WEBVTT - Walmart’s Cautious Outlook Reflects Uneven State of US Economy 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, Podcasts, radio News. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:24.200 --> 0:00:26.720 Walmart reported some numbers. I thought they were pretty darn good. 0:00:26.760 --> 0:00:28.840 They're always seemingly pretty good out of Walmart. They know 0:00:28.880 --> 0:00:29.720 what they're doing over there. 0:00:29.840 --> 0:00:30.680 Stocks up two percent. 0:00:30.760 --> 0:00:33.440 Here today, let's break it down with Emily Cohene, consumer 0:00:33.479 --> 0:00:36.760 team leader for Bloomberg News. Emily talk to us about 0:00:36.760 --> 0:00:39.240 the quarter. What's the company saying about their business? 0:00:39.720 --> 0:00:43.040 Yeah, I think you nailed it as another solid quarter 0:00:43.120 --> 0:00:46.080 for Walmart in the fourth quarter. They did come out 0:00:46.080 --> 0:00:50.240 with conservative guidance, which is pretty typical for Walmart, come 0:00:50.240 --> 0:00:54.600 out with cautious guidance and then exceed it later in 0:00:54.640 --> 0:00:57.400 the year, which is sort of their playbook. And then 0:00:57.440 --> 0:01:01.320 their guidance was also paired with some warning signs or 0:01:01.440 --> 0:01:04.640 cautious outlook about the economy, which I found interesting. 0:01:05.319 --> 0:01:07.200 Yeah, I want to pick up on that idea because 0:01:07.240 --> 0:01:10.920 the CFO talked to Bloomberg and mentioned that tariff driven 0:01:10.959 --> 0:01:14.440 inflation has reached or is reaching its peak, which I 0:01:14.440 --> 0:01:17.360 thought was really interesting given that there's so many people 0:01:17.400 --> 0:01:20.880 expecting rate cuts later on this year, given that inflation 0:01:21.000 --> 0:01:23.840 seems to have settled down, What more can they tell 0:01:23.920 --> 0:01:24.800 us about pricing? 0:01:26.120 --> 0:01:29.360 I think they told us that prices rose one percent 0:01:29.400 --> 0:01:31.280 in the quarter, which I think was the same as 0:01:31.319 --> 0:01:34.440 the last quarter. But they also mentioned other things like 0:01:35.240 --> 0:01:41.520 tepid job growth, student loan delinquencies, rising consumer sentiment being uneven, 0:01:42.440 --> 0:01:45.959 things that you know, would give any CEO or CFO 0:01:46.080 --> 0:01:50.320 or company pause when they're trying to outlay what might 0:01:50.360 --> 0:01:52.520 happen in the coming year. 0:01:52.920 --> 0:01:55.320 And I noticed over the last a couple of years 0:01:55.360 --> 0:01:57.840 they've talked about how maybe their customer base is changing 0:01:57.880 --> 0:02:01.240 a little bit, people, some middle class maybe for income 0:02:01.440 --> 0:02:03.200 areas coming down to Walmart. 0:02:03.200 --> 0:02:04.720 They're seeing more and more of that. Is that still 0:02:04.720 --> 0:02:05.120 the case. 0:02:05.240 --> 0:02:07.520 I think yes, that's definitely the case, and that's sort 0:02:07.560 --> 0:02:11.120 of their superpower right now that you know, poor this 0:02:11.280 --> 0:02:14.400 is the case shaped economy that we talk about a lot. 0:02:14.639 --> 0:02:18.679 Poor customers are pulling back in areas, but what they're 0:02:18.680 --> 0:02:21.959 seeing is wealthier clients clientele who might not have come 0:02:22.000 --> 0:02:26.200 to Walmart in the past, shopping at Walmart, especially for 0:02:26.360 --> 0:02:29.919 things like their groceries, which they've invested in a lot 0:02:29.960 --> 0:02:32.360 in the last ten years. You can now find organic 0:02:32.400 --> 0:02:35.360 groceries in Walmart and that's really paying off. 0:02:36.400 --> 0:02:39.000 And they also have this Walmart Plus program which they're 0:02:39.040 --> 0:02:41.400 really putting a lot of emphasis on. It's actually one 0:02:41.400 --> 0:02:44.359 of the benefits if you're an American Express Platinum cardholder, 0:02:44.440 --> 0:02:47.000 which speaks to that idea that they're really reaching for 0:02:47.040 --> 0:02:49.919 the higher income consumer. How's that going in Is it 0:02:50.080 --> 0:02:53.640 making any headway on stealing Marcus share from Amazon with 0:02:53.680 --> 0:02:54.600 its Prime program? 0:02:55.080 --> 0:02:58.000 Yeah, they're seeing a huge growth in e commerce. I 0:02:58.000 --> 0:03:00.239 think that was one of the major areas that grew 0:03:00.280 --> 0:03:04.480 this quarter. That is drawing in higher income shoppers who 0:03:04.600 --> 0:03:09.919 actually pay even more than the membership for faster deliveries, 0:03:10.000 --> 0:03:13.840 speedier pickup times, and that's helping them also grow market 0:03:13.840 --> 0:03:18.320 share among wealthier shoppers who are looking for convenience over 0:03:18.639 --> 0:03:19.400 everything else. 0:03:20.280 --> 0:03:23.359 So what are they saying about Did they even talk 0:03:23.360 --> 0:03:26.600 about on CONFT called tariffs anymore? That's still a discussion point. 0:03:27.360 --> 0:03:29.480 And what's the company saying about tariffs? 0:03:29.760 --> 0:03:33.760 Yeah, tariffs came up a little bit, but they said 0:03:33.760 --> 0:03:39.560 that they expect that that tariff driven inflation to peak. 0:03:39.640 --> 0:03:39.960 Now. 0:03:41.160 --> 0:03:44.600 I think they also benefit here again from their groceries. 0:03:44.680 --> 0:03:48.120 Groceries are a portion of their assortment that is less 0:03:48.120 --> 0:03:52.880 impacted by tariffs, and they're really benefiting from I think 0:03:52.920 --> 0:03:55.640 sixty percent of their sales come from groceries these days. 0:03:56.360 --> 0:03:58.920 You mentioned e commerce, It sounds like Walmart will continue 0:03:58.960 --> 0:04:02.760 to invest in techlogy and automation. What were some of 0:04:02.760 --> 0:04:04.640 the things that they flagged that they're working on in 0:04:04.720 --> 0:04:08.320 terms of innovation and building on the technology that they 0:04:08.320 --> 0:04:10.520 have already implemented into their system. 0:04:10.680 --> 0:04:12.120 Yeah, it was interesting. 0:04:12.160 --> 0:04:15.880 They said most of their fulfillment and stores is now 0:04:15.920 --> 0:04:19.400 coming from automated warehouses, most of their fulfillment for e 0:04:19.440 --> 0:04:23.800 commerces coming from automated warehouses. They have really made huge 0:04:23.960 --> 0:04:29.880 gains here to speed up fulfillment centers, and I think 0:04:29.920 --> 0:04:32.599 we should expect to see more of that in the 0:04:32.600 --> 0:04:35.920 coming quarters. They cited story models and automation as the 0:04:36.640 --> 0:04:39.800 main areas where they're going to be continuing to invest. 0:04:40.000 --> 0:04:41.960 You know, one of the things that's amazed me really 0:04:41.960 --> 0:04:45.039 for ten fifteen years about Walmart is how well their 0:04:45.040 --> 0:04:46.200 digital business has been. 0:04:46.240 --> 0:04:47.440 Their e commerce business. 0:04:47.440 --> 0:04:50.360 They have built that to not only I mean they 0:04:50.360 --> 0:04:52.839 can go toe to toe with Amazon dot Com just 0:04:52.839 --> 0:04:54.200 about anything, it seems like. 0:04:54.520 --> 0:04:56.120 Is that still a growth story for them? 0:04:56.440 --> 0:04:59.400 Yeah? I think they said something like a third. They've 0:04:59.480 --> 0:05:04.080 you know, a huge amount of shoppers are now actually 0:05:04.120 --> 0:05:11.240 interacting with their AI, their AI assistant on their app 0:05:11.279 --> 0:05:15.480 and on their website. That really helping people make shopping 0:05:15.520 --> 0:05:20.120 decisions faster. They're seeing an increasing spend from customers who 0:05:20.160 --> 0:05:24.440 interact with the AI shopping assistant, they said, which which 0:05:24.520 --> 0:05:25.680 I think we can expect to see. 0:05:25.880 --> 0:05:28.839 Just in the last five years, their ibathas roughly doubled, 0:05:29.200 --> 0:05:30.680 but their cap X is tripled. 0:05:30.880 --> 0:05:33.880 Yeah, so commerce build out, that tech build out, yep. 0:05:33.920 --> 0:05:35.720 So I mean they're putting their money where their mount 0:05:35.800 --> 0:05:36.120 is here. 0:05:36.360 --> 0:05:38.760 You know what Paul's dream job is, Emily us He 0:05:38.880 --> 0:05:39.960 mentioned this to you, No. 0:05:40.600 --> 0:05:44.160 Be a greeter at Walmart. See I'm a nice, friendly guymock. 0:05:44.200 --> 0:05:45.120 He wants to wear the smock. 0:05:45.600 --> 0:05:48.840 But you know, to that point, Walmart employees about two 0:05:48.839 --> 0:05:52.120 point one million people, which makes it a huge employer. 0:05:52.680 --> 0:05:54.320 Do we have a sense of whether they've been growing 0:05:54.360 --> 0:05:58.560 their employee base at all with this commitment to technology, 0:05:58.600 --> 0:05:59.240 to automation. 0:06:00.480 --> 0:06:03.800 I think They've definitely made a huge investment in technology. 0:06:04.320 --> 0:06:06.240 They have a lot more people working on tech than 0:06:06.279 --> 0:06:08.479 they ever have, and I think we could expect to 0:06:08.480 --> 0:06:10.279 see more of that for sure. 0:06:11.080 --> 0:06:14.240 Stay with us more from Bloomberg Intelligence coming up after this. 0:06:18.080 --> 0:06:21.760 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:21.839 --> 0:06:24.960 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:24.960 --> 0:06:28.279 Auto with the Bloomberg Business App. Listen on demand wherever 0:06:28.320 --> 0:06:31.440 you get your podcasts, or watch us live on YouTube. 0:06:31.920 --> 0:06:35.280 All right, let's move from cars to tractors. We can 0:06:35.320 --> 0:06:39.080 do that with John Deere. John Deer reported some really 0:06:39.120 --> 0:06:41.839 solid numbers of stocks up twelve percent today, so a 0:06:41.839 --> 0:06:44.720 big move for Dear. It's up forty two percent year 0:06:44.760 --> 0:06:46.640 to date. And when you think about the John Deer company, 0:06:46.640 --> 0:06:49.000 you think about the US farmer because that's the primary 0:06:49.040 --> 0:06:51.800 customer there. When a farmer has money, the farmer links 0:06:51.839 --> 0:06:54.080 to buy some new tractors. So let's check in with 0:06:54.200 --> 0:06:57.039 Chris Chiolino. He covers all the big equipment companies for 0:06:57.200 --> 0:07:01.040 Bloomberg Intelligence. Chris tell us about what did they tell 0:07:01.120 --> 0:07:02.200 us in their earnings report? 0:07:03.320 --> 0:07:05.640 Yeah, it was a really solid beat and race quarter. 0:07:06.040 --> 0:07:07.640 And I think this kind of gives us the all 0:07:07.720 --> 0:07:10.160 clear on the cycle and that you know twenty six 0:07:10.280 --> 0:07:13.800 will be the trough earnings year. The one Q beat 0:07:13.960 --> 0:07:18.160 was was broad based, all segments, better top line, better 0:07:18.200 --> 0:07:21.720 margins than expected, really on the back of higher shipment volumes, 0:07:22.680 --> 0:07:26.160 with particular strength in the small agg business and construction. 0:07:27.360 --> 0:07:29.840 Those those are markets that you know, have started to 0:07:29.920 --> 0:07:31.440 already recover now this year. 0:07:32.280 --> 0:07:33.200 The large agg. 0:07:33.040 --> 0:07:36.200 Business, which is obviously their their bigger growth engine, continues 0:07:36.240 --> 0:07:39.120 to be soft. But I think we're seeing that business 0:07:39.120 --> 0:07:42.200 stabilize and really for the first time, you know, in years, 0:07:42.240 --> 0:07:45.000 we're starting to see some green shoots emerge there. Order books, 0:07:45.040 --> 0:07:47.200 you know, strengthened a little bit during the quarter as well. 0:07:49.120 --> 0:07:52.080 How about how does this compare it in contrast with 0:07:52.120 --> 0:07:55.480 what CNH Industrial reported earlier this week, which took more 0:07:55.840 --> 0:07:57.520 It feels like a cautious stance. 0:07:58.640 --> 0:08:01.000 Yeah, you know, I think so. Both companies are calling 0:08:01.040 --> 0:08:03.480 twenty six as the bottom. I think that's pretty well 0:08:03.560 --> 0:08:06.559 understood at this point. I think the incremental piece coming 0:08:06.560 --> 0:08:09.320 out of Deer today is that you're starting to see 0:08:09.320 --> 0:08:12.320 some early signs of improvement in the North American lar 0:08:12.440 --> 0:08:15.280 jag business. That's a market they're projecting in terms of 0:08:15.400 --> 0:08:18.560 unit volumes to you down fifteen to twenty percent this year. 0:08:18.880 --> 0:08:20.640 That's going to put volumes at the lowest level in 0:08:20.680 --> 0:08:23.120 more than four decades. But what you're starting to hear 0:08:23.160 --> 0:08:26.080 from them this quarter is that the order book strengthened. 0:08:25.560 --> 0:08:29.320 Particularly just in the last month of the quarter. You're 0:08:29.320 --> 0:08:29.680 starting to. 0:08:29.640 --> 0:08:31.840 See a little bit more trade flows going to China, 0:08:32.080 --> 0:08:35.160 the fleets continue to age, you have the government aid support, 0:08:36.000 --> 0:08:38.000 so this is not a big step change, but it's 0:08:38.040 --> 0:08:40.079 really the first signs of incremental improvement. 0:08:43.760 --> 0:08:46.360 You got to have a great sense of timing, Chris, 0:08:47.040 --> 0:08:49.400 as I said, Deer's up forty two percent year to date, 0:08:49.440 --> 0:08:52.600 so the market's anticipating this business bottoming and then turning up. 0:08:52.920 --> 0:08:55.400 How long is this cycle for some of these companies 0:08:55.400 --> 0:08:57.000 that you followed here, they are cyclical. 0:08:58.080 --> 0:09:00.719 Yeah, so a typical downturn in this business will last 0:09:00.760 --> 0:09:02.320 anywhere from two to four years. 0:09:02.360 --> 0:09:04.080 This will be the third year of the downturn. 0:09:04.160 --> 0:09:07.800 So in terms of the downturn, it looks very similar 0:09:07.880 --> 0:09:12.600 to what we've seen historically. Typically the upturns last a 0:09:12.679 --> 0:09:17.240 little bit longer. But you know, this is an incredibly 0:09:17.320 --> 0:09:21.120 volatile market and it's ultimately dictated by crop prices and 0:09:21.160 --> 0:09:25.840 farmer profitability. So the crop outlooks do have a significant 0:09:25.840 --> 0:09:28.480 impact here in terms of what farmers are willing and 0:09:28.600 --> 0:09:29.400 able to spend. 0:09:31.000 --> 0:09:34.360 And it looks like Deer relies on the US for 0:09:34.800 --> 0:09:37.840 a huge part of its revenue, if not half. What 0:09:38.000 --> 0:09:41.800 is it doing in terms of growing its business overseas 0:09:42.280 --> 0:09:46.240 does it? Is it just kind of a trajectory of 0:09:46.280 --> 0:09:48.880 growth there that is similar to what it sees in 0:09:48.920 --> 0:09:51.280 the US, or is it competing against some established players. 0:09:52.400 --> 0:09:55.600 Yeah, so they're regional markets, but in terms of what 0:09:55.679 --> 0:09:59.840 markets matter for Deer, it's North America and now South 0:10:00.320 --> 0:10:03.880 is becoming more important. Reason being those are you know, 0:10:03.960 --> 0:10:08.760 typically the bigger producers of road crops, corn, soybeans. They're 0:10:08.840 --> 0:10:13.040 larger farms, they utilize more, the larger equipment that you know, 0:10:13.160 --> 0:10:16.199 is more conducive to some of the precision technologies which 0:10:16.240 --> 0:10:19.240 which come in at a higher margin. Europe tends to 0:10:19.320 --> 0:10:21.400 be a little bit more stable, They get a lot 0:10:21.440 --> 0:10:23.960 of government support, so I think of that market as 0:10:24.080 --> 0:10:29.760 less less cyclical. You know, lower peaks, higher troughs. Those 0:10:29.800 --> 0:10:32.040 are really kind of the three big growth engines. If 0:10:32.040 --> 0:10:34.280 you think about Deer's geographic exposure. 0:10:35.160 --> 0:10:38.240 So what is Deer saying about the US farmer these days? 0:10:39.960 --> 0:10:41.439 Listen, things are still challenging. 0:10:41.600 --> 0:10:44.880 Let's let's not understate that, you know, crop prices really 0:10:44.920 --> 0:10:48.480 haven't moved that much and still under tremendous pressure. As 0:10:48.520 --> 0:10:51.040 we look at another year of you know, near record production, 0:10:52.440 --> 0:10:56.000 they are seeing some signs of stability, I would say, 0:10:56.040 --> 0:10:57.960 And like I mentioned earlier, I think we're starting to 0:10:57.960 --> 0:11:01.640 see some early signs of improved activity again, albeit off 0:11:01.679 --> 0:11:04.640 a very low base, and a lot of that's predicated 0:11:04.679 --> 0:11:06.280 on you know, we're starting to see a little bit 0:11:06.280 --> 0:11:11.080 more exports going to China, you have a continued government support, 0:11:11.880 --> 0:11:14.439 and then also you know, there's certainly a need for replacement. 0:11:14.480 --> 0:11:15.960 The age of the fleet is as old as it's 0:11:15.960 --> 0:11:19.080 been in a number of years. So as farmers get 0:11:19.080 --> 0:11:21.200 more money, you start to see some stability on the 0:11:21.240 --> 0:11:22.040 crop price front. 0:11:22.080 --> 0:11:24.439 That should, you know, unlock some pent up demand. 0:11:25.440 --> 0:11:27.640 Yeah, I'm just looking at the stock price trading. It 0:11:27.679 --> 0:11:29.800 at a record high, but it really has gone on 0:11:29.840 --> 0:11:33.280 a tear over the past three weeks or two weeks. 0:11:34.240 --> 0:11:37.160 What accounts for that? Was it anticipation of this report 0:11:37.240 --> 0:11:38.160 or was it something else? 0:11:39.440 --> 0:11:40.560 A combination of things. 0:11:40.600 --> 0:11:43.880 You know, I think, you know, it's pretty well understood 0:11:43.920 --> 0:11:46.120 now that we this year will be the trough of 0:11:46.160 --> 0:11:48.960 the cycle. So I think there's some positioning ahead of that. 0:11:49.080 --> 0:11:51.120 And you know, a lot of these heavy machinery companies 0:11:51.120 --> 0:11:53.800 typically do well in early in the rate cut environment. 0:11:54.080 --> 0:11:57.960 So the anticipation of lower rates stronger growth environment not 0:11:58.000 --> 0:12:00.360 only in the ag business but also construction, and I 0:12:00.440 --> 0:12:04.120 think that sometimes get over gets overlooked. They're completely refreshing 0:12:04.160 --> 0:12:07.640 their excavator product lineup. They have a pretty strong position 0:12:07.720 --> 0:12:11.600 in construction equipment, and I think the growth dynamics there 0:12:11.679 --> 0:12:14.760 moving for twenty six and twenty seven are still quite favorable. 0:12:15.600 --> 0:12:16.199 Stay with us. 0:12:16.360 --> 0:12:18.760 More from Bloomberg Intelligence coming up after this. 0:12:22.640 --> 0:12:26.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:26.400 --> 0:12:29.520 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:29.520 --> 0:12:32.840 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:32.880 --> 0:12:36.400 you get your podcasts, or watch us live on YouTube. 0:12:36.880 --> 0:12:40.560 Six Flags Great Adventure, my first amusement and next second 0:12:40.600 --> 0:12:41.080 amusement park. 0:12:41.120 --> 0:12:42.280 The first one is Hershey Park. 0:12:42.679 --> 0:12:44.840 Okay, yeah, that's a good starter. 0:12:45.000 --> 0:12:45.720 Amusement park. 0:12:45.800 --> 0:12:47.280 Yeah, yeah, that was a good one. Then you go 0:12:47.320 --> 0:12:49.480 to then you step up to six Flags. Great adventure. 0:12:49.600 --> 0:12:51.880 That's some serious park there. 0:12:52.000 --> 0:12:52.240 Yeah. 0:12:52.360 --> 0:12:54.199 Well we have to be ready to kind of be 0:12:54.440 --> 0:12:58.120 you know, have trouble standing because of the roller coaster 0:12:58.200 --> 0:12:59.320 rise being super aggressive. 0:12:59.400 --> 0:12:59.559 Yep. 0:12:59.559 --> 0:13:03.240 Absolutely, And they're still there, cars going in, packing in 0:13:03.320 --> 0:13:05.520 all the time down there in Jackson, New Jersey. They're 0:13:05.520 --> 0:13:07.400 all around the country. They reported some earnings here today. 0:13:07.440 --> 0:13:09.520 Let's get down to it with Jody Lourie. She's a 0:13:09.520 --> 0:13:12.560 credit analyst. She covers all the leisure companies, including six 0:13:12.600 --> 0:13:15.960 Flags Entertainment. Jody, thanks so much for joining us. What 0:13:16.000 --> 0:13:18.640 did you hear from six Flags today with their earnings? 0:13:19.760 --> 0:13:22.439 So I think what's interesting, Paul, is that we're seeing 0:13:22.520 --> 0:13:25.600 that some of what six Flags said, oddly was similar 0:13:25.640 --> 0:13:29.520 to what we saw on APHIS's call. And both companies 0:13:29.880 --> 0:13:33.280 had these large impairment charges to boost ebada, but it 0:13:33.280 --> 0:13:37.280 didn't necessarily equate to cash generation, And both companies are 0:13:37.280 --> 0:13:40.559 focused on improving their debt load and also just the 0:13:40.600 --> 0:13:44.040 core of the business, the operational side, adding an AI 0:13:44.360 --> 0:13:47.360 to boost the business and figuring out ways to turn around, 0:13:47.360 --> 0:13:49.880 and both companies are dealing with new CEOs. So it's 0:13:49.920 --> 0:13:53.480 just like a weird sort of compare contrast scenario that 0:13:53.800 --> 0:13:56.280 I've been toying with my head all morning. 0:13:58.200 --> 0:14:00.520 I mean, Paul was talking about how Hershey was his 0:14:00.559 --> 0:14:04.080 first amusement park, and then we're obviously the big one 0:14:04.160 --> 0:14:07.000 would be Disney, yep or Universal. 0:14:07.360 --> 0:14:07.959 Have you been there? 0:14:08.440 --> 0:14:08.640 No? 0:14:08.760 --> 0:14:10.080 Okay, that's a pretty good one. 0:14:10.160 --> 0:14:11.439 Yeah. 0:14:11.559 --> 0:14:14.240 Is that the competition for six Flags or does it 0:14:14.240 --> 0:14:15.959 work on a different level than those? 0:14:16.400 --> 0:14:19.080 It is and it isn't the competition Scarlett. I mean, 0:14:19.080 --> 0:14:22.000 I think you know, six Flags likes to compare itself 0:14:22.040 --> 0:14:26.160 more to alternatives in leisure and entertainment. There was a 0:14:26.200 --> 0:14:30.520 great slide that they provided that that showcase the value 0:14:30.560 --> 0:14:34.120 proposition if you compare it to like concert tickets or 0:14:34.960 --> 0:14:37.560 you know, in cert sporting event. The amount of time 0:14:37.600 --> 0:14:41.000 that you spend at six Flags, in theory is all day, right, 0:14:41.080 --> 0:14:44.080 So the cost to enter and the cost for the 0:14:44.560 --> 0:14:46.800 you know, all the sort of concessions is much lower 0:14:46.840 --> 0:14:48.320 than what you would pay to go to like a 0:14:48.360 --> 0:14:51.480 Taylor Swift concert. Now that said, I mean, I think 0:14:51.520 --> 0:14:54.640 what's so interesting is is when the company combined, there 0:14:54.720 --> 0:14:57.200 was this image that they could create like an all 0:14:57.320 --> 0:15:00.680 pass promotion, right that you can end in all parks. 0:15:00.680 --> 0:15:03.400 They've only finally started rolling out something that's our regional 0:15:03.440 --> 0:15:08.360 pass recently, and I'm curious to see what could happen 0:15:08.480 --> 0:15:11.280 with the company as they improve those sort of points 0:15:11.280 --> 0:15:13.200 of it. Because what's funny is if you look at 0:15:13.240 --> 0:15:16.120 it from a revenue perspective, it did actually pretty well 0:15:16.160 --> 0:15:18.000 this year compared to twenty four, and twenty four was 0:15:18.040 --> 0:15:20.640 a pretty strong year. Same thing with some of the 0:15:20.880 --> 0:15:25.120 per cap spending pieces of it, right, the per cap component, 0:15:25.280 --> 0:15:28.040 the admissions were down, but the in park spending was decent, 0:15:28.400 --> 0:15:30.840 and so you say, what's going on, like why are 0:15:30.920 --> 0:15:33.000 they having such issues? And it comes down to an 0:15:33.040 --> 0:15:35.320 operational issue. It comes down to the fact that the 0:15:35.360 --> 0:15:38.440 legacy six Flags assets, I think were in way worse 0:15:38.480 --> 0:15:41.480 shape than Cedar Fair anticipated when they took on the company, 0:15:41.920 --> 0:15:43.760 and they're saddled with a lot of debt. So it's 0:15:43.800 --> 0:15:45.840 really a question of if the capital markets are going 0:15:45.920 --> 0:15:48.840 to be encouraging enough to help them through. You know, 0:15:48.880 --> 0:15:51.080 they helped them through in January with a new issue, 0:15:51.160 --> 0:15:54.160 but really are they able to sort of support the 0:15:54.200 --> 0:15:55.560 company through this transition. 0:15:55.920 --> 0:15:58.280 That park past you mentioned sounds like a you know, 0:15:58.320 --> 0:16:00.840 the amusement park version of an epic, which makes sense 0:16:00.920 --> 0:16:04.280 if you're skier and you are chasing the weather around 0:16:04.280 --> 0:16:06.520 the country. What doesn't make sense to go to the 0:16:06.520 --> 0:16:08.760 West Coast for six Flags and then come back. 0:16:09.320 --> 0:16:12.320 I don't know it could Scarlet. You don't talk to 0:16:12.440 --> 0:16:15.160 Ira Jersey enough. Apparently, at least when it comes to 0:16:15.240 --> 0:16:17.720 roller coasters. You probably talked him about interest rates. Next 0:16:17.720 --> 0:16:19.560 time when you have him on, ask him about his 0:16:19.640 --> 0:16:24.600 son's American Coasters Enthusiast card that he proudly can If 0:16:24.640 --> 0:16:29.120 you are deep into the roller coaster dynamics and culture, 0:16:29.600 --> 0:16:31.880 people will go to the end of this of the Earth. 0:16:31.920 --> 0:16:33.920 And I am curious to see how the Middle East 0:16:33.920 --> 0:16:36.920 traction for six Flags, for SeaWorld and for some of 0:16:36.920 --> 0:16:39.480 the other parks that have expanded there, how that's going 0:16:39.520 --> 0:16:41.680 to play out If you do see these park coaster 0:16:41.880 --> 0:16:44.680 enthusiasts fly out to Saudi Area, fly out to the 0:16:44.680 --> 0:16:46.840 Oe to ride certain coasters. 0:16:48.800 --> 0:16:51.200 Stay with us. More from Bloomberg Intelligence coming up. 0:16:54.920 --> 0:16:58.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:58.720 --> 0:17:02.280 weekdays at ten AM's on Applecarplay and Android Otto with 0:17:02.360 --> 0:17:05.480 the Bluemberg Business app. Listen on demand wherever you get 0:17:05.480 --> 0:17:08.280 your podcasts or watch us live on YouTube. 0:17:09.200 --> 0:17:12.480 Our good friends over in Switzerland Nesley, a lot of 0:17:12.520 --> 0:17:16.440 news coming out of them today. They're talking about maybe 0:17:16.480 --> 0:17:18.520 backing away a little bit from the ice cream business. 0:17:18.600 --> 0:17:20.000 How can you do that? I don't know. 0:17:20.520 --> 0:17:23.120 But let's check out what's going on with Nesley with 0:17:23.160 --> 0:17:26.399 our good friend Duncan Fox. He's Bloomberg Intelligence senior Consumer 0:17:26.440 --> 0:17:30.560 Stables Analytis based over there in London. Duncan, what's going 0:17:30.600 --> 0:17:34.240 on with Nestley. It seems like they considering some strategic 0:17:34.320 --> 0:17:34.840 moves here. 0:17:36.720 --> 0:17:39.720 Well, yes, I think it's such a large organization. I 0:17:39.840 --> 0:17:41.879 spion it's quite a small part of their business, and 0:17:41.920 --> 0:17:44.760 that it's already in it Well, I love it too, 0:17:44.840 --> 0:17:46.840 but it's in a joint venture, well, most of it's 0:17:46.880 --> 0:17:49.960 in a joint venture with fron Aire, and they took 0:17:49.960 --> 0:17:53.280 a back two billion dollars out last year when from 0:17:53.320 --> 0:17:56.600 Area did a raising capital. So I think it was 0:17:56.640 --> 0:18:00.080 sort of set that the chance would be that they 0:18:00.119 --> 0:18:02.200 would probably clean up their portfolio a little bit and 0:18:02.520 --> 0:18:06.240 try and concentrate on really where they have huge market share. 0:18:06.480 --> 0:18:09.000 I mean, as much as I love the ness, I scream, 0:18:09.000 --> 0:18:13.399 it is not the global leader. Magnum is so and 0:18:13.440 --> 0:18:16.200 it's well behind. It's sort of half the market share 0:18:16.240 --> 0:18:19.840 globally that that Magnum's got, So it makes sense, I think, 0:18:19.840 --> 0:18:23.720 to monetize that that stake and put it into areas 0:18:23.760 --> 0:18:26.320 where they are global number one or number two, which 0:18:26.400 --> 0:18:29.920 is coffee, pet food, and nutrition. So it does make sense. 0:18:29.960 --> 0:18:31.639 And it makes sense in the context of there's a 0:18:31.680 --> 0:18:34.119 new CEO and he's kind of putting his stamp on 0:18:34.200 --> 0:18:38.520 the company and setting out strategic direction for Nesley based 0:18:38.520 --> 0:18:40.840 on what he's done so far, is he still in 0:18:40.880 --> 0:18:44.000 the assessing stage of, you know, trying to figure out 0:18:44.280 --> 0:18:46.199 what works, what doesn't work, or is he ready to 0:18:46.280 --> 0:18:47.560 make actual moves. 0:18:49.200 --> 0:18:52.640 It feels like it's ready to make those moves. I mean, 0:18:52.640 --> 0:18:55.640 he's already sort of sharpened up the focus in sort 0:18:55.680 --> 0:18:59.880 of making it much more of the four big core 0:19:00.080 --> 0:19:02.440 acid bases, and you know, three of which are global, 0:19:02.600 --> 0:19:05.480 so he's merging two sort of nutrition businesses into one. 0:19:05.560 --> 0:19:08.920 So I actually get some cost savings which should then 0:19:09.000 --> 0:19:13.520 be invested back into driving organic growth or particularly volume 0:19:13.560 --> 0:19:15.520 in the case of Nessie, which is something that's been 0:19:15.600 --> 0:19:18.720 a bit shy the last couple of years. So it 0:19:19.200 --> 0:19:23.719 really feels that he's sort of focusing very much on 0:19:23.880 --> 0:19:28.080 getting the volume moving forward on their core categories and 0:19:28.359 --> 0:19:31.320 sort of I wouldn't say he's getting rid of everything else, 0:19:31.359 --> 0:19:35.600 but he's de emphasizing that the importance of some of 0:19:35.640 --> 0:19:37.760 the smaller parts of the business to make sure they 0:19:37.760 --> 0:19:41.720 get the large parts right. And you know, if you 0:19:41.760 --> 0:19:43.879 can do that, then maybe there'll be some other assets 0:19:43.880 --> 0:19:46.560 to monetize over time. But he did say that in 0:19:46.600 --> 0:19:49.359 the food businesses a lot of local assets there, things 0:19:49.400 --> 0:19:51.720 like kick Kat, which which are very very big and 0:19:51.840 --> 0:19:55.800 very cash generative. So you know, there are ways they've 0:19:55.800 --> 0:19:57.959 got to make sure that they keep investing in some 0:19:58.000 --> 0:20:01.760 of those, maybe smaller because they actually offer quite a 0:20:01.760 --> 0:20:04.399 lot of cashloads of the business. But it's really about 0:20:04.440 --> 0:20:07.800 focusing on the core areas where they can grow and 0:20:07.960 --> 0:20:10.440 really shape the business moving forward. So it does look, 0:20:10.480 --> 0:20:12.520 like you said, the ground running dunk and I. 0:20:12.480 --> 0:20:14.639 Know that part of the Nestle story is a cost 0:20:14.680 --> 0:20:17.200 cutting story. Give us a sense of kind of what 0:20:17.320 --> 0:20:20.440 costs they're looking to cut and kind of how far 0:20:20.480 --> 0:20:23.040