480
<v Speaker 2>not as bad as it was in the nineteen seventies.

0:15:36.640 --> 0:15:39.160
<v Speaker 2>You know, Okay, there might be a bit of some

0:15:39.280 --> 0:15:42.440
<v Speaker 2>lofty valuations in tech, but it's nothing like two thousand.

0:15:42.560 --> 0:15:48.720
<v Speaker 2>All these comparisons to previous context kind of give give

0:15:48.800 --> 0:15:50.800
<v Speaker 2>us a false sense of complacency, doesn't it.

0:15:51.280 --> 0:15:54.240
<v Speaker 8>Yes, And it comes back to the idea of the story.

0:15:54.280 --> 0:15:57.280
<v Speaker 8>So Matt Malee's a strategist at Miller Tabic. What he

0:15:57.400 --> 0:16:01.480
<v Speaker 8>says is you can look at each of these risks

0:16:01.520 --> 0:16:07.200
<v Speaker 8>on its own because the you know, the problems together

0:16:07.360 --> 0:16:10.560
<v Speaker 8>can add up to create you know, issues for risk assets.

0:16:10.800 --> 0:16:14.680
<v Speaker 8>And also that the stock market is really expensive today,

0:16:14.760 --> 0:16:20.640
<v Speaker 8>so that maybe creates more downside risk even if the

0:16:20.680 --> 0:16:23.080
<v Speaker 8>initial you know issues are smaller.

0:16:24.120 --> 0:16:27.960
<v Speaker 4>So if a headline crossed and said the do wars over?

0:16:28.280 --> 0:16:29.600
<v Speaker 4>Is it all back to normal?

0:16:30.680 --> 0:16:33.960
<v Speaker 8>I think that's what we've been hearing is not necessarily

0:16:34.720 --> 0:16:38.360
<v Speaker 8>you know, I have talked to investors and strategists for

0:16:38.440 --> 0:16:40.840
<v Speaker 8>a different story last week that was about this question

0:16:40.920 --> 0:16:43.680
<v Speaker 8>of will Trump and can Trump step in to rescue

0:16:43.680 --> 0:16:46.560
<v Speaker 8>the markets in the way that he did last spring?

0:16:46.640 --> 0:16:47.320
<v Speaker 6>And Trump put?

0:16:47.480 --> 0:16:47.680
<v Speaker 5>Is that?

0:16:47.720 --> 0:16:48.760
<v Speaker 6>Trump put yes?

0:16:49.360 --> 0:16:52.280
<v Speaker 8>And what a lot of people told me is they

0:16:52.320 --> 0:16:55.600
<v Speaker 8>really weren't holding their breath for two reasons. One, the

0:16:55.640 --> 0:16:58.160
<v Speaker 8>market hasn't been shaken as badly as it has been

0:16:58.240 --> 0:17:01.440
<v Speaker 8>last spring, so the administration and may not be at

0:17:01.440 --> 0:17:03.760
<v Speaker 8>that point yet. Although you did see Trump, you know,

0:17:03.800 --> 0:17:06.720
<v Speaker 8>making some comments yesterday signaling the word will end. But

0:17:07.119 --> 0:17:09.919
<v Speaker 8>the more profound issue is that a war is not

0:17:09.960 --> 0:17:13.000
<v Speaker 8>as simple to change as a list of tariff rates

0:17:13.000 --> 0:17:13.720
<v Speaker 8>on a poster board.

0:17:14.280 --> 0:17:18.960
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