November 28, 2025 • 36 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Hosts: Paul Sweeney and Scarlet Fu
On this podcast:
- Sam Fazeli, Bloomberg Intelligence, Director of Research for Global Industries and Senior Pharmaceuticals Analyst, discusses Novo Nordisk’s Ozempic pill failing in a long shot Alzheimer’s effort.
- Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst, discusses November restaurant sales.
- Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses earnings from Kohl's and Abercrombie & Fitch.
- Woo Jin Ho, Bloomberg Intelligence Senior Technology Analyst, discusses research on Cisco's path to growth.
- Matthew Schettenhelm, Bloomberg Intelligence Media Litigation Analyst, discusses President Trump saying TV networks shouldn’t be able to enlarge.
- Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst, discusses earnings from Dick’s Sporting Goods and Best Buy.
- Jody Lurie, Bloomberg Intelligence Senior Credit Analyst, discusses the Bloomberg Intelligence survey: “Travelers Eye Similar Spending for Vacations in 2026.”
Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence
with Scarletfoo and Paul Sweeney.
Speaker 2 (00:13):
How do you think the FED is looking at tariffs?
The uncertainty of terriffs.
Speaker 3 (00:17):
Let's take a look at the sectors and how they performed.
Speaker 2 (00:19):
A lot of investors getting whipsaled every day by news.
Speaker 1 (00:22):
Events, breaking market headlines, and corporate news from across the globe.
Speaker 3 (00:26):
Could we see a market disruption of market event?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 3 (00:31):
You see some so called low quality stocks driving this
short term rally.
Speaker 1 (00:34):
Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
YouTube and Bloomberg Originals.
Speaker 2 (00:42):
On today's Bloomberg Intelligence Show, we dig inside the big
business story is impacting Wall Street and the global markets.
Speaker 3 (00:47):
Each and every week we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries are analysts cover worldwide Today?
Speaker 2 (00:54):
Well, look at why the retailer coals rates is full
year outlook for the second straight quarter.
Speaker 3 (00:58):
Plus a look at why travelers may be eyeing similar
spending for vacations in twenty twenty six.
Speaker 2 (01:02):
First, we move next to some news in the biotech space.
Speaker 3 (01:05):
This week, we heard that a pill version of Danish
drug maker Novo Nordisk's ozempic failed to slow the progression
of Alzheimer's in a pair of studies.
Speaker 2 (01:12):
Nova said this was based on a cognitive assessment for
patients who took the medicine. The drug maker will now
discontinue a plan one year extension of the studies.
Speaker 3 (01:21):
As a result, Novastock plummeted to its lowest in more
than four years. We were joined by Sam Fazzelli, Bloomberg Intelligence,
Director of Research for Global Industries and senior pharmaceuticals analysts.
Speaker 2 (01:30):
We first asked Sam to break down Nova's recent studies.
Speaker 4 (01:33):
Is not about OBCD. It's about a drug, semaglutide in
a pill form that they've tested in Alzheimer's disease. And
the theory was, and there was some evidence that people
who were taking the very first version of the GLP
one brug so victosa or liro glue tide, they had
a lower risk of developing Alzheimer's when you looked at
(01:56):
historic or rect prospective data and there's animal models, et cetera.
So they thought that it's worth a try and it
didn't work out. They said that they're seeing some impacts
in some biomarkers, et cetera. And we'll find out next
week what biomarkers. But the trial didn't work out. And
the question here is was the theory wrong or is
(02:17):
the drug not good enough? Is it pill enough? And
we know the pill doesn't do as well in obesity
as the injection. Should they have tested the injection?
Speaker 3 (02:27):
That's a good question. And you mentioned that the ingredient
here that we're paying attention to is some maglitude, which
I hope I'm pronouncing correctly there. Does that mean that
this ingredient and Alzheimer's are just a no go from
here on out? Or does there need to be more
testing before we can determine that?
Speaker 4 (02:42):
Yeah, there needs to be more testing, But who's going
to do that? I mean, having failed, now, who's going
to put the money into test it? Now? Linly does
have an Alzheimer's business in a completely different with different
set of drugs, and they have a more party product
once weekly with a relatively easily administered pen that would
(03:04):
be interested to see whether that helps, and you know,
so that you get more much more drug in the
body or maybe redesign it a bit. So it really
does depend on how much appetite for risk these companies have.
And literally now with just over literally just over trillion
dollar market cap, maybe they should give it a go.
You know, it would be magic if this thing, It
(03:24):
literally would be magic if this thing just helped so
many different diseases.
Speaker 2 (03:29):
Sam talk to us about just the market for dementia.
Alzheimer's is one one part of it. I would think
that's a it's a big market and be it. It's
got to be a growing market with people living longer.
How do you guys think about it and and how
do you play it?
Speaker 4 (03:42):
If you're an investor, Yeah, it's it's it is a
significant societal issue, number one. And you know, I think
there are many, not many families who would say that
they haven't experienced it. They have all the people in
their in their extended family. So the market has humongous potential.
(04:02):
But you need drugs that actually treat the disease. Remember,
by the time you have Alzheimer's, I eat a full
blown dementia of the Alzheimer's it's a bit late. That
means that a lot that's already happened, So you need
to go early, long expensive trials, and Lily is doing
that with their assets, So fingers crossed, we'll find out
(04:23):
in the next two or three years where they're going
early with these assets. Russia is doing it too. It
would be a beneficial right, I.
Speaker 3 (04:29):
Mean, the tests with the pillar form of ozambic was
definitely a lottery ticket. If it worked, great, If not,
we're back to the drawing board. Are there any effective
treatments right now against dementia or Alzheimer's?
Speaker 4 (04:42):
Well, by effective, I mean it's tough to say, but
there are drugs that lower this thing that is viewed
as a critical part of the Alzheimer's disease, which amyloid
plaques in your brain. If they do lower it, Lily's
got that drug, Biogen's got an equivalent drug, or she's
trying a similar approach, and you do slow down the degeneration.
(05:05):
You don't stop it, you slow it down. So what
we really want is to stop people getting to that degeneration.
Try and get them before they have full grown Alzheimer's
or dementia, so that's called mild cognitive impairerment. Try and
slow that down to give them another ten, twelve, twenty
years of dignified life.
Speaker 2 (05:25):
So where do you think we are on a time
frame for something like that, sam Is that measured in
a couple of years or more than that?
Speaker 4 (05:34):
Well, so Lily is literally trying that and we'll find
out whether and they have the better rug in this space.
So we'll find out whether in the next two or
three years. Do you remember, these things are trials that
need to be run until you start seeing a difference.
They get that to that point, and of course then
(05:55):
society has to decide, well, how we're going to pay
for this. How many people because there's a lot our market, right,
how many people are we going to want to treat
with the prices of these drugs whatever they are, even
if it's ten thousand dollars a year, right, and they
are on their way to becoming worse, and we want
to slow that down. You have ten million people, I mean,
this could be similar in terms of value to the
(06:18):
obesity market. But you need the drug to do that.
So let's wait and see. And RASH has got a
new way of trying to do it, and they're going
to go again and also to phase three to test
that out.
Speaker 3 (06:29):
Our thanks to Sam Fazelli, Bloomberg Intelligence, director of Research
for Global Industries and senior pharmaceuticals analysts.
Speaker 2 (06:35):
We move next to the restaurant industry.
Speaker 3 (06:37):
Bloomberg Intelligence will release data for November restaurant sales in
early December, and according to bi US, restaurant same store
sales rose seven tens of one percent in October but
could drop in November because of the government shutdown.
Speaker 2 (06:48):
For more on the industry, I was joined by Michael Halen,
Bloomberg Intelligence, Senior restaurant and food service analyst. I first
asked Michael to talk to us about how restaurants are
doing and whether it depends on the segment of the
market they're targeting.
Speaker 5 (07:00):
That's definitely part of it.
Speaker 6 (07:02):
We saw that in last month's data find dining had
a really nice rebound, and I think part of it
is because they're catering to hire income consumers who own
assets and are feeling pretty good about things moving forward.
Right now, you know November is going to be a
tough month. There's no doubt about it. The government shut
(07:24):
down has definitely impacted sales and traffic for the chains
we cover, especially in the DMV area as well as
in the South where there's a lot of government workers. Also,
last November restaurant sales had a nice boost from the election,
and so we're going to.
Speaker 5 (07:43):
Be lapping tough comps.
Speaker 6 (07:44):
So November is not looking great, but things should bounce
back a little bit here in December. And we're not
crazy bullish, but we're more bullish about the first half
of next year.
Speaker 2 (07:58):
Let's start with quick quick service dining. Talk to just
about that marketplace. I think back to McDonald's of the
world and so on, how's that varing.
Speaker 5 (08:06):
Quick service had a really difficult first half of the year.
Speaker 6 (08:08):
They were lapping strong comps and they and they kind
of lost their way when it came to value, right.
Speaker 5 (08:14):
They just had implemented too big of.
Speaker 6 (08:17):
Price increases over the last few years, and customers started
to push back, especially low income consumers who have been
you know, who are really impacted by inflation to a
much greater degree than middle and higher income consumers. So
the first half was difficult, but here in the second
half of the year, things have gotten better, largely because
they've re established their value propositions. You know, McDonald's has
(08:42):
revamped its dollar menu this year. They also reintroduced snack
wraps out a three dollars price point, which have boosted
checks by you know, people adding them on to their orders,
as well as bringing in some low income consumer traffic.
Speaker 5 (08:57):
But you know, low income consumers are pulling back at
a pretty big rate.
Speaker 6 (09:01):
You know, we think part of that is the snap
benefit pullback.
Speaker 5 (09:06):
But they've been able to.
Speaker 6 (09:07):
Bring in some higher income consumers and middle income consumers.
Speaker 5 (09:11):
So things are starting to look better.
Speaker 6 (09:13):
McDonald's especially, I mean McDonald's is going to be lapping
the eat Coli or right now is lapping the eat
colip about them from last year, and so you know,
they're the eight hundred pound gorilla. And I think good
results out of McDonald's over the next few quarters should
boost the entire category.
Speaker 2 (09:30):
How about the cost of beef, which you know consumers
complain about across the board. I know companies are dealing
with it, and what I understand is we're not going
to see a material improvement in the cattle herd till
maybe twenty twenty eight. So how does that factor into
the profit margins of all these restaurants.
Speaker 6 (09:45):
The restaurants that are impacted the most are you know,
burger chains like Shakeshack, or steakhouses like Texas Roadhouse that
own and operate all of their stores. You know, to
your point, beef inflation for these chains is going to
be in the mid teens in the fourth quarter, so yeah.
Speaker 5 (10:04):
Yeah, very high.
Speaker 6 (10:05):
So definitely a lot of margin pressure for those chains.
Speaker 2 (10:10):
You know.
Speaker 6 (10:11):
Luckily, those two chains have driven traffic as of late
into the stores which you know, and driven higher sales
and been able to pass along price increases and that
has kind of helped their operating leverage, which has helped
offset the higher costs.
Speaker 5 (10:26):
For the burger chains.
Speaker 6 (10:27):
They there's less impact for the chains that we cover
for McDonald's, Wendy's, Jack in the Box because they're largely franchised,
so that the franchisees are the ones footing the bill
for the higher beef costs.
Speaker 2 (10:37):
Why, like, why do not all changs do like the
McDonald's franchise e model. What's the benefits of franchising or
what's the benefit of owning versus a franchise. I think
I thought I would. I saw the movie. I think
I understand the economics and franchising. It seems pretty good.
Speaker 6 (10:52):
Listen, the franchise business, that's a great business, you know,
and from where I sit as an analyst, you know,
we love it. It's easier to predict the earnings and
the free cash flow. It's it's a much more steady
business model. Franchising eliminates a lot of the operating leverage
and thus the risk to your margins out of the business.
Speaker 5 (11:12):
Right. But if you are.
Speaker 6 (11:14):
Running a full service restaurant chain where operations is very
core to your business, think Darden, think Texas Roadhouse, you
want to own and operate your source because you want
to have control over those operations.
Speaker 5 (11:28):
You want to make sure.
Speaker 6 (11:29):
People are getting a good experience, and they're just much
harder to run than a McDonald's or a Wendy's. And
then I'd say, on the last case would be somebody
like shake Shack or wink Stop or Cava. You know,
when your cash on cash returns are forty fifty sixty percent,
(11:49):
we don't think it's a bad thing to be greedy
and you want to open up as many stores as
possible are.
Speaker 3 (11:54):
Thanks to Michael Helen, who covers restaurants and food services
for Bloomberg Intelligence. Coming up, look at why the tech
company Cisco maybe on a Goldilocks growth path.
Speaker 2 (12:02):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (12:08):
You can access Bloomberg Intelligence via Bigo on the terminal.
I'm Scarlett Foo.
Speaker 2 (12:12):
And I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (12:20):
This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 2 (12:27):
We moved next to more earnings in the retail sector
this week. We got third quarter earnings from Cohle's and
Abercrombing and Finch Coles raised its full year outlook for
the second straight quarter. It's a signed the chief executive officer,
Michael Bender, is helping to stabilize performance at the struggling retailer.
Speaker 3 (12:42):
Separately, Abercromi and Fitch raised the low end of its
full year sales outlook as its Hollister brand continue to
gain momentum. We are joined by Mary Ross Gilbert Bloomberg Intelligence,
senior equity analyst covering retail.
Speaker 2 (12:53):
We first asked Mary for her take on Cohle's most
recent earnings report.
Speaker 7 (12:56):
They've kind of gone back to the basics. What's something
something that clos has always been known for SO One
is their private brand. So if you think about some
of the brands like SO and Juniors, Lauren Conrad for women,
and they brought those brands back because they actually sacrifice
some of those brands under the prior leadership and replace
(13:17):
them with some more name brands like Madden Girl, trying
to really attract the junior shopper there. And now that
they've brought the private brands back, they brought back petite sizing,
which was really important to their customer base. Now they're
really starting to see a recovery. But they're not out
(13:38):
of the woods yet, Scarlett, as you pointed out, I mean,
they're really cycling three years of declines, but we are
seeing encouraging results and given that they actually turned positive
in the latest month, it looks like they could actually
reach a break even in the fourth quarter, even though
they're guiding to a one point seven percent comp sales decline.
(13:58):
So it's very encouraging to see with Cohle's again not
out of the woods. And when you look at what's
going on with SO For, it's now a two billion
dollar business and as you were sort of highlighting, that
means they really lost you know, over the last four
years something like four to five billion in other categories,
so they have lost market share. We think they're losing
it to off price and some of the value players
(14:20):
in the specialty space such as Old. Maybe you know
a gap brand.
Speaker 3 (14:24):
Mary, I will also want to ask you about Abercomie
and Fitch. It was the Darling two years ago because
the new CEO found a way to make the brand
relevant to a new audience. It was no longer targeting
teenage boys, for instance, and really targeting young working women.
But it's had a brutal twenty twenty five, a lot
of concerns about tariffs perhaps and maybe even a lack
(14:45):
of fresh ideas in terms of its offerings. What's the
narrative with Abercomie and Fitch right now?
Speaker 7 (14:51):
Yeah, so Scarlett with Abercrombie and Fitch, their numbers came
in better than expected. So the namesake brand, as you
pointed out, I mean that had been double digit increases
over the last three years, so they're cycling those increases
and that's why their sales are coming in less than expected.
But this quarter the comp sales declined. There was about
(15:11):
three point three percent, so that was better than expected.
And when you look at Hollister, though, Hollister has been
coming in ahead of expectations and they've been posting double
digit increases. So as you were talking about sort of
the millennial women who really love and also the men,
but it does tend to favor more of the women
(15:33):
on the Abercrombie side, on the Hollister side, which really
caters to gen Z that has been on fire, and
so that's what's helping to kind of overcome the weakness
that they're seeing at Abercrombie. But also it's looking like
Abercrombie could turn positive in the fourth quarter with a
number of the initiatives that they have in place going
(15:55):
into the holiday quarter, even though they're cycling some pretty
strong gains in the prior year and the year before that.
Speaker 3 (16:01):
Are Thanks to Mary Ross Gilbert, Bloomberg Intelligence, senior equity
analyst who covers retail, we.
Speaker 2 (16:06):
Moved next to some research from Bloomberg Intelligence in the
tech space. It's titled Cisco and a Golden Locks growth path.
Speaker 3 (16:12):
According to Cisco mayc twenty twenty six, sales above the
top end of its five to seven percent target, and
this comes as the company balances strong AI growth with
networking gains.
Speaker 2 (16:22):
For more on this, we were joined by Wouchinho, Bloomberg
Intelligence senior technology analyst.
Speaker 3 (16:26):
We began by asking Wooje to break down why Cisco's
shares have had a good run this year.
Speaker 8 (16:30):
So there's a couple of things driving it. That they're
actually a massive forty three billion dollar a product upgrade
cycle that Cisco will potentially benefit from, which is going
to give them outsize growth in their core networking business.
But their AI store has actually been a lot better
than I thought. AI is going to be about three
billion dollars of sales tripling or three billion dollars in
(16:54):
sales in fiscal twenty twenty six tripling out of twenty
twenty five. So there are this goldly locks of good
AI store as well as an upgrade cycle tailwind.
Speaker 3 (17:03):
Paul was asking Michael Casper earlier about a lot of
the tech companies issuing debt to pay for their AI buildout.
What does Cisco's debt profile look like and will it
also need to sell bonds to fund everything that's doing?
Speaker 8 (17:17):
Yeah, hey' Carlo. So that's one of the great stories
about about Cisco. I mean, they have roughly about twenty
billion dollars in debt and roughly thirty billion dollars in cash,
so look their net cash positive, they don't need to
take on debt. If anything, they've been very active buyers
of their stock, very good stewards of the cash, strong
(17:41):
cash flow profile, and if anything, they're using their cash
as levers to build up the inventory for the AI
opportunity that's ahead of them.
Speaker 2 (17:49):
So talk to us about just kind of the growth
drivers for this company, which what is he looked at
twenty twenty six, what kind of underpins their top line growth?
Speaker 8 (17:58):
They got it to roughly the top of the top
end of their four to six percent growth. I think
they're going to do roughly about seven to eight percent
growth for this year. So if we think about the
AI story itself trippling from one billion to three billion,
that's going to be the incremental growth that gets you
above to the top end of their revenue growth guidance.
(18:21):
You know, the way I have networking flashed out right now,
the networking business, you know, Xai is growing roughly around
four percent, and that's probably towards the low end and
quite frankly, if the upgrade's coming stronger than a lot
better than we think. There's a little bit of upside.
Now there is a little bit of drag. The security
business hasn't panned out as as strongly as they hoped,
(18:42):
primarily because it is going through this business model transition.
But you know, it would have been a story at
another time. But the two stories AI as well as
a core networking upgrade cycle. I mean, that's doing very
very well in twenty six and if anything, I would
argue we'd probably be better in twenty twenty seven.
Speaker 3 (19:00):
Is Cisco part of this whole circular deal making, circular
funding concern that has investors worried that if one company
in this link stops spending or maybe slows down spending,
everyone else will get affected.
Speaker 4 (19:13):
To some degree.
Speaker 8 (19:14):
Yeah, Scarlett, And that's why I think if you look
at some of the AI stories there, it's one of
the safe bets, right. They are exposed to some of
the I would say the hyperscale names, but a very
small exposure to it, as well as some of the
neo clouds. They do sell some routing products and some
of the sovereigns. Now, if that business disappears, you know,
(19:39):
the cashflow story is still well intact. Right, If I
calculate the amount of AI revenue relative their total total
revenue base. We're only talking about, you know, six to
seven percent of total sales, right, So if the AI
story collapse, I mean, AI evaporates, they're still in very
good standing.
Speaker 3 (19:58):
Not to mention the fact that they out a dividend too.
I mean it's not a huge one, but a tech
company with a two percent dividend yield to something and
they've been steadying.
Speaker 4 (20:06):
The sock was lower. Yeah, the soccer just to be three.
Speaker 8 (20:09):
So yeah, there we go. I mean, it's not the
like stock bog backs and a dividendil and an a
story if it works out.
Speaker 2 (20:15):
Our thanks to Wou Jinho, Bloomberg Intelligence senior technology analyst.
We move next to the news in the media space.
US President Donald Trump recently said in a social media
post that no television networks should be able to expand.
Speaker 3 (20:27):
Trump cited the potential growth of what he considers left
wing news outlets. Trump's post was in response to a
NEWSMAC story that said the FCC head Brendan Carr is
moving to give television networks massive reach and push through
a merger of Next Our Media Group and TAGNA for
more on this.
Speaker 2 (20:42):
We were joined by Matthew Shuttenhelm, Bloomberg Intelligence media litigation analyst.
Speaker 3 (20:46):
We began by asking Matthew if he was surprised about
President Trump's recent comments.
Speaker 9 (20:50):
It's a moderate surprise, So it's it's not a complete
surprise because Newsmax has participated before the FCC and had
it has been one of the few voices that said,
don't do this, don't deregulate this space. And what you
really see here is President Trump latching on to an
article written on Newsmax's platform opposing the easing of this
(21:15):
national ownership cap. What's in play here is that there's
current FCC regulation says no company can reach more than
thirty nine percent of US households, and companies like Nextstar
and Sinclair want to go way beyond thirty nine percent.
In fact, Nextstar has a pending deal before the FCC.
(21:36):
They just filed their application last week to acquire Tegna
that would take them to seventy eighty percent of the country,
and it depends on the FCC deregulating in this space.
So Trump latching on to Newsmax's opposition because he's concerned
about the TV networks growing larger is a concern. It's
(21:59):
a real risk. I'm not convinced yet that it's going
to lead to real FCC policy. I think this FCC
wants to deregulate in this space, and I think there's
going to be a pushback against Trump's view on this.
Speaker 3 (22:10):
Okay, so the FCC is headed by Brendan Carr, who's
been very active in making sure that he's out there
doing the president's bidding. Are you saying that Brendan Carr
is going to defy President Trump?
Speaker 9 (22:21):
Yeah, So that's the big question here. The FCC used
to operate as an independent agency, meaning even if the
President had a view on something, the FCC could could
chart its own course. That doesn't that's not going to
work anymore the way this FCC is operating. If the
President takes a firm view on something, the FCC is
(22:43):
not going to defy it because effectively, the President can
fire the FCC chairman then and you know, there's no
no future job prospect if you defy the president. What
I'm not convinced about is, you know, this was one
social media post from President Trump, and you know, talk
about concerns about letting the broadcast networks ABC, CBS, Fox
(23:04):
get bigger. What I think there could be now in
you know, on in back channels, is some education from
the FCC to the White House that says, hey, easing
the national ownership cap, it would let Sinclair Next Star
get bigger, probably, but it doesn't necessarily mean the broadcast
networks will get bigger. There's still an independent check on
that even if we ease this this cap. So ultimately,
(23:27):
if Trump is against this, the SEC is not going
ahead with it in my view, But I think there's
still room for Trump's position to evolve on this.
Speaker 2 (23:36):
So, I mean, the reality is, I mean, this is
an industry, the broadcast television industry that is arguably on
life support visa VI. Forget about cable television, which itself
is on life support. They survive that on slot. Now
it's just all about digital and social media. And I
would think the industry would have an open would have
an effective argument not just to the DJ but to
(23:58):
the President as well.
Speaker 9 (24:00):
I mean, that's the case that the National Association of
Broadcasters has made to the FCC that these ownership restrictions,
you know, which come from the nineteen seventies or even
earlier than that really make no sense in the world
we live in today, where where so much video that
is consumed doesn't come from from broadcast, it comes over
(24:21):
the Internet, and there are no artificial caps on how
much those companies can reach, and broadcasters are left to
try to fight with one hand tied behind their back
with these these you know, ancient FCC rules on the books,
and the Republicans at the FCC, Brendan Carr included, strongly
(24:41):
agree with that message. And so it's it's going to
be I think a little bit of a communication effort
that needs to happen between the FCC and the White
House too, and the real question will be how does
that play out. Does Trump's social media post actually translate
to real policy. I'm not convinced that it will yet.
Speaker 2 (25:02):
Our thanks to Matthew Schultenhelm, Bloomberg Intelligence media litigation Analyst.
Speaker 3 (25:06):
Coming up, we'll break down corporate earnings at the retailers,
Calls and Abercrome and Fitch.
Speaker 2 (25:10):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (25:16):
You can access Bloomberg Intelligence through Bigo on the terminal.
I'm Scarlett Foe.
Speaker 2 (25:20):
And I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (25:30):
This is Bloomberg Intelligence. With Scarlett Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 2 (25:37):
We move next to more earnings in the retail sector.
This week we got third quarter earning some Dick Sporting
Goods and best Buy. Dick Sporting Goods raised its outlook again, However,
investors were disappointed by costs related to turning around the
foot locker chain it recently acquired.
Speaker 3 (25:50):
Separately, best Buy raised its guidance for the current fiscal
year as demand for the latest consumer tech drove revenue
and profit last quarter.
Speaker 2 (25:57):
For more on this, we were joined by Lindsay Dutch
Bloomberg Intelligence Consumer Hardlines senior analysts. Let's start with Dick's
Sporting Goods. They raised their outlook again, but I guess
investors are focused on I guess some of the costs
trying to turn around foot locker. Talk to us about
Dick Sporting Goods at Lindsay.
Speaker 10 (26:13):
The legacy business remained very strong in the third quarter,
strong back to school, clear demand momentum heading into the
fourth quarter. That's where the raised outlook came, it was
really for the legacy business. But when we look at
foot Locker, you know, the deal closed early September. The
outlook for the fourth quarter is mid to high single
digit same source sales decline. Dix is also looking to
(26:38):
expedite the turnaround there, which means offloading old inventory steep
markdowns in that fourth quarter, which is going to really
hurt the margin as well. So foot Locker, you know,
needs a lot of work. Fourth quarter is going to
be weak, and investors are really looking to see how
quickly they can turn that business around.
Speaker 3 (26:56):
Yeah, and probably they'll need to put some money into
it as well to reorganize stores and freshen up the display.
How much of this deal Dick's buying foot Locker was
predicated on Nike and what it was doing with this
shift back to its wholesale channels and away from solely
relying on its direct to consumer offerings and its own stores.
Speaker 10 (27:17):
So full Looker was, I would argue, over exposed to Nike.
You know, several years ago they had been working that
exposure down. I think Dix will remain focused on being diversified,
just given that their own assortment where they're leaning into
lots of other brands, new up and coming brands like
Hoca and on. They did discuss though, that Footlocker will
(27:40):
sort of remain sort of a hub for basketball, and
Nike does have a stronghold in the basketball market, so
I expect Nike to be, you know, a strong vendor
with foot Locker, but Dix is looking to make sure
that they have that right assortment, the newest stuff, the
hottest lines coming from Nike and others.
Speaker 2 (28:00):
What is Di saying about tariffs in their business, so.
Speaker 10 (28:05):
They are going to feel higher costs in this back
half of the year and even into next year. Dix
has since the pandemic, since they've been able to see
sort of an increase in demand for their premium assortment.
They're not really a huge discounter for the holiday. They
like to sell their product fully through, so I don't
(28:28):
expect them to sort of discount and they have taken
prices up selectively but certainly not across the board, and
their higher income consumer is sort of accepting those increases.
I think Footlocker is a little bit of a different story,
and you might see that impact a little bit bigger
on that business, just because they don't have those premium products,
(28:49):
and they're already going to need to offload older inventory
with steep discounts, so you sort of have that turnaround
compounded with these rising costs into the next year. Something
for them to work on.
Speaker 3 (29:03):
Lindsy, I also want to ask you about best Buy
consumer electronics retailer, how to beat and raise quarter. It
looks pretty good and it looks like it's on the
usual strains sales of mobile phones and sales of computer equipment.
Speaker 10 (29:15):
Yeah, so best Buy had a strong third quarter, better
as better than expected, as you mentioned. I think, you know,
the stock isn't getting a full bump because there is
definitely some conservatism and a low guide for the fourth quarter,
and investors are trying to figure out, you know, is
it just conservatism, are they just worried about the consumer,
or is there something really there that there's going to
(29:36):
be a slowdown in that fourth quarter. But the business
looks good. Demand looks strong, as you mentioned, computing, phones,
gaming all looking solid, and they're also seeing an improvement
in home theater, which is really big because that has
been a weaker category for the last couple of years.
So if that comes to fruition, I definitely think there
will be strength in the fourth quarter.
Speaker 2 (29:57):
So you think about a best Buy, I mean some
of the those are big ticket items here, and that
would suggest that they go to a part of the
case shaped economy made me that is doing better. Is
that a typical best Buy customer.
Speaker 10 (30:11):
So bez buy. Definitely, promotions are going to be a
big piece of the fourth quarter. They're sort of leaning
into those promotional events. That's what worked last year, and
I think they're trying to lean into the things that
worked last year for this year. And I do think
the consumer backshop is quite similar when we do that compare.
(30:32):
I also, they also recently launched a marketplace and they
seem to have a stronger focus on marketing and advertising,
and so they're really trying to meet the consumer where
they are and make sure that best Buy is top
of mind when you're shopping for a wide array of things,
not just those big ticket items like TVs or appliances.
(30:53):
So they're trying to have a bigger wallet share with
consumers across the board, and they're leaning on that marketplace
and advertise to do it and then hopefully get you
into the store and that's where they can bring their
customer service and experience as well.
Speaker 3 (31:06):
That was Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst.
Speaker 2 (31:10):
We move next to the travel and leisure sector. We
recently took a look at a survey from Bloomberg Intelligence
entitled Consumers Maintain Vacation Budgets in twenty twenty six.
Speaker 3 (31:19):
According to the survey, over two thirds of respondents to
bi's proprietary Travel survey said that they will spend more
to go places in twenty twenty six, about the same
as last year. And this comes even with rising economic concerns.
Speaker 2 (31:30):
For more on this, we were joined by Jody Lorie,
Bloomberg Intelligence, Senior Credit Analyst. We first asked Jody to
break down what she learned from BI survey.
Speaker 5 (31:38):
So we do the.
Speaker 11 (31:38):
Survey every half a year and so we just got
the results out for the most recent one. And what's
interesting is that we're seeing more people planning on keeping
their budgets the same. But what's more interesting is that
if costs succeed budgets, fewer people than last year said
they'd increase their budget. And that's on the back of
(31:59):
them knowing that inflation is a much higher risk for
them for their portfolio.
Speaker 3 (32:03):
So in other words, people are making room for time off,
but they're going to have to scrimp more in order
to make it happen because their money is not going
to take them as far as it used to correct.
Speaker 11 (32:16):
And Scarlett, I mean, I think to piggyback on that,
if you look the eating out, anticipation of spending is
higher this year than last year, and I think that's
lesser reflection of people wanting to eat out, but more
that they're expecting eating out is going to be more expensive.
And so even though we're seeing people want to spend
on paid activities and experiences.
Speaker 12 (32:37):
Which could bode well for the cruise.
Speaker 11 (32:38):
Lines and the theme parks, at the end of the day,
when cost succeed budgets, more people this year over last
year are planning on cutting and looking at free options.
So going to the free museums, going to low cost.
Speaker 3 (32:51):
Options, well, now that the government is open, DC is
an option once again. How about in terms of destination,
maybe staying closer to home, maybe not going quite as
far Internationally.
Speaker 11 (33:02):
Yes, and staying closer to home is very very much key.
Speaker 12 (33:06):
If we see the.
Speaker 11 (33:07):
Data, the international trend is to Canada. Canada bumped up
to the second spot. So we saw that in the midyear,
and it was pretty curious for US, particularly because when
you look at it the opposite way, and we did
this analys a few months ago. Canada is not coming
to the US. They don't want to come to the US.
It's too expensive for them, they don't really like the
(33:28):
current government situation. And on top of it, I think
they're scared about crossing the border and what it means
for immigration.
Speaker 12 (33:35):
So we're seeing Canadians not.
Speaker 11 (33:37):
Come to the US, and we're seeing a lot of
companies comment on that. But we are seeing a lot
of Americans go to Canada. And I am curious how much,
and this is going to come in further reports, how
much of the Canada move is a reflection of the
World Cup next year. There's a lot of people going
to Vancouver, for instance, for the World Cup. I'll actually
be there during the World Cup, but not going to
the World Cup.
Speaker 2 (33:57):
Why people are going to be there.
Speaker 12 (34:01):
We might be.
Speaker 11 (34:01):
Doing a very family friendly cruise to Alaska.
Speaker 5 (34:04):
Nice.
Speaker 12 (34:05):
It just works out that that's the same time as
it was bad timing.
Speaker 2 (34:08):
It's bad time, all right, talk to me. This is
when I go to Aruba, we go to an all inclusive.
How come I didn't know about this all inclusive thing
when I had four little kids?
Speaker 12 (34:19):
I mean, were they were they a thing back then?
Speaker 2 (34:22):
I don't know, But I mean I would get the
bill which would be five inches thick with like smoothies
and chicken fingers and all that kind of crap that
they'd eat throughout the day four kids. Man, if I had,
if I knew about the all inclusive, that would have
been a savior for me. What are people doing when
they are they willing to still pay it for travel?
Because I still here people going to Europe and stuff
(34:42):
like that. I mean they're not going to Poughkeepsie, They're
going to Parish and things.
Speaker 11 (34:46):
Yeah, I mean Japan is certainly a popular destination. Strong
dollar there, yeah, very much increased.
Speaker 12 (34:51):
Italy has increased.
Speaker 11 (34:53):
We're seeing among the upper income level, you know, Portugal
and Spain as popular destinations. And I think probably it's
even more interesting is onboard spending for cruises is still
continuing to have momentum. At the moment, I think where
we're watching is when that onboard spending shifts and then
the cruise lines, for example, don't get that gravy for
(35:13):
cash flow. And to your point, Paul, I mean, even
though you have something called all inclusives, even though you
have the cruise lines, that they all are considered these
package deal what every company is doing, and we're talking
the rental car companies. You know, Abus is doing this too, obviously,
the airlines is they're all doing these premium products.
Speaker 12 (35:30):
These you know, you do different tiers.
Speaker 11 (35:32):
Of products, so the add on so you can get
the base level, which is really the skeleton package. But
anyone from cruise lines to you know, theme parks to
some extent, to the all inclusives, to the airlines, to
the rental car companies are all segmenting to give you know,
the lower income consumer the.
Speaker 12 (35:48):
Ability to say that they traveled and.
Speaker 11 (35:50):
The higher income consumer the ability to travel luxury.
Speaker 3 (35:53):
And in terms of the add ons, what are these
add ons are they? You know, things that they used
to offer for free and now charge.
Speaker 12 (36:00):
You for for some of it.
Speaker 11 (36:01):
It is so you know, a good example I have
is anecdotally, I know that some of the cruise lines
that used to not charge to get people into the
center of a city, say in Europe, you're on European Cruise,
they used to get that for free. Now they say no,
you have to be a part of one of our
you know, expeditions, one of our one of our excursions
in order to get that for free. Otherwise we charge
(36:22):
you twenty dollars to get into the center's clown in
you know, Czechoslovakia and not Czechosvakia.
Speaker 12 (36:27):
Check republic.
Speaker 3 (36:27):
He our Thanks to Jody Lorie, Bloomberg Intelligence Senior credit Analyst.
Speaker 2 (36:31):
That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
providing in depth research and data on two thousand companies
and one hundred and thirty industries.
Speaker 3 (36:38):
And remember you can access Bloomberg Intelligence YEA, B I
go on the terminal. I'm Scarlett Foo and.
Speaker 2 (36:42):
I'm Paul Sweeney. Stay with us. Today's top stories and
global business headlines are coming up right now
Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence
with Scarletfoo and Paul Sweeney.
Speaker 2 (00:13):
How do you think the FED is looking at tariffs?
The uncertainty of terriffs.
Speaker 3 (00:17):
Let's take a look at the sectors and how they performed.
Speaker 2 (00:19):
A lot of investors getting whipsaled every day by news.
Speaker 1 (00:22):
Events, breaking market headlines, and corporate news from across the globe.
Speaker 3 (00:26):
Could we see a market disruption of market event?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 3 (00:31):
You see some so called low quality stocks driving this
short term rally.
Speaker 1 (00:34):
Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
YouTube and Bloomberg Originals.
Speaker 2 (00:42):
On today's Bloomberg Intelligence Show, we dig inside the big
business story is impacting Wall Street and the global markets.
Speaker 3 (00:47):
Each and every week we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries are analysts cover worldwide Today?
Speaker 2 (00:54):
Well, look at why the retailer coals rates is full
year outlook for the second straight quarter.
Speaker 3 (00:58):
Plus a look at why travelers may be eyeing similar
spending for vacations in twenty twenty six.
Speaker 2 (01:02):
First, we move next to some news in the biotech space.
Speaker 3 (01:05):
This week, we heard that a pill version of Danish
drug maker Novo Nordisk's ozempic failed to slow the progression
of Alzheimer's in a pair of studies.
Speaker 2 (01:12):
Nova said this was based on a cognitive assessment for
patients who took the medicine. The drug maker will now
discontinue a plan one year extension of the studies.
Speaker 3 (01:21):
As a result, Novastock plummeted to its lowest in more
than four years. We were joined by Sam Fazzelli, Bloomberg Intelligence,
Director of Research for Global Industries and senior pharmaceuticals analysts.
Speaker 2 (01:30):
We first asked Sam to break down Nova's recent studies.
Speaker 4 (01:33):
Is not about OBCD. It's about a drug, semaglutide in
a pill form that they've tested in Alzheimer's disease. And
the theory was, and there was some evidence that people
who were taking the very first version of the GLP
one brug so victosa or liro glue tide, they had
a lower risk of developing Alzheimer's when you looked at
(01:56):
historic or rect prospective data and there's animal models, et cetera.
So they thought that it's worth a try and it
didn't work out. They said that they're seeing some impacts
in some biomarkers, et cetera. And we'll find out next
week what biomarkers. But the trial didn't work out. And
the question here is was the theory wrong or is
(02:17):
the drug not good enough? Is it pill enough? And
we know the pill doesn't do as well in obesity
as the injection. Should they have tested the injection?
Speaker 3 (02:27):
That's a good question. And you mentioned that the ingredient
here that we're paying attention to is some maglitude, which
I hope I'm pronouncing correctly there. Does that mean that
this ingredient and Alzheimer's are just a no go from
here on out? Or does there need to be more
testing before we can determine that?
Speaker 4 (02:42):
Yeah, there needs to be more testing, But who's going
to do that? I mean, having failed, now, who's going
to put the money into test it? Now? Linly does
have an Alzheimer's business in a completely different with different
set of drugs, and they have a more party product
once weekly with a relatively easily administered pen that would
(03:04):
be interested to see whether that helps, and you know,
so that you get more much more drug in the
body or maybe redesign it a bit. So it really
does depend on how much appetite for risk these companies have.
And literally now with just over literally just over trillion
dollar market cap, maybe they should give it a go.
You know, it would be magic if this thing, It
(03:24):
literally would be magic if this thing just helped so
many different diseases.
Speaker 2 (03:29):
Sam talk to us about just the market for dementia.
Alzheimer's is one one part of it. I would think
that's a it's a big market and be it. It's
got to be a growing market with people living longer.
How do you guys think about it and and how
do you play it?
Speaker 4 (03:42):
If you're an investor, Yeah, it's it's it is a
significant societal issue, number one. And you know, I think
there are many, not many families who would say that
they haven't experienced it. They have all the people in
their in their extended family. So the market has humongous potential.
(04:02):
But you need drugs that actually treat the disease. Remember,
by the time you have Alzheimer's, I eat a full
blown dementia of the Alzheimer's it's a bit late. That
means that a lot that's already happened, So you need
to go early, long expensive trials, and Lily is doing
that with their assets, So fingers crossed, we'll find out
(04:23):
in the next two or three years where they're going
early with these assets. Russia is doing it too. It
would be a beneficial right, I.
Speaker 3 (04:29):
Mean, the tests with the pillar form of ozambic was
definitely a lottery ticket. If it worked, great, If not,
we're back to the drawing board. Are there any effective
treatments right now against dementia or Alzheimer's?
Speaker 4 (04:42):
Well, by effective, I mean it's tough to say, but
there are drugs that lower this thing that is viewed
as a critical part of the Alzheimer's disease, which amyloid
plaques in your brain. If they do lower it, Lily's
got that drug, Biogen's got an equivalent drug, or she's
trying a similar approach, and you do slow down the degeneration.
(05:05):
You don't stop it, you slow it down. So what
we really want is to stop people getting to that degeneration.
Try and get them before they have full grown Alzheimer's
or dementia, so that's called mild cognitive impairerment. Try and
slow that down to give them another ten, twelve, twenty
years of dignified life.
Speaker 2 (05:25):
So where do you think we are on a time
frame for something like that, sam Is that measured in
a couple of years or more than that?
Speaker 4 (05:34):
Well, so Lily is literally trying that and we'll find
out whether and they have the better rug in this space.
So we'll find out whether in the next two or
three years. Do you remember, these things are trials that
need to be run until you start seeing a difference.
They get that to that point, and of course then
(05:55):
society has to decide, well, how we're going to pay
for this. How many people because there's a lot our market, right,
how many people are we going to want to treat
with the prices of these drugs whatever they are, even
if it's ten thousand dollars a year, right, and they
are on their way to becoming worse, and we want
to slow that down. You have ten million people, I mean,
this could be similar in terms of value to the
(06:18):
obesity market. But you need the drug to do that.
So let's wait and see. And RASH has got a
new way of trying to do it, and they're going
to go again and also to phase three to test
that out.
Speaker 3 (06:29):
Our thanks to Sam Fazelli, Bloomberg Intelligence, director of Research
for Global Industries and senior pharmaceuticals analysts.
Speaker 2 (06:35):
We move next to the restaurant industry.
Speaker 3 (06:37):
Bloomberg Intelligence will release data for November restaurant sales in
early December, and according to bi US, restaurant same store
sales rose seven tens of one percent in October but
could drop in November because of the government shutdown.
Speaker 2 (06:48):
For more on the industry, I was joined by Michael Halen,
Bloomberg Intelligence, Senior restaurant and food service analyst. I first
asked Michael to talk to us about how restaurants are
doing and whether it depends on the segment of the
market they're targeting.
Speaker 5 (07:00):
That's definitely part of it.
Speaker 6 (07:02):
We saw that in last month's data find dining had
a really nice rebound, and I think part of it
is because they're catering to hire income consumers who own
assets and are feeling pretty good about things moving forward.
Right now, you know November is going to be a
tough month. There's no doubt about it. The government shut
(07:24):
down has definitely impacted sales and traffic for the chains
we cover, especially in the DMV area as well as
in the South where there's a lot of government workers. Also,
last November restaurant sales had a nice boost from the election,
and so we're going to.
Speaker 5 (07:43):
Be lapping tough comps.
Speaker 6 (07:44):
So November is not looking great, but things should bounce
back a little bit here in December. And we're not
crazy bullish, but we're more bullish about the first half
of next year.
Speaker 2 (07:58):
Let's start with quick quick service dining. Talk to just
about that marketplace. I think back to McDonald's of the
world and so on, how's that varing.
Speaker 5 (08:06):
Quick service had a really difficult first half of the year.
Speaker 6 (08:08):
They were lapping strong comps and they and they kind
of lost their way when it came to value, right.
Speaker 5 (08:14):
They just had implemented too big of.
Speaker 6 (08:17):
Price increases over the last few years, and customers started
to push back, especially low income consumers who have been
you know, who are really impacted by inflation to a
much greater degree than middle and higher income consumers. So
the first half was difficult, but here in the second
half of the year, things have gotten better, largely because
they've re established their value propositions. You know, McDonald's has
(08:42):
revamped its dollar menu this year. They also reintroduced snack
wraps out a three dollars price point, which have boosted
checks by you know, people adding them on to their orders,
as well as bringing in some low income consumer traffic.
Speaker 5 (08:57):
But you know, low income consumers are pulling back at
a pretty big rate.
Speaker 6 (09:01):
You know, we think part of that is the snap
benefit pullback.
Speaker 5 (09:06):
But they've been able to.
Speaker 6 (09:07):
Bring in some higher income consumers and middle income consumers.
Speaker 5 (09:11):
So things are starting to look better.
Speaker 6 (09:13):
McDonald's especially, I mean McDonald's is going to be lapping
the eat Coli or right now is lapping the eat
colip about them from last year, and so you know,
they're the eight hundred pound gorilla. And I think good
results out of McDonald's over the next few quarters should
boost the entire category.
Speaker 2 (09:30):
How about the cost of beef, which you know consumers
complain about across the board. I know companies are dealing
with it, and what I understand is we're not going
to see a material improvement in the cattle herd till
maybe twenty twenty eight. So how does that factor into
the profit margins of all these restaurants.
Speaker 6 (09:45):
The restaurants that are impacted the most are you know,
burger chains like Shakeshack, or steakhouses like Texas Roadhouse that
own and operate all of their stores. You know, to
your point, beef inflation for these chains is going to
be in the mid teens in the fourth quarter, so yeah.
Speaker 5 (10:04):
Yeah, very high.
Speaker 6 (10:05):
So definitely a lot of margin pressure for those chains.
Speaker 2 (10:10):
You know.
Speaker 6 (10:11):
Luckily, those two chains have driven traffic as of late
into the stores which you know, and driven higher sales
and been able to pass along price increases and that
has kind of helped their operating leverage, which has helped
offset the higher costs.
Speaker 5 (10:26):
For the burger chains.
Speaker 6 (10:27):
They there's less impact for the chains that we cover
for McDonald's, Wendy's, Jack in the Box because they're largely franchised,
so that the franchisees are the ones footing the bill
for the higher beef costs.
Speaker 2 (10:37):
Why, like, why do not all changs do like the
McDonald's franchise e model. What's the benefits of franchising or
what's the benefit of owning versus a franchise. I think
I thought I would. I saw the movie. I think
I understand the economics and franchising. It seems pretty good.
Speaker 6 (10:52):
Listen, the franchise business, that's a great business, you know,
and from where I sit as an analyst, you know,
we love it. It's easier to predict the earnings and
the free cash flow. It's it's a much more steady
business model. Franchising eliminates a lot of the operating leverage
and thus the risk to your margins out of the business.
Speaker 5 (11:12):
Right. But if you are.
Speaker 6 (11:14):
Running a full service restaurant chain where operations is very
core to your business, think Darden, think Texas Roadhouse, you
want to own and operate your source because you want
to have control over those operations.
Speaker 5 (11:28):
You want to make sure.
Speaker 6 (11:29):
People are getting a good experience, and they're just much
harder to run than a McDonald's or a Wendy's. And
then I'd say, on the last case would be somebody
like shake Shack or wink Stop or Cava. You know,
when your cash on cash returns are forty fifty sixty percent,
(11:49):
we don't think it's a bad thing to be greedy
and you want to open up as many stores as
possible are.
Speaker 3 (11:54):
Thanks to Michael Helen, who covers restaurants and food services
for Bloomberg Intelligence. Coming up, look at why the tech
company Cisco maybe on a Goldilocks growth path.
Speaker 2 (12:02):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (12:08):
You can access Bloomberg Intelligence via Bigo on the terminal.
I'm Scarlett Foo.
Speaker 2 (12:12):
And I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (12:20):
This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 2 (12:27):
We moved next to more earnings in the retail sector
this week. We got third quarter earnings from Cohle's and
Abercrombing and Finch Coles raised its full year outlook for
the second straight quarter. It's a signed the chief executive officer,
Michael Bender, is helping to stabilize performance at the struggling retailer.
Speaker 3 (12:42):
Separately, Abercromi and Fitch raised the low end of its
full year sales outlook as its Hollister brand continue to
gain momentum. We are joined by Mary Ross Gilbert Bloomberg Intelligence,
senior equity analyst covering retail.
Speaker 2 (12:53):
We first asked Mary for her take on Cohle's most
recent earnings report.
Speaker 7 (12:56):
They've kind of gone back to the basics. What's something
something that clos has always been known for SO One
is their private brand. So if you think about some
of the brands like SO and Juniors, Lauren Conrad for women,
and they brought those brands back because they actually sacrifice
some of those brands under the prior leadership and replace
(13:17):
them with some more name brands like Madden Girl, trying
to really attract the junior shopper there. And now that
they've brought the private brands back, they brought back petite sizing,
which was really important to their customer base. Now they're
really starting to see a recovery. But they're not out
(13:38):
of the woods yet, Scarlett, as you pointed out, I mean,
they're really cycling three years of declines, but we are
seeing encouraging results and given that they actually turned positive
in the latest month, it looks like they could actually
reach a break even in the fourth quarter, even though
they're guiding to a one point seven percent comp sales decline.
(13:58):
So it's very encouraging to see with Cohle's again not
out of the woods. And when you look at what's
going on with SO For, it's now a two billion
dollar business and as you were sort of highlighting, that
means they really lost you know, over the last four
years something like four to five billion in other categories,
so they have lost market share. We think they're losing
it to off price and some of the value players
(14:20):
in the specialty space such as Old. Maybe you know
a gap brand.
Speaker 3 (14:24):
Mary, I will also want to ask you about Abercomie
and Fitch. It was the Darling two years ago because
the new CEO found a way to make the brand
relevant to a new audience. It was no longer targeting
teenage boys, for instance, and really targeting young working women.
But it's had a brutal twenty twenty five, a lot
of concerns about tariffs perhaps and maybe even a lack
(14:45):
of fresh ideas in terms of its offerings. What's the
narrative with Abercomie and Fitch right now?
Speaker 7 (14:51):
Yeah, so Scarlett with Abercrombie and Fitch, their numbers came
in better than expected. So the namesake brand, as you
pointed out, I mean that had been double digit increases
over the last three years, so they're cycling those increases
and that's why their sales are coming in less than expected.
But this quarter the comp sales declined. There was about
(15:11):
three point three percent, so that was better than expected.
And when you look at Hollister, though, Hollister has been
coming in ahead of expectations and they've been posting double
digit increases. So as you were talking about sort of
the millennial women who really love and also the men,
but it does tend to favor more of the women
(15:33):
on the Abercrombie side, on the Hollister side, which really
caters to gen Z that has been on fire, and
so that's what's helping to kind of overcome the weakness
that they're seeing at Abercrombie. But also it's looking like
Abercrombie could turn positive in the fourth quarter with a
number of the initiatives that they have in place going
(15:55):
into the holiday quarter, even though they're cycling some pretty
strong gains in the prior year and the year before that.
Speaker 3 (16:01):
Are Thanks to Mary Ross Gilbert, Bloomberg Intelligence, senior equity
analyst who covers retail, we.
Speaker 2 (16:06):
Moved next to some research from Bloomberg Intelligence in the
tech space. It's titled Cisco and a Golden Locks growth path.
Speaker 3 (16:12):
According to Cisco mayc twenty twenty six, sales above the
top end of its five to seven percent target, and
this comes as the company balances strong AI growth with
networking gains.
Speaker 2 (16:22):
For more on this, we were joined by Wouchinho, Bloomberg
Intelligence senior technology analyst.
Speaker 3 (16:26):
We began by asking Wooje to break down why Cisco's
shares have had a good run this year.
Speaker 8 (16:30):
So there's a couple of things driving it. That they're
actually a massive forty three billion dollar a product upgrade
cycle that Cisco will potentially benefit from, which is going
to give them outsize growth in their core networking business.
But their AI store has actually been a lot better
than I thought. AI is going to be about three
billion dollars of sales tripling or three billion dollars in
(16:54):
sales in fiscal twenty twenty six tripling out of twenty
twenty five. So there are this goldly locks of good
AI store as well as an upgrade cycle tailwind.
Speaker 3 (17:03):
Paul was asking Michael Casper earlier about a lot of
the tech companies issuing debt to pay for their AI buildout.
What does Cisco's debt profile look like and will it
also need to sell bonds to fund everything that's doing?
Speaker 8 (17:17):
Yeah, hey' Carlo. So that's one of the great stories
about about Cisco. I mean, they have roughly about twenty
billion dollars in debt and roughly thirty billion dollars in cash,
so look their net cash positive, they don't need to
take on debt. If anything, they've been very active buyers
of their stock, very good stewards of the cash, strong
(17:41):
cash flow profile, and if anything, they're using their cash
as levers to build up the inventory for the AI
opportunity that's ahead of them.
Speaker 2 (17:49):
So talk to us about just kind of the growth
drivers for this company, which what is he looked at
twenty twenty six, what kind of underpins their top line growth?
Speaker 8 (17:58):
They got it to roughly the top of the top
end of their four to six percent growth. I think
they're going to do roughly about seven to eight percent
growth for this year. So if we think about the
AI story itself trippling from one billion to three billion,
that's going to be the incremental growth that gets you
above to the top end of their revenue growth guidance.
(18:21):
You know, the way I have networking flashed out right now,
the networking business, you know, Xai is growing roughly around
four percent, and that's probably towards the low end and
quite frankly, if the upgrade's coming stronger than a lot
better than we think. There's a little bit of upside.
Now there is a little bit of drag. The security
business hasn't panned out as as strongly as they hoped,
(18:42):
primarily because it is going through this business model transition.
But you know, it would have been a story at
another time. But the two stories AI as well as
a core networking upgrade cycle. I mean, that's doing very
very well in twenty six and if anything, I would
argue we'd probably be better in twenty twenty seven.
Speaker 3 (19:00):
Is Cisco part of this whole circular deal making, circular
funding concern that has investors worried that if one company
in this link stops spending or maybe slows down spending,
everyone else will get affected.
Speaker 4 (19:13):
To some degree.
Speaker 8 (19:14):
Yeah, Scarlett, And that's why I think if you look
at some of the AI stories there, it's one of
the safe bets, right. They are exposed to some of
the I would say the hyperscale names, but a very
small exposure to it, as well as some of the
neo clouds. They do sell some routing products and some
of the sovereigns. Now, if that business disappears, you know,
(19:39):
the cashflow story is still well intact. Right, If I
calculate the amount of AI revenue relative their total total
revenue base. We're only talking about, you know, six to
seven percent of total sales, right, So if the AI
story collapse, I mean, AI evaporates, they're still in very
good standing.
Speaker 3 (19:58):
Not to mention the fact that they out a dividend too.
I mean it's not a huge one, but a tech
company with a two percent dividend yield to something and
they've been steadying.
Speaker 4 (20:06):
The sock was lower. Yeah, the soccer just to be three.
Speaker 8 (20:09):
So yeah, there we go. I mean, it's not the
like stock bog backs and a dividendil and an a
story if it works out.
Speaker 2 (20:15):
Our thanks to Wou Jinho, Bloomberg Intelligence senior technology analyst.
We move next to the news in the media space.
US President Donald Trump recently said in a social media
post that no television networks should be able to expand.
Speaker 3 (20:27):
Trump cited the potential growth of what he considers left
wing news outlets. Trump's post was in response to a
NEWSMAC story that said the FCC head Brendan Carr is
moving to give television networks massive reach and push through
a merger of Next Our Media Group and TAGNA for
Speaker 2 (20:42):
We were joined by Matthew Shuttenhelm, Bloomberg Intelligence media litigation analyst.
Speaker 3 (20:46):
We began by asking Matthew if he was surprised about
President Trump's recent comments.
Speaker 9 (20:50):
It's a moderate surprise, So it's it's not a complete
surprise because Newsmax has participated before the FCC and had
it has been one of the few voices that said,
don't do this, don't deregulate this space. And what you
really see here is President Trump latching on to an
article written on Newsmax's platform opposing the easing of this
(21:15):
national ownership cap. What's in play here is that there's
current FCC regulation says no company can reach more than
thirty nine percent of US households, and companies like Nextstar
and Sinclair want to go way beyond thirty nine percent.
In fact, Nextstar has a pending deal before the FCC.
(21:36):
They just filed their application last week to acquire Tegna
that would take them to seventy eighty percent of the country,
and it depends on the FCC deregulating in this space.
So Trump latching on to Newsmax's opposition because he's concerned
about the TV networks growing larger is a concern. It's
(21:59):
a real risk. I'm not convinced yet that it's going
to lead to real FCC policy. I think this FCC
wants to deregulate in this space, and I think there's
going to be a pushback against Trump's view on this.
Speaker 3 (22:10):
Okay, so the FCC is headed by Brendan Carr, who's
been very active in making sure that he's out there
doing the president's bidding. Are you saying that Brendan Carr
is going to defy President Trump?
Speaker 9 (22:21):
Yeah, So that's the big question here. The FCC used
to operate as an independent agency, meaning even if the
President had a view on something, the FCC could could
chart its own course. That doesn't that's not going to
work anymore the way this FCC is operating. If the
President takes a firm view on something, the FCC is
(22:43):
not going to defy it because effectively, the President can
fire the FCC chairman then and you know, there's no
no future job prospect if you defy the president. What
I'm not convinced about is, you know, this was one
social media post from President Trump, and you know, talk
about concerns about letting the broadcast networks ABC, CBS, Fox
(23:04):
get bigger. What I think there could be now in
you know, on in back channels, is some education from
the FCC to the White House that says, hey, easing
the national ownership cap, it would let Sinclair Next Star
get bigger, probably, but it doesn't necessarily mean the broadcast
networks will get bigger. There's still an independent check on
that even if we ease this this cap. So ultimately,
(23:27):
if Trump is against this, the SEC is not going
ahead with it in my view, But I think there's
still room for Trump's position to evolve on this.
Speaker 2 (23:36):
So, I mean, the reality is, I mean, this is
an industry, the broadcast television industry that is arguably on
life support visa VI. Forget about cable television, which itself
is on life support. They survive that on slot. Now
it's just all about digital and social media. And I
would think the industry would have an open would have
an effective argument not just to the DJ but to
(23:58):
the President as well.
Speaker 9 (24:00):
I mean, that's the case that the National Association of
Broadcasters has made to the FCC that these ownership restrictions,
you know, which come from the nineteen seventies or even
earlier than that really make no sense in the world
we live in today, where where so much video that
is consumed doesn't come from from broadcast, it comes over
(24:21):
the Internet, and there are no artificial caps on how
much those companies can reach, and broadcasters are left to
try to fight with one hand tied behind their back
with these these you know, ancient FCC rules on the books,
and the Republicans at the FCC, Brendan Carr included, strongly
(24:41):
agree with that message. And so it's it's going to
be I think a little bit of a communication effort
that needs to happen between the FCC and the White
House too, and the real question will be how does
that play out. Does Trump's social media post actually translate
to real policy. I'm not convinced that it will yet.
Speaker 2 (25:02):
Our thanks to Matthew Schultenhelm, Bloomberg Intelligence media litigation Analyst.
Speaker 3 (25:06):
Coming up, we'll break down corporate earnings at the retailers,
Calls and Abercrome and Fitch.
Speaker 2 (25:10):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (25:16):
You can access Bloomberg Intelligence through Bigo on the terminal.
I'm Scarlett Foe.
Speaker 2 (25:20):
And I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (25:30):
This is Bloomberg Intelligence. With Scarlett Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 2 (25:37):
We move next to more earnings in the retail sector.
This week we got third quarter earning some Dick Sporting
Goods and best Buy. Dick Sporting Goods raised its outlook again, However,
investors were disappointed by costs related to turning around the
foot locker chain it recently acquired.
Speaker 3 (25:50):
Separately, best Buy raised its guidance for the current fiscal
year as demand for the latest consumer tech drove revenue
and profit last quarter.
Speaker 2 (25:57):
For more on this, we were joined by Lindsay Dutch
Bloomberg Intelligence Consumer Hardlines senior analysts. Let's start with Dick's
Sporting Goods. They raised their outlook again, but I guess
investors are focused on I guess some of the costs
trying to turn around foot locker. Talk to us about
Dick Sporting Goods at Lindsay.
Speaker 10 (26:13):
The legacy business remained very strong in the third quarter,
strong back to school, clear demand momentum heading into the
fourth quarter. That's where the raised outlook came, it was
really for the legacy business. But when we look at
foot Locker, you know, the deal closed early September. The
outlook for the fourth quarter is mid to high single
digit same source sales decline. Dix is also looking to
(26:38):
expedite the turnaround there, which means offloading old inventory steep
markdowns in that fourth quarter, which is going to really
hurt the margin as well. So foot Locker, you know,
needs a lot of work. Fourth quarter is going to
be weak, and investors are really looking to see how
quickly they can turn that business around.
Speaker 3 (26:56):
Yeah, and probably they'll need to put some money into
it as well to reorganize stores and freshen up the display.
How much of this deal Dick's buying foot Locker was
predicated on Nike and what it was doing with this
shift back to its wholesale channels and away from solely
relying on its direct to consumer offerings and its own stores.
Speaker 10 (27:17):
So full Looker was, I would argue, over exposed to Nike.
You know, several years ago they had been working that
exposure down. I think Dix will remain focused on being diversified,
just given that their own assortment where they're leaning into
lots of other brands, new up and coming brands like
Hoca and on. They did discuss though, that Footlocker will
(27:40):
sort of remain sort of a hub for basketball, and
Nike does have a stronghold in the basketball market, so
I expect Nike to be, you know, a strong vendor
with foot Locker, but Dix is looking to make sure
that they have that right assortment, the newest stuff, the
hottest lines coming from Nike and others.
Speaker 2 (28:00):
What is Di saying about tariffs in their business, so.
Speaker 10 (28:05):
They are going to feel higher costs in this back
half of the year and even into next year. Dix
has since the pandemic, since they've been able to see
sort of an increase in demand for their premium assortment.
They're not really a huge discounter for the holiday. They
like to sell their product fully through, so I don't
(28:28):
expect them to sort of discount and they have taken
prices up selectively but certainly not across the board, and
their higher income consumer is sort of accepting those increases.
I think Footlocker is a little bit of a different story,
and you might see that impact a little bit bigger
on that business, just because they don't have those premium products,
(28:49):
and they're already going to need to offload older inventory
with steep discounts, so you sort of have that turnaround
compounded with these rising costs into the next year. Something
for them to work on.
Speaker 3 (29:03):
Lindsy, I also want to ask you about best Buy
consumer electronics retailer, how to beat and raise quarter. It
looks pretty good and it looks like it's on the
usual strains sales of mobile phones and sales of computer equipment.
Speaker 10 (29:15):
Yeah, so best Buy had a strong third quarter, better
as better than expected, as you mentioned. I think, you know,
the stock isn't getting a full bump because there is
definitely some conservatism and a low guide for the fourth quarter,
and investors are trying to figure out, you know, is
it just conservatism, are they just worried about the consumer,
or is there something really there that there's going to
(29:36):
be a slowdown in that fourth quarter. But the business
looks good. Demand looks strong, as you mentioned, computing, phones,
gaming all looking solid, and they're also seeing an improvement
in home theater, which is really big because that has
been a weaker category for the last couple of years.
So if that comes to fruition, I definitely think there
will be strength in the fourth quarter.
Speaker 2 (29:57):
So you think about a best Buy, I mean some
of the those are big ticket items here, and that
would suggest that they go to a part of the
case shaped economy made me that is doing better. Is
that a typical best Buy customer.
Speaker 10 (30:11):
So bez buy. Definitely, promotions are going to be a
big piece of the fourth quarter. They're sort of leaning
into those promotional events. That's what worked last year, and
I think they're trying to lean into the things that
worked last year for this year. And I do think
the consumer backshop is quite similar when we do that compare.
(30:32):
I also, they also recently launched a marketplace and they
seem to have a stronger focus on marketing and advertising,
and so they're really trying to meet the consumer where
they are and make sure that best Buy is top
of mind when you're shopping for a wide array of things,
not just those big ticket items like TVs or appliances.
(30:53):
So they're trying to have a bigger wallet share with
consumers across the board, and they're leaning on that marketplace
and advertise to do it and then hopefully get you
into the store and that's where they can bring their
customer service and experience as well.
Speaker 3 (31:06):
That was Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst.
Speaker 2 (31:10):
We move next to the travel and leisure sector. We
recently took a look at a survey from Bloomberg Intelligence
entitled Consumers Maintain Vacation Budgets in twenty twenty six.
Speaker 3 (31:19):
According to the survey, over two thirds of respondents to
bi's proprietary Travel survey said that they will spend more
to go places in twenty twenty six, about the same
as last year. And this comes even with rising economic concerns.
Speaker 2 (31:30):
For more on this, we were joined by Jody Lorie,
Bloomberg Intelligence, Senior Credit Analyst. We first asked Jody to
break down what she learned from BI survey.
Speaker 5 (31:38):
So we do the.
Speaker 11 (31:38):
Survey every half a year and so we just got
the results out for the most recent one. And what's
interesting is that we're seeing more people planning on keeping
their budgets the same. But what's more interesting is that
if costs succeed budgets, fewer people than last year said
they'd increase their budget. And that's on the back of
(31:59):
them knowing that inflation is a much higher risk for
them for their portfolio.
Speaker 3 (32:03):
So in other words, people are making room for time off,
but they're going to have to scrimp more in order
to make it happen because their money is not going
to take them as far as it used to correct.
Speaker 11 (32:16):
And Scarlett, I mean, I think to piggyback on that,
if you look the eating out, anticipation of spending is
higher this year than last year, and I think that's
lesser reflection of people wanting to eat out, but more
that they're expecting eating out is going to be more expensive.
And so even though we're seeing people want to spend
on paid activities and experiences.
Speaker 12 (32:37):
Which could bode well for the cruise.
Speaker 11 (32:38):
Lines and the theme parks, at the end of the day,
when cost succeed budgets, more people this year over last
year are planning on cutting and looking at free options.
So going to the free museums, going to low cost.
Speaker 3 (32:51):
Options, well, now that the government is open, DC is
an option once again. How about in terms of destination,
maybe staying closer to home, maybe not going quite as
far Internationally.
Speaker 11 (33:02):
Yes, and staying closer to home is very very much key.
Speaker 12 (33:06):
If we see the.
Speaker 11 (33:07):
Data, the international trend is to Canada. Canada bumped up
to the second spot. So we saw that in the midyear,
and it was pretty curious for US, particularly because when
you look at it the opposite way, and we did
this analys a few months ago. Canada is not coming
to the US. They don't want to come to the US.
It's too expensive for them, they don't really like the
(33:28):
current government situation. And on top of it, I think
they're scared about crossing the border and what it means
for immigration.
Speaker 12 (33:35):
So we're seeing Canadians not.
Speaker 11 (33:37):
Come to the US, and we're seeing a lot of
companies comment on that. But we are seeing a lot
of Americans go to Canada. And I am curious how much,
and this is going to come in further reports, how
much of the Canada move is a reflection of the
World Cup next year. There's a lot of people going
to Vancouver, for instance, for the World Cup. I'll actually
be there during the World Cup, but not going to
the World Cup.
Speaker 2 (33:57):
Why people are going to be there.
Speaker 12 (34:01):
We might be.
Speaker 11 (34:01):
Doing a very family friendly cruise to Alaska.
Speaker 5 (34:04):
Nice.
Speaker 12 (34:05):
It just works out that that's the same time as
it was bad timing.
Speaker 2 (34:08):
It's bad time, all right, talk to me. This is
when I go to Aruba, we go to an all inclusive.
How come I didn't know about this all inclusive thing
when I had four little kids?
Speaker 12 (34:19):
I mean, were they were they a thing back then?
Speaker 2 (34:22):
I don't know, But I mean I would get the
bill which would be five inches thick with like smoothies
and chicken fingers and all that kind of crap that
they'd eat throughout the day four kids. Man, if I had,
if I knew about the all inclusive, that would have
been a savior for me. What are people doing when
they are they willing to still pay it for travel?
Because I still here people going to Europe and stuff
(34:42):
like that. I mean they're not going to Poughkeepsie, They're
going to Parish and things.
Speaker 11 (34:46):
Yeah, I mean Japan is certainly a popular destination. Strong
dollar there, yeah, very much increased.
Speaker 12 (34:51):
Italy has increased.
Speaker 11 (34:53):
We're seeing among the upper income level, you know, Portugal
and Spain as popular destinations. And I think probably it's
even more interesting is onboard spending for cruises is still
continuing to have momentum. At the moment, I think where
we're watching is when that onboard spending shifts and then
the cruise lines, for example, don't get that gravy for
(35:13):
cash flow. And to your point, Paul, I mean, even
though you have something called all inclusives, even though you
have the cruise lines, that they all are considered these
package deal what every company is doing, and we're talking
the rental car companies. You know, Abus is doing this too, obviously,
the airlines is they're all doing these premium products.
Speaker 12 (35:30):
These you know, you do different tiers.
Speaker 11 (35:32):
Of products, so the add on so you can get
the base level, which is really the skeleton package. But
anyone from cruise lines to you know, theme parks to
some extent, to the all inclusives, to the airlines, to
the rental car companies are all segmenting to give you know,
the lower income consumer the.
Speaker 12 (35:48):
Ability to say that they traveled and.
Speaker 11 (35:50):
The higher income consumer the ability to travel luxury.
Speaker 3 (35:53):
And in terms of the add ons, what are these
add ons are they? You know, things that they used
to offer for free and now charge.
Speaker 12 (36:00):
You for for some of it.
Speaker 11 (36:01):
It is so you know, a good example I have
is anecdotally, I know that some of the cruise lines
that used to not charge to get people into the
center of a city, say in Europe, you're on European Cruise,
they used to get that for free. Now they say no,
you have to be a part of one of our
you know, expeditions, one of our one of our excursions
in order to get that for free. Otherwise we charge
(36:22):
you twenty dollars to get into the center's clown in
you know, Czechoslovakia and not Czechosvakia.
Speaker 12 (36:27):
Check republic.
Speaker 3 (36:27):
He our Thanks to Jody Lorie, Bloomberg Intelligence Senior credit Analyst.
Speaker 2 (36:31):
That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
providing in depth research and data on two thousand companies
and one hundred and thirty industries.
Speaker 3 (36:38):
And remember you can access Bloomberg Intelligence YEA, B I
go on the terminal. I'm Scarlett Foo and.
Speaker 2 (36:42):
I'm Paul Sweeney. Stay with us. Today's top stories and
global business headlines are coming up right now
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