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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Handquarters.
Speaker 1: I'm Charlie Pellette. The three major US stock benchmarks are
Speaker 1: on track to close at records simultaneously for the first
Speaker 1: time in sixteen years. This amidst surprising earnings. May sees,
Speaker 1: for example, surging now by seventeen point five percent, the
Speaker 1: SMP five hundred, indecks up twelve to a record eight,
Speaker 1: gain of six tents of one percent. Naz Stack up
Speaker 1: thirty also at a record at fifty two thirty four,
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Speaker 1: at eighteen thousand, six d thirty one climbing a hundred
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Speaker 1: Gold down eight thirty ounce now to thirteen thirty nine,
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Speaker 1: up three point nine percent of barrel of West Texas
Speaker 1: Intermediate root of a dollar sixty four to forty three
Speaker 1: thirty five five right now on West Texas Intermediate. I'm
Speaker 1: Charlie Pella. That's a Bloomberg Business Flash. Charlie Pella, thank
Speaker 1: you so very much. It's time now for the e
Speaker 1: t F Report, and it's brought to you by National
Speaker 1: Realty Providers of one Satisfaction Guaranteed New York City Realty
Speaker 1: Investments see them at n r I A dot net
Speaker 1: internet e commerce, online shopping. How can you profit from it? Well,
Speaker 1: let's find out. Returning now to our own Katherine Cowry
Speaker 1: for today's et F report, Globally, retail sales are expected
Speaker 1: to store past the one and a half trillion dollar
Speaker 1: marked by that's according to Statista. And yes, there is
Speaker 1: an et F aimed at tapping into that growth. It's
Speaker 1: the Amplify Online Retail et F. Taker I b U
Speaker 1: y or I buy. Christian Magoon, chief executive of Amplify Investments,
Speaker 1: on why his firm decided to launch the e t
Speaker 1: F this year. Even though a lot of people are
Speaker 1: familiar with online retail sales, it's only seven and a
Speaker 1: half percent of US total total US retail sales, so
Speaker 1: we think they're um this this has room to maybe
Speaker 1: double or triple over the next four or five years,
Speaker 1: and we've seen research that supports that. Magoon says, there
Speaker 1: are three types of companies in the e t F.
Speaker 1: The largest allocation is traditional retailers. It's about six of
Speaker 1: the e t F. And these are companies like pet
Speaker 1: meds UM, companies like Lands and that are doing again
Speaker 1: seventy or more of their sales from through an online channel.
Speaker 1: I buy has two point seven million dollars in assets
Speaker 1: under management and an expense ratio of sixty five basis points.
Speaker 1: That's your Bloomberg ETF report. I'm Katherine Cowdery. This is
Speaker 1: taking stock with Kathleen Hayes and Prim Fox on Bloomberg
Speaker 1: Radio The world of retail. Taking a look at Macy's today.
Speaker 1: The shares are higher by more than seventeen per cent.
Speaker 1: Why while the company announces that it will shut her
Speaker 1: more than one stores that's about fiftent of its base
Speaker 1: and cut jobs in order to combat sluggish traffic as
Speaker 1: well as discounters. Here to tell us more is Oliver
Speaker 1: chen he Is, managing director and senior retail analystics Kalin
Speaker 1: and Company. Oliver, thank you for being with us. Tell
Speaker 1: us about Macy's and their plan to fix what is
Speaker 1: a struggling retail empire. Yeah, what happened today in Macy's
Speaker 1: where the comp store sales were better than feared, so
Speaker 1: they came out still negative negative two point six, but
Speaker 1: Street was looking at a negative four point seven, so
Speaker 1: better than feared combined with very low bar in terms
Speaker 1: of the sentiment into the print. So what's happening in
Speaker 1: retail right now and them there is a bit of
Speaker 1: a retail revolution because quite simply, the customers have been
Speaker 1: moving faster than retailers and what customers want and the
Speaker 1: biggest problem is just getting people to walk into stores.
Speaker 1: There are so many distractions, there's it's so much easier
Speaker 1: to shop online now and people have stores on the
Speaker 1: palm of their hands, so there's a new bar in
Speaker 1: terms of interesting people in terms of just walking in
Speaker 1: the store. So the store traffic is a big problem.
Speaker 1: And closing one stores was applauded by the Street because
Speaker 1: that's part of the process as Macy's really tries to
Speaker 1: focus focus as well as get closed stores which make
Speaker 1: less sense to them in terms of sales productivity. Um,
Speaker 1: so we're really seeing a modernization of Macy's on many levels.
Speaker 1: So Oliver, what will Macy's look like then? Is this
Speaker 1: the end of you know, the big department stores. We
Speaker 1: know it. We know that. Going the other direction, there's
Speaker 1: been companies like Warby Parkers started out online and they're
Speaker 1: opening brick, brick and mortar after brick and mortar after
Speaker 1: brick and mortar. Yeah, Kathleen, I think it's it's really interesting.
Speaker 1: I mean, our view here at Cowen is the future
Speaker 1: is bricks plus clicks. So we even see concepts like
Speaker 1: Warby Parker, you know, open stores and really try to
Speaker 1: embrace the customer. Macy still has a really compelling assortment.
Speaker 1: You really need to touch and feel and get get
Speaker 1: into the store to understand fashion, and that's a key point.
Speaker 1: But we have to see Macy's really excite millennials and
Speaker 1: Generation Z folks who are really interested in looking at
Speaker 1: Instagram feeds and traveling and experiencing great things that they
Speaker 1: can brag about online. So Macy's needs to reinvent itself
Speaker 1: and become a cool, exciting cultural institution again. And that's
Speaker 1: going to require change. Change with product assortment, change with service,
Speaker 1: and change with how customers interact with the store. Shoppers
Speaker 1: are selfish, We're selfish with their time, and we're looking
Speaker 1: for value, value as it applies to your time as well. Oliver,
Speaker 1: I wonder if you could comment about the competition coming
Speaker 1: from stores such as Zara, h and m Top Shop, Unchlow,
Speaker 1: Forever One. They're not closing stores, are they. Yeah. What
Speaker 1: what we see there is a is a healthier environment
Speaker 1: and pm UM they have really done a great job
Speaker 1: the bottom line on a lot of the fast fashionist speed.
Speaker 1: So we're moving towards this, this generation of continuous shopping,
Speaker 1: seasonless shopping. You know, I want what I want when
Speaker 1: I want it, So you're walking into store and you're
Speaker 1: seeing collections online and you really want that now. And
Speaker 1: a lot of those concepts have executed that extremely well
Speaker 1: with great supply chains. So it's up to retailers like
Speaker 1: Macy's to to really face that in the form of
Speaker 1: assortment and speed um and and we're seeing, you know,
Speaker 1: strength with that because those fast fashion competitors you named
Speaker 1: offer good speed, good prices, and customers do not want
Speaker 1: to wear One brand had to tell they're really not
Speaker 1: shopping that where anymore. So contrast Macy's two Coals very
Speaker 1: different response today. Yeah, you know Coals was also it
Speaker 1: was an inline camp and they guided EPs down so
Speaker 1: it was all a little better than feared story a
Speaker 1: little bit different. They don't have as an aggressive as
Speaker 1: a store a closure plan right now, and it's also
Speaker 1: going through transformations with with the brand portfolio. But we
Speaker 1: still saw some nice stock upside at Coals as well
Speaker 1: and Um. You know, overall today this better than feared
Speaker 1: scenario which played out has benefited both stocks. Tell us
Speaker 1: about Nordstrom that Northstrom perhaps is in a different category,
Speaker 1: perhaps more upscale. But I'm wondering if you could tell
Speaker 1: us about Nordstrom and it was founded as a shoe
Speaker 1: company and it has some of the same issues that
Speaker 1: you talk about with Macy's and Coals. What's different about
Speaker 1: north Trum and what what investors and others should realize
Speaker 1: is north Trum has a nice portfolio because it was
Speaker 1: early to online, so we have a nice attractive online
Speaker 1: mix of business of high teens to it has Northstrom Rack,
Speaker 1: which is of the business, and then it has the
Speaker 1: full line. So we see a portfolio of concepts and
Speaker 1: you can trast that again against Macy's, which is really
Speaker 1: just starting an off price concept. And then if you
Speaker 1: think about retail large, you gotta remember t j X
Speaker 1: and Ross off price has really been in the sweet spot.
Speaker 1: So Nordstrom having that portfolio, combined with being a customer
Speaker 1: first organization, very focused on what customers want, even at
Speaker 1: the expense of margins, has really helped prepare it for
Speaker 1: the long term. That being said, there's still problems in
Speaker 1: retail and we're cautious. Well, Oliver, what the heck can
Speaker 1: Macy's do? You just said, oh, they have to do
Speaker 1: these things. Okay, someone makes you the head of Macy's.
Speaker 1: What are you gonna do, Oliver, How are you gonna
Speaker 1: change Macy's to have them compete with online shopping, which
Speaker 1: is growing all the time. Well, they Macy's is still
Speaker 1: one of the biggest players in retail, but Amazon is
Speaker 1: a huge factor with convenience. But Macy's knows Fender as well.
Speaker 1: They can get exclusive product made from Macy's. They have
Speaker 1: a tremendous brand equity and household appreciation, and they have
Speaker 1: really stronger knowledgement of the situation and a very good
Speaker 1: management team who's rationalizing real estate. They just have to
Speaker 1: move fast. They have to make stores fun again. They
Speaker 1: have to add experiences. What I think they're doing now
Speaker 1: is pivoting to offer more service. So when you walk
Speaker 1: into Macy's. You don't really want to see messy piles
Speaker 1: of stuff. You want to see someone that really helps
Speaker 1: you navigate. You also want to have fun. You want
Speaker 1: to do health and wellness too, So maybe you could
Speaker 1: exercise in the store. You could get some health and wellness,
Speaker 1: um juice bar, restaurants, uh, watching an art gallery what
Speaker 1: I think they could expand it further. I mean, I
Speaker 1: think there's all these opportunities because the main issue is
Speaker 1: this traffic situation. So uh, they have to really offer
Speaker 1: the consumer kind of double duty and and refocus everybody.
Speaker 1: In addition to clothing, Does Terry London really have what
Speaker 1: it takes to turn Macy's around? I mean he goes
Speaker 1: all the way back to Bullocks and federated department stores.
Speaker 1: I mean, if you can go back to the nine
Speaker 1: nineties when Federated at Macy's combined, Uh, that was seen
Speaker 1: as a way to create a retail juggernaut. We are
Speaker 1: excited about management because Terry knows the organization. There's a
Speaker 1: new CEO coming as well, and they really understand, you know,
Speaker 1: how to impact the large organization and what the problems
Speaker 1: are now versus what the future can hold. So Macy's
Speaker 1: really does face challenges every every three to five years
Speaker 1: about reinventing itself. A setback is a set up for
Speaker 1: a comeback, and they've been aggressive about communication here. We
Speaker 1: do have a market perform rating on the stock, but
Speaker 1: I'm I'm cautiously optimistic about what's possible and I'm excited
Speaker 1: about what what can be possible. Albert Chan, that's a
Speaker 1: great phrase. I'm going to use that a setback is
Speaker 1: a set up for a comeback way and implying that
Speaker 1: do a lot of things in life. At Oliver Chan today,
Speaker 1: managing director and senior retail analysts from Cowen and Co.
Speaker 1: Applying it to Macy's and its management. You can follow
Speaker 1: Oliver at Cohen c O W E N Research. I'm
Speaker 1: Kathleen Hayes along with Pam Fox. This is Bloomberg. H