WEBVTT - BI Weekend: NYC Casinos, Macy’s, Salesforce Earnings 0:00:00.240 --> 0:00:11.240 Bloomberg Audio, Studios, podcasts, radio News. This is Bloomberg Intelligence 0:00:11.320 --> 0:00:13.400 with Scarletfoo and Paul Sweeney. 0:00:13.520 --> 0:00:15.600 How do you think the FED is looking at tariffs? 0:00:15.760 --> 0:00:16.960 The uncertainty of terriffs. 0:00:17.040 --> 0:00:19.119 Let's take a look at the sectors and how they. 0:00:19.120 --> 0:00:21.360 Performed a lot of investors getting whip salt every day 0:00:21.400 --> 0:00:22.160 by news. 0:00:21.880 --> 0:00:26.040 Events, breaking market headlines, and corporate news from across the globe. 0:00:26.040 --> 0:00:28.639 Could we see a market disruption of market events? 0:00:28.720 --> 0:00:30.760 So people just too exuberant out there? 0:00:30.880 --> 0:00:33.479 You see some so called low quality stocks driving this 0:00:33.520 --> 0:00:34.320 short term rally. 0:00:34.360 --> 0:00:39.120 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.320 --> 0:00:41.200 YouTube and Bloomberg Originals. 0:00:42.200 --> 0:00:44.880 I'm Paul Sweeney and I'm marm Melinda filling in for Scarlettfoo. 0:00:45.000 --> 0:00:47.360 On today's Bloomberg Intelligence Show. We dig inside the big 0:00:47.360 --> 0:00:49.960 business stories impacting Wall Street and the global markets. 0:00:50.200 --> 0:00:52.440 Each and every week, we provide in depth research and 0:00:52.560 --> 0:00:54.480 data on some of the two thousand companies and one 0:00:54.560 --> 0:00:57.280 hundred and thirty industries are analysts cover worldwide. 0:00:57.360 --> 0:01:00.120 Today, we'll look at why the cloud based software company 0:01:00.160 --> 0:01:02.800 Salesforce gave a strong outlook for sales in the current quarter. 0:01:03.080 --> 0:01:05.480 Class well dive into why shares of the aerospace company 0:01:05.520 --> 0:01:08.480 Airbus plunged and how this might affect the delivery of 0:01:08.480 --> 0:01:10.000 its newly produced jets. 0:01:10.160 --> 0:01:12.280 But first we begin with some news in the casino 0:01:12.360 --> 0:01:13.200 and gaming space. 0:01:13.560 --> 0:01:16.240 This week, New York Mets owner Steve Cohen won approval 0:01:16.280 --> 0:01:18.800 to operate a casino next to City Fields and Queens. 0:01:19.080 --> 0:01:22.200 It's one of the three projects select different gambling licenses 0:01:22.240 --> 0:01:24.040 in New York City, and this was done by the 0:01:24.080 --> 0:01:26.760 State Gaming Commission's Facility Location Board. 0:01:27.080 --> 0:01:29.720 Cohen, the Hedge Fund Mobile submitted an eight billion dollar 0:01:29.840 --> 0:01:33.080 casino proposal with partner hard Rock International and was picked 0:01:33.080 --> 0:01:37.080 alongside genting groups Resorts World and Ballys. These three projects 0:01:37.080 --> 0:01:40.440 are expected to generate significant revenue and create thousands of 0:01:40.520 --> 0:01:41.160 jobs for. 0:01:41.200 --> 0:01:43.400 More and all. This guest host Alex Simonova and I 0:01:43.480 --> 0:01:46.080 were joined by Brian Eggert, Bloomberg Intelligence senior Gaming and 0:01:46.160 --> 0:01:49.080 launching analysts. We first asked Brian to talk about what 0:01:49.200 --> 0:01:51.919 the licenses represent and where we go from here. 0:01:52.040 --> 0:01:55.520 So this is a fairly protractive process involving ultimately di 0:01:55.560 --> 0:01:57.840 selection of three recipients. By the way, the only three 0:01:57.920 --> 0:02:00.840 left in the running after a few others were limited 0:02:00.960 --> 0:02:06.080 and dropped out, and really it authorized resort casinos for 0:02:06.280 --> 0:02:08.760 the downstate New York area, mostly in New York City. 0:02:08.800 --> 0:02:12.320 And as it turns out, the three qualified casino applicants, 0:02:12.320 --> 0:02:14.800 if you will, really are are in New York City 0:02:14.800 --> 0:02:16.880 but outside the Borough of Manhattan itself. 0:02:17.240 --> 0:02:21.079 Brian, just looking at your note on these license approvals, 0:02:21.120 --> 0:02:24.440 you write that they face a narrow path to decent 0:02:24.520 --> 0:02:26.480 returns on investment. Can you please talk to us a 0:02:26.520 --> 0:02:27.680 little bit more about that idea? 0:02:28.800 --> 0:02:30.880 Sure? So, what we assume for those resorts is they 0:02:30.919 --> 0:02:34.840 will get what I would call a gaming revenue premium 0:02:34.880 --> 0:02:38.360 and room rate premium of ten twenty percent to other 0:02:39.000 --> 0:02:43.120 kind of high end urban area resorts such as the 0:02:43.120 --> 0:02:47.799 Burgata and Atlantic City wins Encore in Boston. However, are 0:02:47.880 --> 0:02:50.760 concerned if in terms of the return prospects are that 0:02:51.120 --> 0:02:54.160 development costs are quite high and perhaps some of the 0:02:54.240 --> 0:02:58.520 targeted non gaming contribution elements might be a bit ambitious. 0:02:58.520 --> 0:03:00.840 So for that reason, when we worked the numbers, we 0:03:00.919 --> 0:03:04.040 came up with something like a ten percent return on investment, 0:03:04.080 --> 0:03:07.920 which is certainly a bit less than most operators would 0:03:07.919 --> 0:03:10.400 expect to attain in these regional markets. 0:03:11.120 --> 0:03:14.079 So I'm thinking here I mean again, I'm just thinking 0:03:14.080 --> 0:03:17.080 about Steve Cohen's I was looking at his plans in 0:03:17.120 --> 0:03:20.160 conjunction with his city field. He obviously he owns the Mets. 0:03:20.560 --> 0:03:23.919 City field is out there, the National Tennis centers out there. 0:03:24.000 --> 0:03:26.200 We had the world's fair situations, so there's a ton 0:03:26.240 --> 0:03:29.480 of opportunity out there. It seems like these are going 0:03:29.520 --> 0:03:35.040 to be more retail hotel than casino. How do you 0:03:35.040 --> 0:03:36.920 think the mix of revenue is going to be there? 0:03:37.680 --> 0:03:39.960 So this certainly is I think when we work the numbers, 0:03:40.760 --> 0:03:45.400 we assume that with respect to either food and beverage 0:03:45.440 --> 0:03:49.080 or retail entertainment revenue, those will be fairly sizable chunks 0:03:49.080 --> 0:03:53.360 of the overall revenue PI probably cuatively close to half, 0:03:53.440 --> 0:03:57.280 which is true of many kind of gaming resorts in 0:03:58.840 --> 0:04:01.480 attractive environments get a lot of non gaming revenue. I 0:04:01.520 --> 0:04:04.400 think the same will be true here. The question is 0:04:04.680 --> 0:04:06.880 will it be enough and will be margins which we 0:04:07.280 --> 0:04:10.120 take to be about thirty percent, be sufficient to get 0:04:10.200 --> 0:04:12.840 a good return. But certainly, you know the logic of 0:04:12.840 --> 0:04:15.240 having at nexas city field makes a lot of sense. 0:04:15.320 --> 0:04:18.440 You know, the other locations valleys and a golf course 0:04:18.480 --> 0:04:21.320 in the Bronx. You know, the the resorts world in 0:04:21.440 --> 0:04:25.359 Queen's pretty much expanding and existing facility all have their merit. 0:04:25.400 --> 0:04:28.320 The question is will be enough to get a decent return, 0:04:28.400 --> 0:04:32.160 But certainly some of these locations have rational prospects. 0:04:32.760 --> 0:04:35.360 What does this victory for these three companies mean for 0:04:35.400 --> 0:04:39.000 their competitors like Sands MGM, When where do they go 0:04:39.080 --> 0:04:39.559 from here? 0:04:40.560 --> 0:04:43.360 So to be queer, You know, Sans exited this process 0:04:43.480 --> 0:04:48.280 back in April. When exited in May, it's Hudson York 0:04:48.360 --> 0:04:52.599 project because of community opposition at MGM in October because 0:04:52.600 --> 0:04:54.560 of the licensed terms. But bear in mind that they 0:04:54.560 --> 0:04:57.479 do have other prospects. You know, when is developing a 0:04:57.640 --> 0:05:01.720 UAE resort of its own, gm is building in Osaka, Japan. 0:05:02.680 --> 0:05:04.320 They all can buy back in their own stock. So 0:05:04.320 --> 0:05:09.200 I think they're weighing this particular opportunity relative to other 0:05:09.279 --> 0:05:10.480 development prospects. 0:05:10.960 --> 0:05:12.840 So we're going to get the licenses by year end. 0:05:14.240 --> 0:05:16.800 What's the time taime if anybody any of these three 0:05:17.240 --> 0:05:19.600 licensed winners lay out of timetable for getting a shovel 0:05:19.600 --> 0:05:21.880 in the ground and maybe even opening the doors. 0:05:22.680 --> 0:05:25.800 So I think it'll vary by operator. But the expectations 0:05:25.800 --> 0:05:30.120 that these resorts will generally open by twenty thirty or so. 0:05:30.560 --> 0:05:32.599 It'll take a few years to develop. There was always 0:05:32.600 --> 0:05:37.200 the possibility of construction challenges, but that's the target. And 0:05:37.240 --> 0:05:40.480 of course our related to concerns since you mentioned MGM 0:05:41.080 --> 0:05:44.839 was MGM Ballely's Caesars O operaate casinos in Atlantic City, 0:05:45.480 --> 0:05:50.000 and you know, the proximity to Alantic City of resorts 0:05:50.040 --> 0:05:54.040 with casino elements at this caliber certainly presents a potential 0:05:54.120 --> 0:05:56.000 competitive challenge to Atlantic City itself. 0:05:56.600 --> 0:06:01.120 AC. That's tough. That's tough because I would see you know, 0:06:01.480 --> 0:06:03.120 on the parkway, Brian, I know you see it too. 0:06:03.480 --> 0:06:05.760 We have for years, for twenty thirty years, we've seen 0:06:05.800 --> 0:06:09.080 the limousines from New York City going down the Parkway 0:06:09.120 --> 0:06:11.520 to AC. That's going to get it impacted, isn't. 0:06:11.279 --> 0:06:15.560 It It will? I think you know, some operaters Burgata, 0:06:15.600 --> 0:06:18.960 for example, a hard rock may hold up better than others. 0:06:19.040 --> 0:06:21.080 But you know, there's always a challenge when you've got 0:06:21.400 --> 0:06:25.200 this much additional gaming capacity with resort elements opening up 0:06:25.800 --> 0:06:29.720 in relative close proximity to a to a key Atlantic 0:06:29.720 --> 0:06:30.680 City feeder market. 0:06:31.160 --> 0:06:34.039 Our thanks to Brian Eger, Bloomberg Intelligence Senior Gaming and 0:06:34.080 --> 0:06:35.039 Lodging analysts. 0:06:35.080 --> 0:06:36.599 We move now to the retail space. 0:06:36.800 --> 0:06:39.840 This week, the department store chains Macy's posted better than 0:06:39.839 --> 0:06:42.839 expected results last quarter. However, shares dropped if the company 0:06:42.880 --> 0:06:45.480 pointed to a potential for soft demand from low income 0:06:45.520 --> 0:06:46.680 shoppers for the current quarter. 0:06:47.120 --> 0:06:49.400 For more, Nora and I were joined by Mary Ross 0:06:49.440 --> 0:06:52.520 and Gilbert Bloomberg Intelligence senior equity analyst covering retail. 0:06:52.680 --> 0:06:55.360 We first asked Mary to break down Macy's most recent quarter. 0:06:55.600 --> 0:06:58.640 We saw, actually, I think great results coming out of 0:06:58.680 --> 0:07:03.120 Macy's see but the company put out conservative fourth quarter 0:07:03.240 --> 0:07:06.560 guidance and that's really what they always do. They seek 0:07:06.600 --> 0:07:09.440 to beat their numbers, and so that guidance came in 0:07:09.640 --> 0:07:11.920 very close, you know, at the high end. It's right 0:07:11.920 --> 0:07:15.040 around where analysts are because they already saw strong results 0:07:15.080 --> 0:07:19.240 come in from other retailers. But we think, when we 0:07:19.280 --> 0:07:23.000 think about it, we think there's upside here. So we 0:07:23.160 --> 0:07:27.680 really view the results as look Macy's name plate because 0:07:27.680 --> 0:07:29.640 of all the changes that they're making, and what that 0:07:29.720 --> 0:07:32.920 means is they're bringing in more relevant brands that are 0:07:32.920 --> 0:07:36.679 resonating with their consumer. Not only that, but the stores 0:07:36.720 --> 0:07:41.400 look brighter. There's really kind of exciting music in the stores. 0:07:41.520 --> 0:07:46.280 The store associates are more engaged with the customer. We've 0:07:46.280 --> 0:07:49.080 noticed that on our channel text, particularly on Black Friday, 0:07:49.480 --> 0:07:52.280 we saw more traffic in the store than we've seen 0:07:52.320 --> 0:07:56.280 in years past. So we think that the changes that 0:07:56.480 --> 0:08:00.360 CEO Tony Sprain is making and he's really making his 0:08:00.480 --> 0:08:04.640 cues from what he's done at Bloomingdale's, it's resonating, it's working, 0:08:04.680 --> 0:08:07.600 and so we think this momentum is building and we 0:08:07.680 --> 0:08:09.840 certainly saw it in the third quarter numbers with comp 0:08:09.920 --> 0:08:13.960 sales two point seven percent for the Go Forwards stores, 0:08:14.480 --> 0:08:17.800 and so with that, I mean that's a big improvement sequentially, 0:08:18.200 --> 0:08:20.600 and so we think that's building, you know, going into 0:08:20.640 --> 0:08:23.720 the fourth quarter and just with you know, the constant 0:08:23.760 --> 0:08:25.240 improvement that we're seeing there. 0:08:25.720 --> 0:08:27.920 So when most people think about the retail space right now, 0:08:27.960 --> 0:08:31.160 a lot of people think about the transition to e commerce, 0:08:31.160 --> 0:08:33.040 but it sounds as though, from what you're explaining, a 0:08:33.040 --> 0:08:35.280 lot of people are going there in person. I mean, 0:08:35.320 --> 0:08:38.040 I'm looking at Coals, I'm looking at Dillard's. What are 0:08:38.080 --> 0:08:41.360 they doing in particular that's really attracting customers to come 0:08:41.400 --> 0:08:44.800 through the doors. Is it also collaborations with celebrities by chance? 0:08:45.360 --> 0:08:48.280 Yes, you raised a valid point, and it is. It 0:08:48.320 --> 0:08:53.440 does include collaborations. So for example, they Aqua you know, 0:08:53.520 --> 0:08:56.839 they're under their Bloomingdale's brand currently has a collapse going 0:08:56.880 --> 0:09:02.120 out with a designer out to move on and so yes, 0:09:02.160 --> 0:09:06.240 these collaborations also even you know, they'll have some events. 0:09:06.800 --> 0:09:09.439 But all of that is is certainly drawing. 0:09:09.200 --> 0:09:12.480 In new customers and I think Macy's nameplate could certainly 0:09:12.520 --> 0:09:15.760 do more on that end. They had their first collab 0:09:15.800 --> 0:09:18.680 with their on thirty fourth brand this year, but we 0:09:18.720 --> 0:09:20.800 think we're going to see more next year because if 0:09:20.840 --> 0:09:23.320 you look at what Dillard's has been doing over the 0:09:23.360 --> 0:09:27.280 last few years, and they have a different business model 0:09:27.320 --> 0:09:30.800 than Macy's does. They're not really promotional. For example, for 0:09:31.160 --> 0:09:34.280 Black Friday, they just had clearance sales and it was 0:09:34.440 --> 0:09:37.520 pretty comparable to last year, so that didn't mean that 0:09:37.559 --> 0:09:39.520 the rest of the merchandise was on sale. 0:09:39.559 --> 0:09:43.000 Macy's the you know, is far more promotional. 0:09:43.360 --> 0:09:47.880 But by doing collaborations, you know, by getting celebrities involved. 0:09:47.960 --> 0:09:50.840 So for example, for the holiday, they have Jennifer Hudson 0:09:51.960 --> 0:09:56.120 that's you know, fronting their campaign for the holiday, and 0:09:56.120 --> 0:10:01.320 they're also engaging with social influencers. Yes, all of that 0:10:01.440 --> 0:10:04.400 is resonating. We're seeing it with other brands, like for 0:10:04.440 --> 0:10:08.520 example with American Eagle, which just tapped Martha Stewart and 0:10:08.559 --> 0:10:10.400 that that's appealing to gen Z. 0:10:11.360 --> 0:10:13.320 Oh wow, so one. 0:10:14.520 --> 0:10:18.679 Yeah, so these bold campaigns that these brands are doing, 0:10:18.800 --> 0:10:22.880 Macy's is also getting involved there and they're dipping there 0:10:22.880 --> 0:10:24.720 to I would say, they're dipping their toe in the water. 0:10:24.760 --> 0:10:27.880 But I think we're going to see that increase, you know, 0:10:27.960 --> 0:10:31.320 and build as we get into twenty twenty six. And 0:10:31.360 --> 0:10:33.760 when you talk about the digital business, because of course 0:10:33.760 --> 0:10:37.600 you're always hearing let's say, stronger growth on digital. For example, 0:10:37.640 --> 0:10:40.719 when we looked at Black Friday, you know, over the 0:10:40.760 --> 0:10:44.880 weekend through Cyber Monday, the sales strength was really led 0:10:45.120 --> 0:10:48.720 by digital. Digital was up double digits versus you know, 0:10:48.840 --> 0:10:51.080 load to mid single digits for in store. 0:10:51.600 --> 0:10:55.760 So I think that's really positive there. 0:10:55.840 --> 0:10:57.760 But so when we look at Macy's, a third of 0:10:57.800 --> 0:11:00.920 their sales come from digital, so still in the store 0:11:01.320 --> 0:11:04.440 is very big, but it's also omni channel well, the 0:11:04.480 --> 0:11:07.520 ability to buy online, take back in store, or buy 0:11:07.559 --> 0:11:08.840 online pickup in store. 0:11:09.480 --> 0:11:11.840 Just real quick, thirty seconds, what's macy saying about the 0:11:11.840 --> 0:11:12.680 consumer out there. 0:11:13.480 --> 0:11:16.240 Yeah, So they're saying that the lower end consumer is 0:11:16.360 --> 0:11:20.280 really feeling pinched, and that's where they're seeing some challenges 0:11:20.320 --> 0:11:22.440 on some of the price increases on their lower price 0:11:22.480 --> 0:11:26.520 point items. But the higher middle income, in the higher 0:11:26.559 --> 0:11:31.800 income consumer is resilient and they haven't flashed or batter 0:11:31.840 --> 0:11:35.560 DENI with higher prices that they took to offset tariffs, 0:11:35.559 --> 0:11:36.520 and they're still buying. 0:11:37.120 --> 0:11:40.320 Thanks to Mary Ross Gilbert Bloomberg Intelligence, senior equity analyst 0:11:40.360 --> 0:11:41.000 covering retail. 0:11:41.240 --> 0:11:43.120 Coming up, we continue in the retail space and look 0:11:43.160 --> 0:11:45.319 at earnings from the discout retailer dollar. 0:11:45.080 --> 0:11:49.320 Tree listening to Bloomberg Intelligence on Bloomberg Radio, providing research 0:11:49.360 --> 0:11:51.240 and data on two thousand companies and one hundred and 0:11:51.280 --> 0:11:51.960 thirty industries. 0:11:52.120 --> 0:11:54.520 You can access Bloomberg Intelligence via b I go on 0:11:54.600 --> 0:11:56.959 the terminal. I'm normal Linda, and I'm Paul. 0:11:56.800 --> 0:11:58.320 Sweeney, and this is Bloomberg. 0:12:02.679 --> 0:12:07.199 This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 0:12:07.520 --> 0:12:08.840 on Bloomberg Radio. 0:12:09.600 --> 0:12:11.720 I'm Paul Sweeney and I'm normal Linda, filling in for 0:12:11.720 --> 0:12:12.280 Scarlet Foo. 0:12:12.640 --> 0:12:15.680 We continue into retail space. This week, dollar Tree reported 0:12:15.679 --> 0:12:18.600 better than expected profit and raised its full year outlook. 0:12:18.840 --> 0:12:21.079 It's a sign that the discount retailer is capturing more 0:12:21.080 --> 0:12:23.719 spending from stretched shoppers. For more of this, Paul and 0:12:23.760 --> 0:12:26.559 I were joined by Lilly Meyer, Bloomberg Retail reporter. 0:12:26.480 --> 0:12:29.360 First ass Lily to break down Dollar Tree's most recent quarter. 0:12:29.600 --> 0:12:29.800 Yeah. 0:12:29.800 --> 0:12:33.079 So Dollar Tree did well this quarter at matt expectations 0:12:33.160 --> 0:12:36.880 on revenue and same store sales, and it raised its 0:12:37.200 --> 0:12:40.600 profit outlook for the year. I think they really have 0:12:40.720 --> 0:12:44.160 hit a niche in being able to capture consumers, both 0:12:44.160 --> 0:12:47.640 lower end consumers who need cheaper goods and then high 0:12:47.720 --> 0:12:49.840 income consumers who are looking to trade down. 0:12:50.360 --> 0:12:52.800 So, I mean, what do we think about elasticity of 0:12:52.880 --> 0:12:54.960 the lower end consumer right now? Because I mean, if 0:12:55.000 --> 0:12:56.760 you think about Walmart, I used to think of this 0:12:56.800 --> 0:12:59.680 as a company that you know, was a cheaper place 0:12:59.679 --> 0:13:01.360 to show, but it seems as though it's appealing to 0:13:01.480 --> 0:13:04.439 multiple consumer types. But it seems as a dollar Tree 0:13:04.480 --> 0:13:06.720 really is a great place for the lower end consumer. 0:13:07.040 --> 0:13:09.760 Yeah, and actually recently dollar Tree has been looking to 0:13:09.840 --> 0:13:12.720 kind of break into that higher income shopper as well. 0:13:12.800 --> 0:13:16.200 So it has this pricing strategy, so it has some 0:13:16.480 --> 0:13:19.360 products that are still cheaper, but then it has some 0:13:19.520 --> 0:13:22.480 it's getting more products that are more expensive. 0:13:23.440 --> 0:13:27.920 What is Dollar Tree saying about its core consumer out there? 0:13:28.520 --> 0:13:30.319 Who is that core consumer and how are they behaving? 0:13:30.679 --> 0:13:32.960 Yeah, so I think it's core consumer is still a 0:13:33.040 --> 0:13:35.960 lower income shopper. Eighty five percent of their products are 0:13:36.000 --> 0:13:38.560 two dollars an under, so they really still have a 0:13:38.559 --> 0:13:39.200 lot of value. 0:13:39.280 --> 0:13:40.239 So they're seeing. 0:13:39.960 --> 0:13:43.200 Those shoppers continue to go in. But this quarter they 0:13:43.200 --> 0:13:46.680 saw traffic down and they attributed that to tariff increases. 0:13:46.920 --> 0:13:48.720 But what's the takeaway in terms of the outlook. I mean, 0:13:48.760 --> 0:13:50.880 you talked about tariff still being a drag here. 0:13:51.240 --> 0:13:53.680 Yeah, so tariffs will really dragged this quarter. They said 0:13:53.679 --> 0:13:55.679 that's going to lessen, So I think this was the 0:13:55.760 --> 0:13:59.160 quarter where we're really seeing the biggest tariff impact. It'll 0:13:59.200 --> 0:14:02.760 be really interesting to see what they predict for consumers 0:14:02.960 --> 0:14:06.400 next year. I'm interested to hear about that and also 0:14:06.440 --> 0:14:08.440 what they see for holiday if they continue to see 0:14:08.480 --> 0:14:10.760 hire income shoppers trading down for gifts. 0:14:11.000 --> 0:14:14.920 Is the dollar stores do they see a surgeon sales 0:14:15.240 --> 0:14:17.760 seasonal surge and sales from holiday sales that Do they 0:14:17.800 --> 0:14:19.760 see that like a department store would. 0:14:20.080 --> 0:14:22.080 Yeah, I don't know if it's the same surge, but 0:14:22.240 --> 0:14:24.120 you know, they sell a lot of gift wrapping and 0:14:24.240 --> 0:14:27.360 gift bags and some of those smaller gifts stocking stuffer, 0:14:27.440 --> 0:14:29.000 so I think they see a lot of that around 0:14:29.040 --> 0:14:29.680 the holidays. 0:14:30.160 --> 0:14:31.880 So what are we seeing in terms of just the 0:14:31.880 --> 0:14:34.120 broader read on the retail space? This kind of gives 0:14:34.200 --> 0:14:35.880 us a picture of the lower end consumer, But what 0:14:35.920 --> 0:14:37.040 are you seeing across the board? 0:14:37.400 --> 0:14:40.440 So broadly, we're really still seeing consumer spend, So there 0:14:40.440 --> 0:14:43.000 hasn't been that massive pullback that I think some of 0:14:43.040 --> 0:14:46.280 us were imagining might happen. We're still seeing consumer spend, 0:14:46.320 --> 0:14:48.640 but they're really value driven, so they're looking for the 0:14:48.640 --> 0:14:51.800 best deals they can get. They're trading down when they 0:14:51.840 --> 0:14:53.920 need to, They're stocking up on essentials. 0:14:54.880 --> 0:14:59.440 How promotional are retailers right now? Because I'm in I know, 0:14:59.760 --> 0:15:02.840 talk to Punham Gooile, the retail analyst Bloomberg Intelligence. She says, 0:15:02.880 --> 0:15:05.160 you know, the more promotions you see out there, that's 0:15:05.200 --> 0:15:07.000 going to be that goes right to the margins, the 0:15:07.000 --> 0:15:10.040 profit margins of some of these retailers. What are we 0:15:10.080 --> 0:15:10.760 seeing this season? 0:15:11.000 --> 0:15:13.200 That's a good question. So this season, we've actually seen 0:15:13.280 --> 0:15:16.480 some retailers pull back on deals to protect their margin. 0:15:17.080 --> 0:15:19.200 So some companies are doing that as part of a 0:15:19.200 --> 0:15:21.480 broader strategy, and then some are having to do that 0:15:21.560 --> 0:15:24.440 because of tariff. So, you know, for Black Friday, typically 0:15:24.520 --> 0:15:27.200 they'd offer big discounts and some are pulling back or 0:15:27.240 --> 0:15:28.680 not offering discounts at all. 0:15:29.360 --> 0:15:32.480 So consumers have still been broadly spending in the retail space. 0:15:32.600 --> 0:15:34.880 What are they spending on? Is it? You know, are 0:15:34.880 --> 0:15:39.920 we spending money on essentials right now? Skipping this lurging? Yeah, yeah, 0:15:39.960 --> 0:15:40.960 that's exactly it. 0:15:41.040 --> 0:15:43.240 So Black Friday, we talked to a lot of folks 0:15:43.280 --> 0:15:45.960 who were saying they're going to just get essentials this 0:15:46.080 --> 0:15:49.440 Black Friday. So instead of buying, you know, a Lake Crusette, 0:15:49.520 --> 0:15:52.600 Dutch oven, they were We talked to someone who instead 0:15:52.680 --> 0:15:55.040 was going to buy like three bags of forty pounds 0:15:55.080 --> 0:15:55.680 dog food. 0:15:55.880 --> 0:15:57.480 Oh that sounds okay. 0:15:57.640 --> 0:15:58.960 Yeah, So really. 0:15:58.720 --> 0:16:01.400 Using you know, deals to get things that they need 0:16:01.440 --> 0:16:04.280 for themselves rather than getting that big ticket item they 0:16:04.320 --> 0:16:04.800 waited for. 0:16:05.360 --> 0:16:08.480 What I learned from talking to retail folks is omni 0:16:08.760 --> 0:16:12.920 channel retail, which is you use both the online and 0:16:13.000 --> 0:16:15.760 the bricks and mortar, and maybe you look at something online, 0:16:16.040 --> 0:16:17.440 then you want to go touch and feel it, or 0:16:17.440 --> 0:16:18.800 maybe you order it then you pick it up at 0:16:18.800 --> 0:16:21.320 the store. Omni channels that still a thing. 0:16:21.800 --> 0:16:24.360 Yeah, Yeah, So we were out there on Black Friday 0:16:24.360 --> 0:16:26.240 and some of the stores, and you know, while a 0:16:26.320 --> 0:16:29.120 lot of people have switched their holiday shopping to be online, 0:16:29.160 --> 0:16:32.000 we still saw a ton of people in stores, especially 0:16:32.040 --> 0:16:34.680 at stores with really good deals and stores that have 0:16:34.800 --> 0:16:38.520 appealed to young shoppers. So brands like Addicted and Princess 0:16:38.560 --> 0:16:41.520 Paul that are in malls were really flooded with young people. 0:16:41.840 --> 0:16:45.040 Our thanks to Lily Meyer, Bloomberg Retail reporter, move next. 0:16:44.960 --> 0:16:48.080 To quarterly earnings from the cloud based software company Salesforce. 0:16:48.200 --> 0:16:50.600 This week, the company reported third quarter earnings that beat 0:16:50.640 --> 0:16:54.160 analyst expectations. Salesforce also gave an outlook for revenue in 0:16:54.160 --> 0:16:56.440 the current quarter that topped Wall Street estimates. 0:16:56.640 --> 0:16:59.640 This suggests that the software company is persuading customers to 0:16:59.680 --> 0:17:02.520 buy it AI tools. For more on this, Nornite were 0:17:02.600 --> 0:17:05.560 joined by anarag Rana, Bloomberg Intelligence technology analyst. 0:17:05.800 --> 0:17:07.800 We first asked Aniog for his take on the most 0:17:07.840 --> 0:17:09.480 recent earnings report from Salesforce. 0:17:09.840 --> 0:17:10.400 Yeah, the sack. 0:17:10.640 --> 0:17:12.880 The results did come in, I mean almost in line 0:17:12.920 --> 0:17:14.760 with how we were looking at it in terms of 0:17:15.119 --> 0:17:17.840 that the core business is still struggling. But when it 0:17:17.880 --> 0:17:19.960 comes to some of their AI products that has started 0:17:20.000 --> 0:17:22.920 to do well, they've gained momentum. But when you look 0:17:22.960 --> 0:17:25.160 at somebody like a salesforce, when you have a revenue 0:17:25.160 --> 0:17:28.280 base of forty one billion dollars, it takes a lot 0:17:28.359 --> 0:17:30.800 to move the needles. So even though these products are 0:17:30.880 --> 0:17:34.040 very small and you know, growing triple digits, but they 0:17:34.040 --> 0:17:37.160 are not you know, right there in order to take 0:17:37.240 --> 0:17:39.679 down what is happening on the core business, which is 0:17:39.920 --> 0:17:44.080 a decline in seat growth or the less addition of 0:17:44.200 --> 0:17:48.120 seats because of macro IT spending, and that is probably 0:17:48.119 --> 0:17:51.280 going to be the story, at least for the near term. 0:17:51.560 --> 0:17:54.680 So it seems as though analysts are still generally positive 0:17:54.800 --> 0:17:57.119 on in terms of AI adoption trends when we think 0:17:57.160 --> 0:17:58.280 about this company though. 0:17:59.200 --> 0:18:01.240 Yes, absolutely, and that's you know, one of the things. 0:18:01.280 --> 0:18:04.399 We saw really good numbers on both the data cloud 0:18:04.480 --> 0:18:06.840 side of it and also the agent force. But when 0:18:06.840 --> 0:18:09.320 you look at the stock reaction and finally people have 0:18:09.359 --> 0:18:12.600 when you really scrape the numbers and see that their 0:18:12.920 --> 0:18:16.280 commercial remaining performance obligations, which is the order book for 0:18:16.400 --> 0:18:19.440 next quarter, which they expect to grow about thirteen percent 0:18:19.440 --> 0:18:23.679 in constant currency four percentage of point of that is informatica. 0:18:23.760 --> 0:18:26.240 So when you strip that out, you will see that 0:18:26.240 --> 0:18:29.520 that particular backlock number goes from eleven percent this quarter 0:18:29.760 --> 0:18:31.840 to let's say nine or ten percent. So the core 0:18:31.880 --> 0:18:34.280 is still declining or the core is still under pressure. 0:18:35.200 --> 0:18:37.640 So the stock down twenty seven percent year to date 0:18:37.840 --> 0:18:40.280 on a rock that does that reflect the fact that 0:18:40.520 --> 0:18:44.479 it's just it budgets are tight, or that AI poses 0:18:44.480 --> 0:18:48.760 an existential threat to certain providers like a Salesforce. 0:18:50.200 --> 0:18:52.399 I don't think that's the case, because it's going to 0:18:52.400 --> 0:18:56.040 be very difficult for an established Fortune two thousand company 0:18:56.240 --> 0:18:58.760 to get rid of their core system of record, you know, 0:18:58.800 --> 0:19:02.359 whether that's an HRS sales customer service and just deploy 0:19:02.400 --> 0:19:04.680 a model in there. At least we are not there yet. 0:19:04.680 --> 0:19:06.840 Maybe you know, five years down the road we may 0:19:06.880 --> 0:19:09.760 see a scenario like this. But that's not really why 0:19:09.840 --> 0:19:13.160 Salesforce is struggling. It is basically, we are the largest 0:19:13.160 --> 0:19:16.760 provider of sales automation tool and customer service tool to 0:19:16.840 --> 0:19:20.000 Fortune two thousand companies. It's those companies that are not 0:19:20.200 --> 0:19:23.080 hiding at that same rate that they used to because 0:19:23.240 --> 0:19:26.680 outside of AI and AI infrastructure, everything else is still 0:19:26.720 --> 0:19:27.320 weak at this. 0:19:27.240 --> 0:19:31.400 Point our thanks to anaag Rana Bloomberg Intelligence technology analysts, we. 0:19:31.320 --> 0:19:33.520 Move to some news in the aerospace sector. 0:19:33.880 --> 0:19:36.920 This week's shares of the aerospace company Airbus plunged after 0:19:36.960 --> 0:19:40.000 revealed a quality issue on some fuselage panels of its 0:19:40.080 --> 0:19:42.640 A three to twenty airliner. This came just days after 0:19:42.640 --> 0:19:45.840 Airbus flagged a software glitch on about six thousand jets. 0:19:46.160 --> 0:19:48.880 As a result, Airbus must inspect hundreds of its best 0:19:48.880 --> 0:19:51.560 selling A three twenty jets for potential quality flaws in 0:19:51.600 --> 0:19:54.199