WEBVTT - Nvidia-Google AI Chip Rivalry Escalates on Report of Meta Talks 0:00:02.759 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.960 --> 0:00:21.080 Business App. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.640 or watch us live on YouTube. 0:00:24.320 --> 0:00:28.920 Meta platforms in talks to spend billions on Google's AI chip, 0:00:29.000 --> 0:00:32.160 suggesting that the search giant Google has made the case 0:00:32.159 --> 0:00:34.160 that it can rival in Vidia as a leader in 0:00:34.720 --> 0:00:38.360 artificial intelligence technology. Let's check in with an expert who's 0:00:38.400 --> 0:00:41.600 got an opinion there, Mandeep Singh, Senior tech analyst for 0:00:41.800 --> 0:00:44.519 Bloomberg Intelligence. Mandy, what are you making this news with 0:00:44.920 --> 0:00:48.720 Meta investing and spending money on Google's AI chips? What 0:00:48.760 --> 0:00:51.479 does that mean for the space and you know, Nvidia 0:00:51.479 --> 0:00:53.000 in particular, because we're seeing some big moves in the 0:00:53.040 --> 0:00:53.840 stock market today. 0:00:55.560 --> 0:00:59.000 Look, I mean, we know CAPEX numbers are going up, 0:00:59.120 --> 0:01:02.840 not just next year, probably through twenty twenty eight, because 0:01:03.040 --> 0:01:06.920 Meta has given some sort of a three year forecast. 0:01:06.959 --> 0:01:10.200 In fact, Mark Zuckerbert has mentioned that you know, they 0:01:10.319 --> 0:01:12.840 plan to spend up to six hundred billion dollars in 0:01:12.920 --> 0:01:17.080 capex through twenty twenty eight. So when you are spending 0:01:17.120 --> 0:01:20.319 such big sums, you don't want to be dependent on 0:01:20.319 --> 0:01:23.880 one supplier, and in this case, Nvidia still has the 0:01:23.920 --> 0:01:27.640 best chips. They probably have a virtual monopoly when it 0:01:27.680 --> 0:01:30.760 comes to the training. But on the infrincing side, I 0:01:30.800 --> 0:01:34.360 think everyone, especially among the hyperscalers who don't have their 0:01:34.400 --> 0:01:38.480 own chips, are looking to diversify. And I think I'm 0:01:38.600 --> 0:01:42.319 very surprised that Meta is looking to buy something from Google, 0:01:42.440 --> 0:01:45.800 given they compete, you know, so furiously on the digital 0:01:45.840 --> 0:01:49.600 ad side. But that's really a reflection of the changing 0:01:50.080 --> 0:01:53.400 tech stack and how these companies are evolving with AI. 0:01:54.400 --> 0:01:57.240 What is it about Alphabet and Google that we did 0:01:57.280 --> 0:02:00.720 not realize that they're making so much progress on their 0:02:00.760 --> 0:02:04.800 own chips, these TPUs tensor processing units. It does feel 0:02:04.800 --> 0:02:07.960 like it's kind of come from out of nowhere. I know, 0:02:08.080 --> 0:02:11.120 folks in the tech industry know that Google has been 0:02:11.160 --> 0:02:13.440 working on this for a while, but if you were 0:02:13.560 --> 0:02:16.840 just following along, it feels like Nvidia had this locked 0:02:16.919 --> 0:02:18.520 up and then all of a sudden it's a little 0:02:18.520 --> 0:02:19.160 bit more open. 0:02:20.560 --> 0:02:20.800 Yeah. 0:02:20.840 --> 0:02:24.200 I mean, Google is in the seventh generation of their TPUs, 0:02:24.240 --> 0:02:27.320 so clearly they have been working at this for a while, 0:02:27.320 --> 0:02:30.080 which is the reason why the TPU has been able 0:02:30.160 --> 0:02:34.040 to catch up to mvd's GPU in terms of performance. 0:02:34.080 --> 0:02:37.480 But to your point, look, the Gemini model was not 0:02:37.800 --> 0:02:42.280 comparable to open Ai and Entropics leadings models up until 0:02:42.280 --> 0:02:45.000 the last six months. So that is what has changed 0:02:45.000 --> 0:02:49.480 that Gemini as a standalone model has been able to 0:02:49.680 --> 0:02:52.400 match up to you know, open Ai, whether it's in 0:02:52.480 --> 0:02:57.519 terms of chat, doot functionality, image generation, video generation. They 0:02:57.560 --> 0:02:59.800 are a state of the art model. Maybe in terms 0:02:59.840 --> 0:03:03.240 of holding agents they still trail. Entropics and Thropic release 0:03:03.280 --> 0:03:06.840 a new version yesterday and they still claim that their 0:03:06.919 --> 0:03:09.920 models are better than Gemini. But if you are looking 0:03:10.040 --> 0:03:13.200 for a state of the art model and the lowest 0:03:13.280 --> 0:03:17.320 cost in terms of tokens, Gemini is your best better 0:03:17.320 --> 0:03:20.800 And which is what Meta is realizing that yes, they 0:03:20.840 --> 0:03:25.280 could use the low cost that Google has in terms 0:03:25.320 --> 0:03:28.000 of running their infrastructure and use it to their advantage 0:03:28.040 --> 0:03:30.840 in terms of how they are looking to deploy Jenni 0:03:31.080 --> 0:03:32.560 on their family of facts. 0:03:33.040 --> 0:03:35.280 So, Mandy, you can you give us a sense of 0:03:35.320 --> 0:03:39.440 the competitive landscape today for Nvidia. We know, I guess 0:03:39.480 --> 0:03:44.000 now we have a better appreciation for Google as a competitors. 0:03:43.160 --> 0:03:44.480 Laid out for us and how you think it might 0:03:44.520 --> 0:03:44.920 play out. 0:03:46.200 --> 0:03:49.320 I mean, the one metric that Nvidia shared on their 0:03:49.400 --> 0:03:53.320 latest earnings call was their content per gigawatt is going 0:03:53.360 --> 0:03:55.960 to grow over the next few years. And the reason 0:03:56.000 --> 0:03:59.120 they said is because they generate the most tokens for 0:03:59.320 --> 0:04:03.680 what now, for one gigawad, Jensen said they'll have up 0:04:03.680 --> 0:04:08.360 to thirty to thirty five billion dollars of Nvidia chips 0:04:08.520 --> 0:04:11.600 being purchased. Think about it. You know, if a one 0:04:11.600 --> 0:04:15.440 gigawat costs fifty billion, any company is spending thirty to 0:04:15.520 --> 0:04:18.240 thirty five billion. And all these companies like open Ai 0:04:18.400 --> 0:04:21.640 has talked about adding up to twenty six gigawatts in capacity. 0:04:22.080 --> 0:04:26.720 That really translates into huge revenue for Nvidia just from 0:04:26.760 --> 0:04:30.120 one hyper scaler. And that's what I think Meta if 0:04:30.160 --> 0:04:33.040 they plan to add ten gigawatts over the next five years, 0:04:33.320 --> 0:04:35.880 they don't want to be giving Nvidia, you know, three 0:04:35.960 --> 0:04:39.120 hundred billion dollars just for the chips. They want to 0:04:39.160 --> 0:04:43.440 diversify and really make sure they're running their infrastructure at 0:04:43.440 --> 0:04:46.000 the lowest cost, which is what Google is doing. Google 0:04:46.040 --> 0:04:49.400 spend ninety billion dollars in CAPEX this year and guess what. 0:04:49.480 --> 0:04:52.280 They have a cloud business. They have trained their new model, 0:04:52.680 --> 0:04:56.120 they're doing infrincing at scale. They're serving search and all 0:04:56.160 --> 0:04:59.760 their family of appso Genii functionality, so they are really 0:05:00.200 --> 0:05:03.120 it very efficiently. They don't They're not spending to thirty 0:05:03.160 --> 0:05:05.880 to thirty five billion dollars per gigawatt, and that's what 0:05:05.920 --> 0:05:08.159 everyone is seeing now in terms of efficiency. 0:05:08.320 --> 0:05:10.120 So you do a great job of explaining this from 0:05:10.120 --> 0:05:12.640 a technical point of view, from the technologies point of view, 0:05:12.640 --> 0:05:16.039 But for investors who really just understand in video as 0:05:16.120 --> 0:05:21.640 you know, AI personified or embodied, is this just an 0:05:21.640 --> 0:05:25.279 opportunity to diversify and not rely so much on Invidia 0:05:25.320 --> 0:05:29.000 and maybe chase another company whose stairs have not rallied 0:05:29.000 --> 0:05:29.440 as much. 0:05:30.720 --> 0:05:33.279 I think so. I mean, it's very hard to see 0:05:34.400 --> 0:05:38.279 multiple expansion in a company like Nvidia, which was close 0:05:38.320 --> 0:05:42.480 to you know, four trillion plus, and I think they're 0:05:42.520 --> 0:05:45.520 growing very nicely into earnings. They've given a forecast of 0:05:45.600 --> 0:05:48.160 up to three hundred and thirty billion dollars and revenue 0:05:48.200 --> 0:05:51.520 next year, so there is embedded growth in there. But 0:05:51.800 --> 0:05:54.360 everyone has that scarce from you know, the dot com 0:05:54.360 --> 0:05:57.400 bubble in terms of paying too much in terms of multiple, 0:05:57.440 --> 0:06:00.839 and that's where you're seeing people really beingservative in terms 0:06:00.839 --> 0:06:02.840 of what sort of multiple they pay for a stock. 0:06:02.960 --> 0:06:06.120 Like en video, Stay with us. 0:06:06.279 --> 0:06:08.560 More from Bloomberg Intelligence coming up after this. 0:06:12.200 --> 0:06:15.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:15.960 --> 0:06:19.040 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:19.080 --> 0:06:22.360 Auto with the Bloomberg Business App. Listen on demand wherever 0:06:22.440 --> 0:06:25.960 you get your podcasts, or watch us live on YouTube. 0:06:26.760 --> 0:06:27.840 Let's talk some retailers. 0:06:27.839 --> 0:06:30.000 We got some retailers bringing up the rear of earning 0:06:30.000 --> 0:06:34.600 season as they liked to do. We had Dick spoarding goods, 0:06:34.640 --> 0:06:36.960 and we had Best Buy. And let's break it all 0:06:36.960 --> 0:06:39.679 down with Lindsay, Dutch Consumer, Hardline Senior, and also Bloomberg 0:06:39.680 --> 0:06:42.599 Intelligence joining us from Princeton via that Zoom thing. Let's 0:06:42.600 --> 0:06:45.880 start with Dick Sporting Goods. They raised their outlook again, 0:06:45.920 --> 0:06:48.320 but I guess investors are focused on I guess some 0:06:48.360 --> 0:06:50.520 of the costs trying to turn around foot Locker. 0:06:50.800 --> 0:06:53.200 Talk to us about Dick spoorting goods at Lindsay. 0:06:54.200 --> 0:06:54.960 Yes, that's right. 0:06:55.000 --> 0:06:58.600 The legacy business remained very strong in the third quarter. 0:06:58.800 --> 0:07:02.440 Strong back to school, clear demand momentum heading into the 0:07:02.480 --> 0:07:05.640 fourth quarter. That's where the raised outlook came. It was 0:07:05.680 --> 0:07:09.280 really for the legacy business. But when we look at Footlocker, 0:07:09.400 --> 0:07:12.200 you know, the deal closed early September. The outlook for 0:07:12.240 --> 0:07:15.280 the fourth quarter is mid to high single digit same 0:07:15.280 --> 0:07:19.960 source sales decline. Dix is also looking to expedite the 0:07:19.960 --> 0:07:24.440 turnaround there, which means offloading old inventory steep markdowns in 0:07:24.480 --> 0:07:27.000 that fourth quarter, which is going to really hurt the 0:07:27.040 --> 0:07:30.480 margin as well. So foot Locker, you know, needs a 0:07:30.520 --> 0:07:32.720 lot of work. Fourth quarter is going to be weak, 0:07:33.120 --> 0:07:36.120 and investors are really looking to see how quickly they 0:07:36.160 --> 0:07:37.480 can turn that business around. 0:07:37.760 --> 0:07:39.640 Yeah, and probably they'll need to put some money into 0:07:39.640 --> 0:07:44.000 it as well to reorganize stores and freshen up the display. 0:07:44.920 --> 0:07:48.000 How much of this deal Dick's buying foot Locker was 0:07:48.120 --> 0:07:51.160 predicated on Nike and what it was doing with this 0:07:51.360 --> 0:07:55.240 shift back to its wholesale channels and away from solely 0:07:55.280 --> 0:07:58.360 relying on its direct to consumer offerings and its own stores. 0:08:00.000 --> 0:08:03.680 The full looker was, I would argue, over exposed to Nike. 0:08:04.040 --> 0:08:06.080 You know, several years ago they had been working that 0:08:06.200 --> 0:08:10.920 exposure down. I think Dix will remain focused on being diversified, 0:08:11.240 --> 0:08:15.080 just given that their own assortment where they're leaning into 0:08:15.120 --> 0:08:18.680 lots of other brands, new up and coming brands like 0:08:18.720 --> 0:08:22.680 Hoka and on. They did discuss though that foot Locker 0:08:22.720 --> 0:08:25.520 will sort of remain sort of a hub for basketball, 0:08:25.680 --> 0:08:28.880 and Nike does have a stronghold in the basketball market, 0:08:28.920 --> 0:08:31.480 so I expect Nike to be, you know, a strong 0:08:31.760 --> 0:08:35.240 vendor with foot Locker, but Dix is looking to make 0:08:35.240 --> 0:08:38.480 sure that they have that right assortment, the newest stuff, 0:08:38.559 --> 0:08:41.520 the hottest lines coming from Nike and others. 0:08:42.960 --> 0:08:48.920 What is Dick saying about tariffs in their business, so. 0:08:49.160 --> 0:08:52.640 You know, Tara, they are going to feel higher costs, 0:08:52.760 --> 0:08:54.320 you know, in this back half of the year and 0:08:54.400 --> 0:08:59.640 even into next year. Dix has since the pandemic, since 0:08:59.640 --> 0:09:01.600 they've been able to see sort of an increase in 0:09:01.640 --> 0:09:05.760 demand for their premium assortment. They're not really a huge 0:09:05.880 --> 0:09:10.240 discounter for the holiday. They like to sell their product 0:09:10.640 --> 0:09:14.240 fully through, so I don't expect them to sort of discount, 0:09:14.240 --> 0:09:17.560 and they have taken prices up selectively but certainly not 0:09:17.800 --> 0:09:21.240 across the board, and their higher income consumer is sort 0:09:21.240 --> 0:09:24.080 of accepting those increases. I think Footlocker is a little 0:09:24.080 --> 0:09:28.160 bit of a different story, and you might see that 0:09:28.280 --> 0:09:31.480 impact a little bit bigger on that business, just because 0:09:31.520 --> 0:09:35.800 they don't have those premium products and they're already going 0:09:35.840 --> 0:09:40.320 to need to offload older inventory with steep discounts. So 0:09:40.440 --> 0:09:43.680 you sort of have that turnaround compounded with these rising 0:09:43.800 --> 0:09:47.520 costs heading into the next year. Something for them to work. 0:09:47.320 --> 0:09:50.400 On, Lindsay, I also want to ask you about best Buy. 0:09:50.440 --> 0:09:52.400 The shares are up about four and a half percent 0:09:52.520 --> 0:09:55.800 right now, and of course this consumer electronics retailer how 0:09:55.800 --> 0:09:57.960 to beat and raise quarter. It looks pretty good, and 0:09:58.040 --> 0:10:00.800 it looks like it's on the usual string sales of 0:10:00.880 --> 0:10:03.040 mobile phones and sales of computer equipment. 0:10:04.840 --> 0:10:08.000 Yeah, so best Buy had a strong third quarter, better 0:10:08.080 --> 0:10:11.320 as better than expected, as you mentioned. I think, you know, 0:10:11.440 --> 0:10:14.440 the stock isn't getting a full bump because there is 0:10:14.520 --> 0:10:18.520 definitely some conservatism and a low guide for the fourth quarter, 0:10:18.600 --> 0:10:20.920 and investors are trying to figure out, you know, is 0:10:20.960 --> 0:10:23.640 it just conservatism, are they just worried about the consumer, 0:10:23.760 --> 0:10:25.760 or is there something really there that there's going to 0:10:25.760 --> 0:10:29.360 be a slowdown in that fourth quarter. But the business 0:10:29.360 --> 0:10:33.640 looks good. Demand looks strong, as you mentioned, computing, phones, 0:10:33.880 --> 0:10:37.120 gaming all looking solid, and they're also seeing an improvement 0:10:37.160 --> 0:10:39.440 in home theater, which is really big because that has 0:10:39.520 --> 0:10:42.439 been a weaker category for the last couple of years. 0:10:42.480 --> 0:10:45.280 So if that comes to fruition, I definitely think there 0:10:45.280 --> 0:10:46.800 will be strength in the fourth quarter. 0:10:47.400 --> 0:10:49.640 So you think about a best Buy, I mean some 0:10:49.679 --> 0:10:53.040 of those are big ticket items here, and that would 0:10:53.120 --> 0:10:56.240 suggest that they're confident. I think they go to a 0:10:56.480 --> 0:10:58.760 part of the K shaped economy, may me that that 0:10:58.880 --> 0:10:59.720 is doing better. 0:10:59.800 --> 0:11:01.520 Is that a typical best Buy customer? 0:11:03.200 --> 0:11:06.600 So best Buy definitely promotions are going to be a 0:11:06.600 --> 0:11:09.120 big piece of the fourth quarter. They're sort of leaning 0:11:09.160 --> 0:11:13.160 into those promotional events. That's what worked last year, and 0:11:13.240 --> 0:11:15.560 I think they're trying to lean into the things that 0:11:15.640 --> 0:11:17.920 worked last year for this year. And I do think 0:11:17.960 --> 0:11:22.320 the consumer backshop is quite similar when we do that compare. 0:11:23.400 --> 0:11:26.520 I also they also recently launched a marketplace, and they 0:11:26.520 --> 0:11:29.920 seem to have a stronger focus on marketing and advertising, 0:11:29.920 --> 0:11:33.160 and so they're really trying to meet the consumer where 0:11:33.200 --> 0:11:35.480 they are and make sure that best Buy is top 0:11:35.520 --> 0:11:39.440 of mind when you're shopping for a wide array of things, 0:11:39.679 --> 0:11:44.000 not just those big ticket items like TVs or appliances. 0:11:44.559 --> 0:11:47.600 So they're trying to have a bigger wallet share with 0:11:47.679 --> 0:11:50.800 consumers across the board, and they're leaning on that marketplace 0:11:50.800 --> 0:11:53.240 and advertising to do it and then hopefully get you 0:11:53.280 --> 0:11:55.480 into the store, and that's where they can bring their 0:11:55.480 --> 0:11:57.560 customer service and experience as well. 0:11:58.160 --> 0:12:00.400 Did they say anything or give an a indication on 0:12:00.440 --> 0:12:03.160 how they're preparing for Black Friday and for the holiday 0:12:03.160 --> 0:12:03.840 shopping season. 0:12:05.080 --> 0:12:07.839 It sounds like very similar to last year. So they 0:12:07.840 --> 0:12:11.800 started their deals about a week ago. They roll out 0:12:11.920 --> 0:12:16.680 new deals each week. They are leaning into their paid 0:12:16.760 --> 0:12:20.959 membership program, so paid members get access to certain deals 0:12:20.679 --> 0:12:25.360 over the regular shopper. But the playbook looks very very similar, 0:12:25.640 --> 0:12:29.559 but the demand picture looks better. So hopefully those promo 0:12:30.600 --> 0:12:34.280 events can really draw that shopper in, especially since everyone's 0:12:34.320 --> 0:12:35.640 already looking for those items. 0:12:36.160 --> 0:12:39.240 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:43.200 --> 0:12:46.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:46.960 --> 0:12:50.079 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:50.080 --> 0:12:53.400 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:53.440 --> 0:12:56.720 you get your podcasts, or watch us live on YouTube. 0:12:57.360 --> 0:12:58.360 Let's dig into. 0:12:58.200 --> 0:13:00.240 Some of the individual companies a little bit more here 0:13:00.280 --> 0:13:03.040 with Mary Ross Gilbert. She's a senior Equity and that's 0:13:03.080 --> 0:13:06.280 covering the sector for Bloomberg Intelligence. And Mary, let me 0:13:06.320 --> 0:13:08.719 start off with Coles because we talk about companies that 0:13:08.760 --> 0:13:11.760 are gaining market share. Coles lost a lot of market 0:13:11.760 --> 0:13:14.840 share over the past five six years and it's. 0:13:14.720 --> 0:13:17.760 Coming back a bit here. What is its strategy? 0:13:17.920 --> 0:13:23.880 Is it just that it's kind of simplified its business model, Garlic. 0:13:24.360 --> 0:13:26.960 What's happening here is that they've kind of gone back 0:13:27.000 --> 0:13:29.920 to the basics. What's something something that Coles has always 0:13:29.920 --> 0:13:32.920 been known for, So one is their private brand. So 0:13:32.960 --> 0:13:34.760 if you think about some of the brands like so 0:13:35.080 --> 0:13:39.240 and Juniors, Lauren Conrad for women, and they brought those 0:13:39.280 --> 0:13:43.000 brands back because they actually sacrificed some of those brands 0:13:43.080 --> 0:13:49.959 under the prior leadership and replaced them with some more 0:13:50.280 --> 0:13:54.840 name brands like Madden Girl, trying to really attract the 0:13:54.920 --> 0:13:58.920 junior shopper there. And now that they've brought the private 0:13:58.920 --> 0:14:02.640 brands back, they brought back petite sizing, which was really 0:14:02.640 --> 0:14:06.240 important to their customer base. Now they're really starting to see, 0:14:06.400 --> 0:14:09.319 you know, a recovery. But they're not out of the 0:14:09.320 --> 0:14:12.240 woods yet, Scarlett, as you pointed out, I mean, they're 0:14:12.240 --> 0:14:15.640 really cycling three years of declines, but we are seeing 0:14:15.800 --> 0:14:19.080 encouraging results and given that they actually turned positive in 0:14:19.120 --> 0:14:24.160 the latest month, it looks like they could actually reach 0:14:24.360 --> 0:14:27.520 a break even in the fourth quarter, even though they're 0:14:27.520 --> 0:14:30.680 guiding to a one point seven percent comp sales decline. 0:14:30.960 --> 0:14:34.960 So it's very encouraging to see with Coohle's again not 0:14:35.000 --> 0:14:36.360 out of the woods. And when you look at what's 0:14:36.360 --> 0:14:38.200 going on with so for it's now a two billion 0:14:38.240 --> 0:14:40.920 dollar business and as you were sort of highlighting, that 0:14:41.000 --> 0:14:43.320 means they really lost you know, over the last four 0:14:43.400 --> 0:14:46.880 years something like four to five billion in other categories, 0:14:47.400 --> 0:14:49.680 so they have lost market share. We think they're losing 0:14:49.680 --> 0:14:53.360 it to off price and some of the value players 0:14:53.400 --> 0:14:56.280 in the specialty space such as Old Navy, you know, 0:14:56.400 --> 0:14:57.240 a gap brand. 0:14:58.280 --> 0:15:01.600 Stock is up thirty three percent today alone to a 0:15:01.680 --> 0:15:03.720 huge move up forty nine percent year to date. 0:15:03.800 --> 0:15:06.880 So it seems like the market likes what it heard here. 0:15:07.440 --> 0:15:10.640 So from a competitive landscape, where does Coles kind of 0:15:10.640 --> 0:15:14.960 fit in out there? Mary? 0:15:15.080 --> 0:15:17.880 So, Paul Coles is really a value player in the 0:15:17.920 --> 0:15:21.760 department store space, so they're really a notch below Macy's. 0:15:21.800 --> 0:15:24.960 And they're also located off the mall, which can be 0:15:25.000 --> 0:15:28.240 an advantage and because they brought in so for as 0:15:28.280 --> 0:15:31.520 a beauty authority, and beauty is a very big and 0:15:31.600 --> 0:15:37.720 important and higher margin category for department stores. So that's sorry. 0:15:37.920 --> 0:15:39.040 You have to invest in your face. 0:15:39.080 --> 0:15:42.360 Somebody once told me, yes, you got to invest in 0:15:42.400 --> 0:15:45.200 your face. That's exactly right. Well, the idea there is 0:15:45.200 --> 0:15:48.520 that you're getting a repeat customer, they have to come 0:15:48.560 --> 0:15:51.960 back and they have to replenish product. But we did 0:15:52.000 --> 0:15:55.600 see a comp sales decline because that business is matured, 0:15:55.920 --> 0:16:00.120 it's kind of tracking somewhat close to what the the 0:16:00.240 --> 0:16:02.480 company is tracking in terms of comp sales. So we 0:16:02.520 --> 0:16:06.320 did see a decline in the latest quarterer. So that's 0:16:06.640 --> 0:16:08.480 they do have a number of initiatives to try to 0:16:08.520 --> 0:16:12.040 bolster that because of course we're seeing gains with some 0:16:12.080 --> 0:16:13.760 of their competitors, and we think we'll see that when 0:16:13.800 --> 0:16:15.920 Macy's goes to report next week. 0:16:16.200 --> 0:16:17.880 Right, and of course that's a big one, right in 0:16:17.920 --> 0:16:19.920 terms of department store chains. We'll be looking for that one, 0:16:19.960 --> 0:16:22.120 and of course you'll help us break it down when 0:16:22.320 --> 0:16:22.920 those cross. 0:16:23.280 --> 0:16:23.560 Mary. 0:16:23.600 --> 0:16:25.880 I also want to ask you about Abercommie Fitch. It 0:16:25.960 --> 0:16:29.000 was the Darling two years ago because the new CEO 0:16:29.200 --> 0:16:32.640 found a way to make the brand relevant to a 0:16:32.680 --> 0:16:35.840 new audience. It was no longer targeting teenage boys, for instance, 0:16:35.840 --> 0:16:37.920 and really targeting young working women. 0:16:38.280 --> 0:16:40.160 But it's had a brutal twenty twenty five. 0:16:40.240 --> 0:16:43.040 The shares have fallen, I believe more than fifty percent 0:16:43.480 --> 0:16:47.120 through Monday's Clothes. A lot of concerns about tariffs perhaps 0:16:47.120 --> 0:16:51.560 and maybe even a lack of fresh ideas in terms 0:16:51.560 --> 0:16:54.840 of its offerings. When you look at the stock today, 0:16:54.960 --> 0:16:57.840 it is soaring up thirty percent on the latest earnings. 0:16:58.160 --> 0:16:59.960 What's the narrative with Abercommune Fitch right now? 0:17:00.040 --> 0:17:02.520 Yeah? 0:17:02.800 --> 0:17:05.840 Yeah, so Scarlett with Abercrombie and Fitch, their numbers came 0:17:05.880 --> 0:17:09.200 in better than expected. So the namesake brand, as you 0:17:09.320 --> 0:17:12.679 pointed out, I mean that had been double digit increases 0:17:13.040 --> 0:17:16.320 over the last three years. So they're cycling those increases 0:17:16.800 --> 0:17:19.200 and that's why their sales are coming in less than 0:17:19.240 --> 0:17:22.240 expected generally for the whole year and why the stock 0:17:22.320 --> 0:17:25.680 is down. But this quarter the comp sales declined. There 0:17:25.760 --> 0:17:28.160 was about three point three percent, so that was better 0:17:28.200 --> 0:17:32.840 than expected. And when you look at Hollister, though, Hollister 0:17:33.000 --> 0:17:36.200 has been coming in ahead of expectations and they've been 0:17:36.200 --> 0:17:41.359 posting double digit increases. So as you were talking about 0:17:41.400 --> 0:17:44.399 sort of the millennial women who really love and also 0:17:44.440 --> 0:17:47.000 the men, but it does tend to favor more of 0:17:47.000 --> 0:17:50.960 the women on the Abercrombie side on the Hollister side, 0:17:51.000 --> 0:17:56.399 which really caters to jazz that has been on fire. 0:17:57.200 --> 0:18:00.320 And so that's what's helping to kind of over come 0:18:00.359 --> 0:18:03.120 the weakness that they're seeing at Abercrombie. But also it's 0:18:03.200 --> 0:18:06.960 looking like Abercrombie could turn positive in the fourth quarter 0:18:07.080 --> 0:18:09.480 with a number of the initiatives that they have in 0:18:09.520 --> 0:18:12.320 place going into the holiday quarter, even though they're cycling 0:18:12.440 --> 0:18:15.359 some pretty strong gains in the prior year and the 0:18:15.440 --> 0:18:18.439 year before that. So there's some encouragement there. And I 0:18:18.480 --> 0:18:20.920 think and then of course you have some short interests, 0:18:20.920 --> 0:18:24.080 both in that stock and massle in Cohal's, and that's 0:18:24.400 --> 0:18:27.159 part of the big bounce back that you're seeing this morning, 0:18:27.200 --> 0:18:28.440 is some of that short covering. 0:18:28.960 --> 0:18:33.000 What we're not really talking about, Mary, is tariffs and 0:18:33.040 --> 0:18:35.359 the impact on these retailers. 0:18:35.840 --> 0:18:37.080 What's the story these days. 0:18:38.480 --> 0:18:41.000 Yeah, So in the case of Paul, in the case 0:18:41.040 --> 0:18:43.720 of tariffs with Abercrombie, they expect to have a sixty 0:18:43.760 --> 0:18:47.400 million dollars hit in the fourth quarter, So they are 0:18:47.440 --> 0:18:52.399 being hit by tariffs, but they're discounting less. Plus they 0:18:52.480 --> 0:18:54.760 have lower freight expenses, and this is something we've been 0:18:54.800 --> 0:18:58.080 hearing from most of the retailers, is that lower freight 0:18:58.119 --> 0:19:01.560 costs are also helping to bolster margin. So they are 0:19:01.640 --> 0:19:05.600 going to be impacted, but probably not as badly as before, 0:19:05.720 --> 0:19:09.080 given that they've got an improvement in average price points, 0:19:09.480 --> 0:19:13.639 less discounting and lower freight that's helping to offset some 0:19:13.720 --> 0:19:16.440 of the tariffs. And remember that sixty million dollars hit 0:19:16.480 --> 0:19:21.960 on tariffs for Avercrombie. That's after mitigation efforts, so there 0:19:22.000 --> 0:19:24.360 is still going to be an impact. Cole's even brought 0:19:24.359 --> 0:19:26.520 it up, which they hadn't really brought up tariffs in 0:19:26.560 --> 0:19:29.399 their prior to calls, but they did say that going 0:19:29.480 --> 0:19:32.720 into early twenty twenty six, there will be some impact 0:19:32.800 --> 0:19:35.359 there for them. And the reason why their margins have 0:19:35.520 --> 0:19:39.680 been holding up and coming in better than expected, and 0:19:39.960 --> 0:19:44.000 their margins are low, but it's because of the fact 0:19:44.119 --> 0:19:48.040 that their mix of business being more private label, which 0:19:48.119 --> 0:19:52.560 is higher margin, is helping to bolster those margins. 0:19:53.640 --> 0:19:56.760 Stay with us. More from Bloomberg Intelligence coming up after this. 0:20:00.640 --> 0:20:04.359 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:20:04.440 --> 0:20:07.520 weekdays at ten am Eastern on Apple Corplay and Android 0:20:07.560 --> 0:20:10.840 Auto with the Bloomberg Business App. Listen on demand wherever 0:20:10.920 --> 0:20:14.000 you get your podcasts, or watch us live on YouTube. 0:20:14.880 --> 0:20:19.600 JM Smucker Company s JM is the ticker symbol. They're 0:20:19.600 --> 0:20:24.200 in Orville, Ohio. Stock is trading radion one hundred dollars 0:20:24.200 --> 0:20:26.000 to share. It's down three percent today, down eight percent 0:20:26.119 --> 0:20:27.920 year to date. It's got a market cap about eleven 0:20:28.000 --> 0:20:31.360 billion dollars. Don't look at that company too often here, 0:20:31.400 --> 0:20:34.680 but they reported numbers. They lowered the top end of 0:20:34.680 --> 0:20:37.680 their four year guidance after the company opted to forego 0:20:38.240 --> 0:20:41.520 a planned price increase on coffee in the wake of 0:20:41.600 --> 0:20:43.159 tarafreleef from the Trump administration. 0:20:43.240 --> 0:20:45.359 Let's get the latest on this name and on some 0:20:45.400 --> 0:20:47.800 of the other food companies. Diana Roe set up. 0:20:47.720 --> 0:20:51.440 Heying Yeah, consumer staples analysts for Bloomberg Intelligence journings live 0:20:51.440 --> 0:20:54.320 here in our Bloomberg Interactive studio, all the way from. 0:20:54.119 --> 0:20:55.280 The tenth floor. 0:20:55.320 --> 0:20:57.199 From the tenth floor, boy, that's a long walk now, 0:20:57.200 --> 0:20:58.840 because you guys used to be just one floor away. 0:20:58.880 --> 0:21:00.960 We could just stop on the floor and you guys 0:21:00.960 --> 0:21:03.680 come running up to help us out. Okay, talk to 0:21:03.760 --> 0:21:06.360 us about Jim Smuckers. This is jelly, this is coffee 0:21:06.359 --> 0:21:08.159 maker Smuckers. What's going on the. 0:21:08.200 --> 0:21:09.000 Food as well? 0:21:09.240 --> 0:21:13.520 You know, pet snacks and cat food. So basically, I 0:21:13.560 --> 0:21:15.199 mean it was it was all right. There were some 0:21:15.280 --> 0:21:19.280 pull some puts and takes for the quarter. There's some 0:21:19.320 --> 0:21:23.359 signs of stabilization, but it doesn't seem that it's there yet. 0:21:23.480 --> 0:21:26.359 It's it's similar to other package food companies that we 0:21:26.400 --> 0:21:29.520 are seeing in the space. It's always a second half 0:21:30.160 --> 0:21:33.960 or the next six month story when it's gonna get 0:21:34.080 --> 0:21:37.080 you know, growth is gonna happen, and it really doesn't happen. 0:21:37.240 --> 0:21:39.720 So you know, people are starting to lose patients on that. 0:21:39.880 --> 0:21:42.119 So specifically as it relates to the tariffs, they, like 0:21:42.160 --> 0:21:44.359 a lot of your companies, they're just telling you what 0:21:44.400 --> 0:21:44.960 the number is. 0:21:45.440 --> 0:21:48.640 So what's their their tariff cost? I guess for the period. 0:21:48.920 --> 0:21:51.800