May 15, 2025 • 21 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Isabelle Lee
Today’s Podcast Features are:
Jennifer Bartashus, Bloomberg Intelligence Senior Analyst, Retail Staples & Packaged Food, discusses Walmart earnings. Walmart delivered solid sales and earnings growth, but cautioned that tariffs and economic turbulence will lead to price increases.
Mari Shor, Senior Equity Analyst at Columbia Threadneedle Investments, joins to break down U.S Retail Sales. US retail sales rose 1.4% in March, the most in over two years, driven by a jump in car purchases and other goods such as electronics.
Anurag Rana, Bloomberg Intelligence Technology Analyst, discusses President Donald Trump saying he’s asked Apple’s Tim Cook to stop building plants in India to make devices for the US, pushing the iPhone maker to add domestic production as it pivots away from China.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news, and Android auto with
the Bloomberg Business appum listen on demand wherever you get
your podcasts, or watch us live on YouTube.
Speaker 2 (00:15):
What I learned from our next guest years ago, which
shocked me and still to this day amazes me. The
largest supermarket chain in the United States is.
Speaker 3 (00:27):
Walmartmart.
Speaker 2 (00:28):
I never would have guessed that, And now that I
think about it, of course it is Jen Bartasha. She's
the one that kind of enlightened me on that. When
she's Bloomberg Intelligence Senior animost, she covers the retail staples
and the package goods companies. So, Jen, I'm thinking in
a world of tariffs, and I'm worried about if I'm
a retail investor, kind of the margins my retailers like
a Walmart might have having the grocery store business as
(00:52):
a traffic driver. That's got to be a good thing,
is Did we see that in Walmart's numbers today?
Speaker 1 (00:58):
Yeah?
Speaker 4 (00:58):
Hi, Paul absolutely saw that in Walmart's numbers. You know,
their growth in consumables and grocery mid single digit growth.
That means people keep coming back to Walmart to buy
their staples, and you know, that's a that's a foundational
type of thing because for Walmart, as they get these
customers doing that regular, repeat shopping and coming in consistently,
(01:22):
it really bodes well for how well they'll be able
to retain those customers once all of this market volatility
fades and people become a little less price sensitive.
Speaker 5 (01:31):
How does Walmart just really in general raise the pressure
for competitors? We have Home Depot and Target reporting out soon.
How do you think they will fare well?
Speaker 4 (01:41):
You know, I think that Walmart is really uniquely positioned
because it arguably has the best view into mainstream America
consumer of any retailer out there, because they touch such
a huge.
Speaker 3 (01:52):
Number of households.
Speaker 4 (01:53):
And so when somebody the size of Walmart says that
even their scale is a big enough to fully offset tariffs,
the read through on that is with for other retailers
who are smaller and have bigger exposure to imported goods
is rather dire because you know, you know, Walmart is
(02:16):
is the one that is probably best position to whether
it because of its scale. But that just means for
the smaller guys, it's going to be a really difficult battle,
and that there's going to be a lot more price
that has to be taken and a lot more operational
maneuvering to try to stay competitive in that in that
particular set. So Target has a lot of discretionary exposure.
(02:37):
Home depot lows they both do as well, So you
know it could be difficult season for those retailers.
Speaker 2 (02:44):
All right, full disclosure, And John Socker knows this. My
last job in this illustrious career of mine will be
as a greeter at Walmart. We hope to see. I
have never been in one because they don't have near me.
Root seventy in Brick that's going to be. It's far
the next stop here on this one. Hey, Jen, you
mentioned it, and that's kind of where I wanted to go.
(03:06):
I can see wal Bart dealing with higher tariffs in
pricing because they're Walmart. But how about the mom and
pop retailers out there on Main Street USA? How tough
is it going to be for them?
Speaker 4 (03:17):
Do you think it's It's incredibly tough, Paul, because you
know the mom and pop retailers, it's usually only a
handful of employees. It's a very set type of inventory
that they carry. They don't necessarily have the ability to
flex in and out of different product categories to to
lessen the impact of tariffs, because they're usually known for
(03:40):
a particular type of product, which is why their customers
come to them, and so you know, they're also they're
very reliant also on getting goods either directly or through
third parties that are that are imported, and so there's
just very little room in there in their operations to
be able to offset the power of what's come the
(04:03):
pricing that's going to come with these tariffs. And we've
heard anecdotally small businesses that are just saying they've had
to lay off employees already. You know, there could be
greater ramifications, you know, in terms of unemployment and things.
If small businesses are impacted to a large degree, Should
this tariff situation persist for longer than we're expecting?
Speaker 5 (04:23):
Yeah, bring up a good point because they have CFO
John David Rainey saying the rage of outcomes is pretty
quote extreme, and it is. How has Walmart have they
hinted on how they're preparing for it? I mean, we
know that they're a good barometer of the US economy
and they're really really huge, but they must still be
impacted by tariffs.
Speaker 4 (04:42):
Absolutely, they definitely will be impacted. But part of where
their advantage is is that the company has been investing
for some time behind technology like AI, and AI has
across retail, but especially for those retailers who have had
the time and the balance sheet to invest in it
gives them a lot of flexibility in their tools for
(05:03):
predicting what their need is going to be and for
responding quickly to changes in their supply chain. So you
know that investment in AI will actually pay some dividends
and probably help them navigate the tariff situation more easily.
And again that goes back to the smaller players who
don't have that kind of technology support or haven't been
(05:23):
able to make those investments. Will it'll be harder for
them to maneuver in that environment.
Speaker 2 (05:29):
So Jennifer Kroger are some big, you know, grocery store,
and I don't know, craft Food comes in and says,
cheese Whiz is going to be ten or fifteen percent
higher price to you Kroger because of teriffs. How does
that conversation go? Who's got the leverage there? Who eats it,
who takes it?
Speaker 6 (05:45):
Is it?
Speaker 3 (05:46):
How does that go?
Speaker 4 (05:48):
Yeah, it's it's usually a combination of a couple of things.
So the first thing is that because the grocers all
have private label programs, they are very very well in
formed on what cost of ingredients are, which ingredients are
being imported, you know, packaging costs. So when a counterpart
from a package food company comes to them and says
(06:10):
we need to increase prices because of X, Y, and z,
the retailer can call them out if they don't see
the same pattern that they're being given as an excuse. Now,
then there's a collaborative, a collaboration where ultimately both the
retailer and the food package the package foo company want
to you know, increase the volume sold and make sure
(06:30):
that their products are getting in the hands of customers.
So when it comes to pricing, usually there can be
a bit of a sharing in terms of cost, but
most of it does fall into the package food company
itself and that comes in the form of having to
do promotions you know, or or you know, offering discounts
and things like that to make sure that their products
(06:50):
are actually moving and that they're generating turnover and that
they're then getting some profit out of it.
Speaker 2 (06:57):
Jen, thanks so much for joining us always appreciate it.
Always learned something speaking to you. Jen Bartash's senior retail
analyst from Bloomberg Intelligence. I mean Jen had a real
career at Bloomberg. She was managing departments, managing a bunch
of people in global data. And then we asked her,
like fifteen years ago, hey, come to Bloomberg Intelligence, that
we think you'd be a really good analyst. And she
did come over, she accepted, and she's been great, and
(07:18):
now she's one of the leading voices on retail. So
another success story coming out of Bloomberg Intelligence.
Speaker 1 (07:26):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (07:40):
Checking with Mariy Shore. She's a senior Ecodana's a Columbia threadneeder.
She's up in Boston. We'd love to talk to he
ed when we get the retail sales on her because
she really spends a lot of time looking at the retailers,
the consumer, that kind of thing, so a real helpful
voice to us. Mari what did you make of the
retail sales here. I mean, I guess there's some noise
here about you know, tariffs, and did that impact kind
(08:00):
of how consumers are spending money these days? What did
you make of the retail sales number today?
Speaker 6 (08:06):
Yes, thanks Paulin Isabelle, thank you for having me. Absolutely
you said it better than I could have. The tariffs
are definitely creating some monthly noise.
Speaker 3 (08:15):
When we look year over.
Speaker 6 (08:17):
Year, the growth has been a little more consistent and
actually showed acceleration in April versus March.
Speaker 3 (08:24):
But on a month over.
Speaker 6 (08:25):
Month basis, we did see softness in April versus March,
given the pull forward that we saw in March ahead
of some tariff driven price increases that the consumer anticipated
in some big ticket categories like autos. And you know,
when I look and really step back and just getting
(08:46):
off of Walmart's earnings call, I think their tone on
the consumer is very consistent. Obviously, tariffs are creating a
lot of noise in the spending trends, but you know,
in their words, the consumer is still very focused on
value and speed of delivery, and that is what we've
been seeing for years now coming out of the pandemic.
Speaker 5 (09:07):
I'm glad you brought up consumer because for Walmart, we
saw traffic, which is the number of shoppers less of
a boost to the figure than ticket. What does that
tell you that maybe there are less shoppers, but they're
buying more expensive things or at least higher amount of tickets.
Speaker 6 (09:21):
Well, right, So that could either say they're coming in
less frequently and when they are in, they're buying a
lot more, right, they're stalking up more or to your point,
they're buying more expensive things. But we did see relative
weakness in their general merchandise category. We saw like their
(09:42):
you know, food categories up mid single digits, Health and
wellness was up high teams. A lot of that is
GLP ones, and general merchandise for them was actually down slightly,
which is worse than what we saw in.
Speaker 3 (09:58):
Q four. And so I think it's a us that
the consumer is you know.
Speaker 6 (10:02):
Coming to Walmart for their stock up trip, which is
typically what we've seen with Walmart.
Speaker 3 (10:08):
But you know, I think a lot of that.
Speaker 6 (10:12):
Intra week spend, those like fill in trips that we
talk about, you know, I think that the consumer may
be doing less of that just given their general caution
and uncertainty over what tariffs are going to do to
their spending ability in the future.
Speaker 2 (10:28):
Hey, Mari, wh when you speak to the retailers that
you talk to across your coverage area, Let's see what's
the feeling today in terms of how much they want
to pass through to customers versus how much they're willing
to kind of take in their margin here.
Speaker 6 (10:43):
Yeah, it's a great question, and it's so interesting seeing
like the uh, you know, the commentary from the retailers
versus what we see in the stock market is very different, right,
I mean, the stock market is acting as if these
tariffs are no big deal. We got some resolution, things
are going to be fine. Then you listen to the retailers.
I mean you listen to Walmart today. They're talking about,
(11:06):
you know, starting now, there will be less product on shelves.
They're going to do all they can to try to
protect pricing in their value position in faster turn categories
like food.
Speaker 3 (11:17):
But there's certain.
Speaker 6 (11:18):
Categories like toys, electronics, even some of the textile categories
like apparel and soft home where it's going to be
really hard for them to absorb the full impact of terraft.
So I think, you know, the ten percent rate for
a lot of companies is a lot more manageable. When
you talk to them about the ten percent we see
(11:39):
globally x China, they seem to feel a little bit
better about that. I think, you know, the thirty percent
in China is still too high, and the margin levels
and a lot of the categories that come out of
China are very low, and they just do not have
the ability to absorb that pricing themselves, share it with
(11:59):
their vendors who or their vendor partners, their manufacturing partners.
Speaker 3 (12:03):
We're also operating on very low margin.
Speaker 6 (12:06):
And so it's inevitable that some of that is going
to have to come through to higher prices. It's just
a question of you know, I think what the retailers
are really trying to they're really struggling with now how
to think about that trade off between price and volume.
Speaker 3 (12:21):
You know, I mean.
Speaker 6 (12:22):
During the pandemic, as everyone took pricing, we did not
see the kind of elasticity of demand that you would
typically expect to see when prices move up. And I
think how the retailers manage their unit inventories is going
to be a huge area of focus for them and
for investors during this really volatile period.
Speaker 5 (12:44):
One thing that also caught my edw with Walmart is
it said it's online business posted a quarterly profit for
the first time. Are you seeing the same trend across
the board and what does that tell you?
Speaker 3 (12:54):
No, this is very Walmart specific.
Speaker 6 (12:57):
We have seen in the e commerce space Amazon and
Walmart taking incredible share. And so when you listen to Walmart,
and they've been kind of alluding to the fact that
they were nearing this inflection and profitability for some time,
I think it's really coming from two things. That's coming
from the scale that they are now seeing as that
(13:18):
business has grown so much. And also they've talked about
how consumers are increasingly willing to pay for delivery for
expedited shipment. So if you're making dinner tonight and you
realize you forgot a certain spice, you know, you could
pay five dollars to have Walmart deliver it.
Speaker 3 (13:38):
To you in the next hour.
Speaker 6 (13:39):
And in those cases, the consumer is more willing to
pay for delivery, and I think that's something Walmart had
not expected, but it is a key I think part
of the reason why they are able to achieve e
commerce profitability. They also have, of course, the benefit of
the growth in the marketplace and addizing and fulfillment services
(14:02):
and membership.
Speaker 3 (14:03):
All of which are higher margin and are.
Speaker 6 (14:06):
Really starting to move the needle for them as we
see with Amazon. But I think Walmart and Amazon are
in a league of their own as it relates to
what they're seeing in e commerce, both in terms of
the growth that they're putting up in that business and
the profitability that they're able to achieve.
Speaker 2 (14:23):
Mari, thank you so much for joining us. As always,
Mario Sure, Senior Equity aas for Columbia Threadneedle Investment, she's
up there in Boston and she joined us. View that
zoom thing.
Speaker 1 (14:34):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Colocklay, and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (14:48):
President Trump making lots and lots of news in his
trip to the Middle East, lots of economic deals of
being announced, big big dollar amounts as well. All that
is good for the companies involved, but it does call
out Apple a Tim Cook not there with him, as
Jensen Wang is in Nvidia also suggesting that Apple should
stop moving iPhone production to India. What is that all about?
(15:10):
Anurag Rana technologychannels for Bloomberg Intelligence, he covers Apple, he
covers all this tech stuff for us in the burgeoning
tech capital Chicago, Illinois, anurag Apple computer. They're trying to
diversify their supply chain, maybe get a little bit less
reliant on China taking some of that over to India.
There's a president not like that.
Speaker 7 (15:32):
Yeah, we just heard that. In fact, it looks like
Apple cannot you know, catch a break right now. We
thought that the US China deal would probably put a
lot of those fears to rest. But you know, it
just looks like that. You know, it's not He's not
happy with the Apple moving some of that iPhone facilities
to India. Now that is the case because you know,
(15:53):
frankly speaking, you do need a low cost labor setup.
You do need really large factories and the amount of
labor to assemble some of these products. Remember, even in
an iPhone, you know, the chip can come from a
you know, high cost region, but the assembly of the phone,
you know, cannot be done in a high cost region.
So I think they are in a bit of a
jam as to what to do because we have Bloomberg
(16:16):
News reported that they wanted to double their capacity in
India to ensure that they don't have to pay the
high tariff strate coming out of China. But you know,
let's see what Apple does to counter that. You know,
our best gut feeling is that they will ramp up
the investments in the US and perhaps target more on
the higher margin items such as chips or really expensive
(16:37):
max But it will be tough for them to do
this on the on the iPhone level, frankly.
Speaker 5 (16:42):
But that's the thing. Apple already promised to hire more
workers domestically here in the US and spend five hundred
billion over the next four years. So you think they
will need to add more to that.
Speaker 7 (16:52):
Either they need to add more to that or support
some of the local manufacturing, perhaps in the chip capacity,
or explain to the president how they're doing it in
the US a lot more benefits to you know, the
local workers, because you know, for President Trump to call him,
call him out, you know, out in the open, you know,
dost put him in a tough position.
Speaker 2 (17:13):
Right now, What is the Apple strategy here? Because again,
we think of some of the quote unquote China exposure.
The company that comes to the top of most people's
list is Apple because they get twenty percent of their
revenue from China. Their supply chain is fully enmeshed in China.
And I know we've talked to you, you know, for
the last several years about how they can diversify. Here
(17:36):
what is the reality in today's world for Apple?
Speaker 7 (17:40):
See, the reality is the higher value products. So let's
say that the chip that they do or they make,
you know, those are all designed in the US. It's
made by TSMC. Those plants have been shifted, some of
them to Arizona. So the higher value products can be done.
But frankly speaking, think about it, you know, lower whether
(18:01):
it's an air pod or whether it's just an assembly
of the phone, it's not that easy to just you know,
come up and then make those things in the US.
I mean it's they've been trying to perfect that over
a twenty year period, across different parts that they get
from China. The factories that employs you know, hundreds and
thousands of people. You know, it's just not easy to
move those I think they will be pushing a lot
(18:23):
more on the R and D front over here hiring
more local workers to offset some of that actim which means,
on the at least over the next few years, there
could be some downward pressure on their gross margins, you know,
in order to you know, showcase that they are investing
heavily in the US.
Speaker 5 (18:40):
How has it been like as an analyst covering all
the tire flip flops and all these big tech companies
that are at the mercy of some of Trump's pronouncements
that are sometimes really unexpected.
Speaker 7 (18:51):
I mean, really listen, it is very tough, and frankly,
we're going to see how and if this leads to
some kind of demand destruction on any of the you know,
and markets we cover. So so far, it doesn't look
like it's having an impact on the cell phone market,
it doesn't look like it's having an impact on the
cloud market. But when you look at something like consulting market,
(19:12):
I mean it is having a second degree impact because
people or companies are not sure how they're going to be,
you know, what kind of economic environment they will see
down the road, whether they'll be a recession or not.
So there has been an absolute stop and a lot
of the consulting work and a consulting related you know,
bookings or contracts out there, and I think that's kind
(19:32):
of what we are seeing, you know, at least in
the overall tech space right now.
Speaker 2 (19:36):
And Ron, thanks so much for joining us. Always appreciate
getting a couple of minutes of your time. On aur Agrana,
he's a senior technology analyst for Bloomberg Intelligency and Mandeep saying,
kind of lead our global technology research. It is a
global technology research team. We've got analysts on the ground
North America, Europe and most importantly Asia given where that
(19:57):
is in the supply chain there. So on Aurono Mende,
manage that business for us. What are you looking at?
Speaker 5 (20:02):
I'm just really kind of I'm surprised because imagine Apple,
You're a big company, trillon dollar market cap and the
president said shift out of China, so you do that
and you go to India and now they saying why
are you in India? And I just don't want to
be Tim Cook right now.
Speaker 2 (20:15):
Yeah, it could be a tough situation, but all companies
are dealing with and trying to adapt. And what thing
Tom Keen always says is companies adapt, whether it's a
global pandemic, or whether it's trade tensions. Companies adapt, consumers adapt,
and that's arguably what the tech industry and global trade
(20:36):
will do as well.
Speaker 1 (20:38):
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Speaker 7 (21:04):
YAHM
Bloomberg Audio Studios, podcasts, radio news, and Android auto with
the Bloomberg Business appum listen on demand wherever you get
your podcasts, or watch us live on YouTube.
Speaker 2 (00:15):
What I learned from our next guest years ago, which
shocked me and still to this day amazes me. The
largest supermarket chain in the United States is.
Speaker 3 (00:27):
Walmartmart.
Speaker 2 (00:28):
I never would have guessed that, And now that I
think about it, of course it is Jen Bartasha. She's
the one that kind of enlightened me on that. When
she's Bloomberg Intelligence Senior animost, she covers the retail staples
and the package goods companies. So, Jen, I'm thinking in
a world of tariffs, and I'm worried about if I'm
a retail investor, kind of the margins my retailers like
a Walmart might have having the grocery store business as
(00:52):
a traffic driver. That's got to be a good thing,
is Did we see that in Walmart's numbers today?
Speaker 1 (00:58):
Yeah?
Speaker 4 (00:58):
Hi, Paul absolutely saw that in Walmart's numbers. You know,
their growth in consumables and grocery mid single digit growth.
That means people keep coming back to Walmart to buy
their staples, and you know, that's a that's a foundational
type of thing because for Walmart, as they get these
customers doing that regular, repeat shopping and coming in consistently,
(01:22):
it really bodes well for how well they'll be able
to retain those customers once all of this market volatility
fades and people become a little less price sensitive.
Speaker 5 (01:31):
How does Walmart just really in general raise the pressure
for competitors? We have Home Depot and Target reporting out soon.
How do you think they will fare well?
Speaker 4 (01:41):
You know, I think that Walmart is really uniquely positioned
because it arguably has the best view into mainstream America
consumer of any retailer out there, because they touch such
a huge.
Speaker 3 (01:52):
Number of households.
Speaker 4 (01:53):
And so when somebody the size of Walmart says that
even their scale is a big enough to fully offset tariffs,
the read through on that is with for other retailers
who are smaller and have bigger exposure to imported goods
is rather dire because you know, you know, Walmart is
(02:16):
is the one that is probably best position to whether
it because of its scale. But that just means for
the smaller guys, it's going to be a really difficult battle,
and that there's going to be a lot more price
that has to be taken and a lot more operational
maneuvering to try to stay competitive in that in that
particular set. So Target has a lot of discretionary exposure.
(02:37):
Home depot lows they both do as well, So you
know it could be difficult season for those retailers.
Speaker 2 (02:44):
All right, full disclosure, And John Socker knows this. My
last job in this illustrious career of mine will be
as a greeter at Walmart. We hope to see. I
have never been in one because they don't have near me.
Root seventy in Brick that's going to be. It's far
the next stop here on this one. Hey, Jen, you
mentioned it, and that's kind of where I wanted to go.
(03:06):
I can see wal Bart dealing with higher tariffs in
pricing because they're Walmart. But how about the mom and
pop retailers out there on Main Street USA? How tough
is it going to be for them?
Speaker 4 (03:17):
Do you think it's It's incredibly tough, Paul, because you
know the mom and pop retailers, it's usually only a
handful of employees. It's a very set type of inventory
that they carry. They don't necessarily have the ability to
flex in and out of different product categories to to
lessen the impact of tariffs, because they're usually known for
(03:40):
a particular type of product, which is why their customers
come to them, and so you know, they're also they're
very reliant also on getting goods either directly or through
third parties that are that are imported, and so there's
just very little room in there in their operations to
be able to offset the power of what's come the
(04:03):
pricing that's going to come with these tariffs. And we've
heard anecdotally small businesses that are just saying they've had
to lay off employees already. You know, there could be
greater ramifications, you know, in terms of unemployment and things.
If small businesses are impacted to a large degree, Should
this tariff situation persist for longer than we're expecting?
Speaker 5 (04:23):
Yeah, bring up a good point because they have CFO
John David Rainey saying the rage of outcomes is pretty
quote extreme, and it is. How has Walmart have they
hinted on how they're preparing for it? I mean, we
know that they're a good barometer of the US economy
and they're really really huge, but they must still be
impacted by tariffs.
Speaker 4 (04:42):
Absolutely, they definitely will be impacted. But part of where
their advantage is is that the company has been investing
for some time behind technology like AI, and AI has
across retail, but especially for those retailers who have had
the time and the balance sheet to invest in it
gives them a lot of flexibility in their tools for
(05:03):
predicting what their need is going to be and for
responding quickly to changes in their supply chain. So you
know that investment in AI will actually pay some dividends
and probably help them navigate the tariff situation more easily.
And again that goes back to the smaller players who
don't have that kind of technology support or haven't been
(05:23):
able to make those investments. Will it'll be harder for
them to maneuver in that environment.
Speaker 2 (05:29):
So Jennifer Kroger are some big, you know, grocery store,
and I don't know, craft Food comes in and says,
cheese Whiz is going to be ten or fifteen percent
higher price to you Kroger because of teriffs. How does
that conversation go? Who's got the leverage there? Who eats it,
who takes it?
Speaker 6 (05:45):
Is it?
Speaker 3 (05:46):
How does that go?
Speaker 4 (05:48):
Yeah, it's it's usually a combination of a couple of things.
So the first thing is that because the grocers all
have private label programs, they are very very well in
formed on what cost of ingredients are, which ingredients are
being imported, you know, packaging costs. So when a counterpart
from a package food company comes to them and says
(06:10):
we need to increase prices because of X, Y, and z,
the retailer can call them out if they don't see
the same pattern that they're being given as an excuse. Now,
then there's a collaborative, a collaboration where ultimately both the
retailer and the food package the package foo company want
to you know, increase the volume sold and make sure
(06:30):
that their products are getting in the hands of customers.
So when it comes to pricing, usually there can be
a bit of a sharing in terms of cost, but
most of it does fall into the package food company
itself and that comes in the form of having to
do promotions you know, or or you know, offering discounts
and things like that to make sure that their products
(06:50):
are actually moving and that they're generating turnover and that
they're then getting some profit out of it.
Speaker 2 (06:57):
Jen, thanks so much for joining us always appreciate it.
Always learned something speaking to you. Jen Bartash's senior retail
analyst from Bloomberg Intelligence. I mean Jen had a real
career at Bloomberg. She was managing departments, managing a bunch
of people in global data. And then we asked her,
like fifteen years ago, hey, come to Bloomberg Intelligence, that
we think you'd be a really good analyst. And she
did come over, she accepted, and she's been great, and
(07:18):
now she's one of the leading voices on retail. So
another success story coming out of Bloomberg Intelligence.
Speaker 1 (07:26):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (07:40):
Checking with Mariy Shore. She's a senior Ecodana's a Columbia threadneeder.
She's up in Boston. We'd love to talk to he
ed when we get the retail sales on her because
she really spends a lot of time looking at the retailers,
the consumer, that kind of thing, so a real helpful
voice to us. Mari what did you make of the
retail sales here. I mean, I guess there's some noise
here about you know, tariffs, and did that impact kind
(08:00):
of how consumers are spending money these days? What did
you make of the retail sales number today?
Speaker 6 (08:06):
Yes, thanks Paulin Isabelle, thank you for having me. Absolutely
you said it better than I could have. The tariffs
are definitely creating some monthly noise.
Speaker 3 (08:15):
When we look year over.
Speaker 6 (08:17):
Year, the growth has been a little more consistent and
actually showed acceleration in April versus March.
Speaker 3 (08:24):
But on a month over.
Speaker 6 (08:25):
Month basis, we did see softness in April versus March,
given the pull forward that we saw in March ahead
of some tariff driven price increases that the consumer anticipated
in some big ticket categories like autos. And you know,
when I look and really step back and just getting
(08:46):
off of Walmart's earnings call, I think their tone on
the consumer is very consistent. Obviously, tariffs are creating a
lot of noise in the spending trends, but you know,
in their words, the consumer is still very focused on
value and speed of delivery, and that is what we've
been seeing for years now coming out of the pandemic.
Speaker 5 (09:07):
I'm glad you brought up consumer because for Walmart, we
saw traffic, which is the number of shoppers less of
a boost to the figure than ticket. What does that
tell you that maybe there are less shoppers, but they're
buying more expensive things or at least higher amount of tickets.
Speaker 6 (09:21):
Well, right, So that could either say they're coming in
less frequently and when they are in, they're buying a
lot more, right, they're stalking up more or to your point,
they're buying more expensive things. But we did see relative
weakness in their general merchandise category. We saw like their
(09:42):
you know, food categories up mid single digits, Health and
wellness was up high teams. A lot of that is
GLP ones, and general merchandise for them was actually down slightly,
which is worse than what we saw in.
Speaker 3 (09:58):
Q four. And so I think it's a us that
the consumer is you know.
Speaker 6 (10:02):
Coming to Walmart for their stock up trip, which is
typically what we've seen with Walmart.
Speaker 3 (10:08):
But you know, I think a lot of that.
Speaker 6 (10:12):
Intra week spend, those like fill in trips that we
talk about, you know, I think that the consumer may
be doing less of that just given their general caution
and uncertainty over what tariffs are going to do to
their spending ability in the future.
Speaker 2 (10:28):
Hey, Mari, wh when you speak to the retailers that
you talk to across your coverage area, Let's see what's
the feeling today in terms of how much they want
to pass through to customers versus how much they're willing
to kind of take in their margin here.
Speaker 6 (10:43):
Yeah, it's a great question, and it's so interesting seeing
like the uh, you know, the commentary from the retailers
versus what we see in the stock market is very different, right,
I mean, the stock market is acting as if these
tariffs are no big deal. We got some resolution, things
are going to be fine. Then you listen to the retailers.
I mean you listen to Walmart today. They're talking about,
(11:06):
you know, starting now, there will be less product on shelves.
They're going to do all they can to try to
protect pricing in their value position in faster turn categories
like food.
Speaker 3 (11:17):
But there's certain.
Speaker 6 (11:18):
Categories like toys, electronics, even some of the textile categories
like apparel and soft home where it's going to be
really hard for them to absorb the full impact of terraft.
So I think, you know, the ten percent rate for
a lot of companies is a lot more manageable. When
you talk to them about the ten percent we see
(11:39):
globally x China, they seem to feel a little bit
better about that. I think, you know, the thirty percent
in China is still too high, and the margin levels
and a lot of the categories that come out of
China are very low, and they just do not have
the ability to absorb that pricing themselves, share it with
(11:59):
their vendors who or their vendor partners, their manufacturing partners.
Speaker 3 (12:03):
We're also operating on very low margin.
Speaker 6 (12:06):
And so it's inevitable that some of that is going
to have to come through to higher prices. It's just
a question of you know, I think what the retailers
are really trying to they're really struggling with now how
to think about that trade off between price and volume.
Speaker 3 (12:21):
You know, I mean.
Speaker 6 (12:22):
During the pandemic, as everyone took pricing, we did not
see the kind of elasticity of demand that you would
typically expect to see when prices move up. And I
think how the retailers manage their unit inventories is going
to be a huge area of focus for them and
for investors during this really volatile period.
Speaker 5 (12:44):
One thing that also caught my edw with Walmart is
it said it's online business posted a quarterly profit for
the first time. Are you seeing the same trend across
the board and what does that tell you?
Speaker 3 (12:54):
No, this is very Walmart specific.
Speaker 6 (12:57):
We have seen in the e commerce space Amazon and
Walmart taking incredible share. And so when you listen to Walmart,
and they've been kind of alluding to the fact that
they were nearing this inflection and profitability for some time,
I think it's really coming from two things. That's coming
from the scale that they are now seeing as that
(13:18):
business has grown so much. And also they've talked about
how consumers are increasingly willing to pay for delivery for
expedited shipment. So if you're making dinner tonight and you
realize you forgot a certain spice, you know, you could
pay five dollars to have Walmart deliver it.
Speaker 3 (13:38):
To you in the next hour.
Speaker 6 (13:39):
And in those cases, the consumer is more willing to
pay for delivery, and I think that's something Walmart had
not expected, but it is a key I think part
of the reason why they are able to achieve e
commerce profitability. They also have, of course, the benefit of
the growth in the marketplace and addizing and fulfillment services
(14:02):
and membership.
Speaker 3 (14:03):
All of which are higher margin and are.
Speaker 6 (14:06):
Really starting to move the needle for them as we
see with Amazon. But I think Walmart and Amazon are
in a league of their own as it relates to
what they're seeing in e commerce, both in terms of
the growth that they're putting up in that business and
the profitability that they're able to achieve.
Speaker 2 (14:23):
Mari, thank you so much for joining us. As always,
Mario Sure, Senior Equity aas for Columbia Threadneedle Investment, she's
up there in Boston and she joined us. View that
zoom thing.
Speaker 1 (14:34):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Colocklay, and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (14:48):
President Trump making lots and lots of news in his
trip to the Middle East, lots of economic deals of
being announced, big big dollar amounts as well. All that
is good for the companies involved, but it does call
out Apple a Tim Cook not there with him, as
Jensen Wang is in Nvidia also suggesting that Apple should
stop moving iPhone production to India. What is that all about?
(15:10):
Anurag Rana technologychannels for Bloomberg Intelligence, he covers Apple, he
covers all this tech stuff for us in the burgeoning
tech capital Chicago, Illinois, anurag Apple computer. They're trying to
diversify their supply chain, maybe get a little bit less
reliant on China taking some of that over to India.
There's a president not like that.
Speaker 7 (15:32):
Yeah, we just heard that. In fact, it looks like
Apple cannot you know, catch a break right now. We
thought that the US China deal would probably put a
lot of those fears to rest. But you know, it
just looks like that. You know, it's not He's not
happy with the Apple moving some of that iPhone facilities
to India. Now that is the case because you know,
(15:53):
frankly speaking, you do need a low cost labor setup.
You do need really large factories and the amount of
labor to assemble some of these products. Remember, even in
an iPhone, you know, the chip can come from a
you know, high cost region, but the assembly of the phone,
you know, cannot be done in a high cost region.
So I think they are in a bit of a
jam as to what to do because we have Bloomberg
(16:16):
News reported that they wanted to double their capacity in
India to ensure that they don't have to pay the
high tariff strate coming out of China. But you know,
let's see what Apple does to counter that. You know,
our best gut feeling is that they will ramp up
the investments in the US and perhaps target more on
the higher margin items such as chips or really expensive
(16:37):
max But it will be tough for them to do
this on the on the iPhone level, frankly.
Speaker 5 (16:42):
But that's the thing. Apple already promised to hire more
workers domestically here in the US and spend five hundred
billion over the next four years. So you think they
will need to add more to that.
Speaker 7 (16:52):
Either they need to add more to that or support
some of the local manufacturing, perhaps in the chip capacity,
or explain to the president how they're doing it in
the US a lot more benefits to you know, the
local workers, because you know, for President Trump to call him,
call him out, you know, out in the open, you know,
dost put him in a tough position.
Speaker 2 (17:13):
Right now, What is the Apple strategy here? Because again,
we think of some of the quote unquote China exposure.
The company that comes to the top of most people's
list is Apple because they get twenty percent of their
revenue from China. Their supply chain is fully enmeshed in China.
And I know we've talked to you, you know, for
the last several years about how they can diversify. Here
(17:36):
what is the reality in today's world for Apple?
Speaker 7 (17:40):
See, the reality is the higher value products. So let's
say that the chip that they do or they make,
you know, those are all designed in the US. It's
made by TSMC. Those plants have been shifted, some of
them to Arizona. So the higher value products can be done.
But frankly speaking, think about it, you know, lower whether
(18:01):
it's an air pod or whether it's just an assembly
of the phone, it's not that easy to just you know,
come up and then make those things in the US.
I mean it's they've been trying to perfect that over
a twenty year period, across different parts that they get
from China. The factories that employs you know, hundreds and
thousands of people. You know, it's just not easy to
move those I think they will be pushing a lot
(18:23):
more on the R and D front over here hiring
more local workers to offset some of that actim which means,
on the at least over the next few years, there
could be some downward pressure on their gross margins, you know,
in order to you know, showcase that they are investing
heavily in the US.
Speaker 5 (18:40):
How has it been like as an analyst covering all
the tire flip flops and all these big tech companies
that are at the mercy of some of Trump's pronouncements
that are sometimes really unexpected.
Speaker 7 (18:51):
I mean, really listen, it is very tough, and frankly,
we're going to see how and if this leads to
some kind of demand destruction on any of the you know,
and markets we cover. So so far, it doesn't look
like it's having an impact on the cell phone market,
it doesn't look like it's having an impact on the
cloud market. But when you look at something like consulting market,
(19:12):
I mean it is having a second degree impact because
people or companies are not sure how they're going to be,
you know, what kind of economic environment they will see
down the road, whether they'll be a recession or not.
So there has been an absolute stop and a lot
of the consulting work and a consulting related you know,
bookings or contracts out there, and I think that's kind
(19:32):
of what we are seeing, you know, at least in
the overall tech space right now.
Speaker 2 (19:36):
And Ron, thanks so much for joining us. Always appreciate
getting a couple of minutes of your time. On aur Agrana,
he's a senior technology analyst for Bloomberg Intelligency and Mandeep saying,
kind of lead our global technology research. It is a
global technology research team. We've got analysts on the ground
North America, Europe and most importantly Asia given where that
(19:57):
is in the supply chain there. So on Aurono Mende,
manage that business for us. What are you looking at?
Speaker 5 (20:02):
I'm just really kind of I'm surprised because imagine Apple,
You're a big company, trillon dollar market cap and the
president said shift out of China, so you do that
and you go to India and now they saying why
are you in India? And I just don't want to
be Tim Cook right now.
Speaker 2 (20:15):
Yeah, it could be a tough situation, but all companies
are dealing with and trying to adapt. And what thing
Tom Keen always says is companies adapt, whether it's a
global pandemic, or whether it's trade tensions. Companies adapt, consumers adapt,
and that's arguably what the tech industry and global trade
(20:36):
will do as well.
Speaker 1 (20:38):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
ten am to noon Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
always on the Bloomberg terminal
Speaker 7 (21:04):
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