Caesars Agrees to Be Taken Over by Fertitta in $5.7 Billion Deal

Summary

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Bloomberg Intelligence Podcast – Detailed Episode Summary

Episode Title: Caesars Agrees to Be Taken Over by Fertitta in $5.7 Billion Deal
Date: May 28, 2026
Hosts: Scarlet Fu & Paul Sweeney
Key Guests: Jodi Laurie (Bloomberg Intelligence credit analyst), Caroline Hyde (Bloomberg News Tech Co-Anchor), Anurag Rana (Bloomberg Intelligence Technology Analyst), Mary Ross Gilbert (Bloomberg Intelligence Senior Retail Analyst)
Main Theme: In-depth analysis of Caesars’ $5.7 billion acquisition by Fertitta Entertainment, software/tech earnings highlights, and retail market insights.

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Episode Overview

This episode examines the high-profile takeover of Caesars Entertainment by Tillman Fertitta’s Fertitta Entertainment, focusing on the complex financing, market reaction, and implications for bondholders. Additionally, the conversation shifts towards recent tech and retail earnings, discussing resilience and concerns in both sectors. The experts analyze the latest trends, potential pitfalls, and what investors should watch in the current landscape.

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Main Segment: Caesars Entertainment Takeover by Fertitta

Summary:
Scarlet Fu and Paul Sweeney open the discussion with Bloomberg Intelligence’s Jodi Laurie to break down the $5.7 billion deal in which Fertitta Entertainment acquires Caesars, exploring the financing structure, leverage, and market sentiment—especially from bondholders.

Key Discussion Points & Insights

• Deal Structure and Background

  • Fertitta paying Caesars shareholders $31/share in cash.
  • Substantial borrowing required to fund the purchase, with market rumors circulating for months prior to the announcement.
  • “This has been rumored about since actually around the time of the Ides of March... I was super excited that the announcement would happen on the Ides of March, just for all the references with Caesars.” — Jodi Laurie (02:59)
    • Memorable for its wry historical nod.

• Bondholder Concerns and Market History

  • Bond market discomfort is rooted in Caesars’ “troubled history”—previous bankruptcy and out-of-bankruptcy transaction (Eldorado acquisition).
  • “Even so, I think a lot of bondholders, for good reason, are a little bit uncomfortable by this story in general.” — Jodi Laurie (03:28)
  • Key risk: Leverage levels are high, potentially north of 6x net debt/EBITDA.
    • “I've got EBITDA of only, like, three points. I got north of six times on a leverage basis. Jodi, people like you, you guys don't like that.” — Paul Sweeney (03:51)
    • “No. No, we don't, Paul.” — Jodi Laurie (03:58)

• Change of Control Provision Uncertainty

  • “The big question that we're grappling with is whether or not the change of control provision gets executed... We're not sure at the moment... every indication we're seeing is that perhaps that's not going to get executed, which means that… it's only, you know, about a $6 billion price tag in terms of borrowing, as opposed to an $18 billion price tag.” — Jodi Laurie (03:58)

• Potential Impact on the Bond Market

  • If the provision is not triggered, Fertitta can avoid refinancing all of Caesars’ existing debt; otherwise, refinancing $18B would be required.
  • “That's a big nut to sort of grapple with.” — Jodi Laurie (04:51)
  • Bondholders may be forced to ‘ride along’ and accept increased leverage.

• Investor Appetite and Pricing

  • Surprised by continued bondholder and creditor appetite in the current market, but concedes: “Will they have to pay up for it? It's very possible.” — Jodi Laurie (05:24)
  • Points out Caesars had pivoted to deleveraging, but with stagnant EBITDA, future cash flow to service debt is questionable.
  • “...if they're going to be paying up on an interest basis... nobody's going to be looking at this lighthearted.” — Jodi Laurie (05:46)

Notable Quotes

• “It’s a scenario where nobody’s going to be looking at this lighthearted, if and when the deal goes through and if and when they do issue debt, I think there’s going to be a lot of people calling over many documents to decide if it makes sense for them.” — Jodi Laurie (06:13)
• “Management was focused...on deleveraging but they weren’t getting EBITDA up...Bringing down debt...but EBITDA wasn’t budging.” — Jodi Laurie (05:34)

Timestamps & Segments

• [02:14] – Episode pivots to the Caesars Takeover story.
• [02:59] – Jodi Laurie’s first analysis of the deal’s context and bondholder discomfort.
• [03:58–04:51] – Technical breakdown of leverage and refinancing risk.
• [05:24–06:39] – Discussion of market sentiment, structure, and transaction risks.

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Tech Earnings Highlights

Summary:
Caroline Hyde joins for rapid analysis of tech earnings—focusing on Snowflake, Marvell, and Salesforce—with an eye on how AI-driven growth, consumer spending, and subscription models are shifting investor perceptions.

Key Discussion Points & Insights

• Snowflake (09:17–10:03)

  • Stock surges 35%, adding $22B in market cap due to strong growth (product revenue up 34%), AI integration, new coding tool (COR) with 7,000+ subscribers, and major infrastructure deals with Amazon.
  • “It's all about AI being intertwined into this business...They can build out to yet more customers and also they get more efficient, cheaper chips.” — Caroline Hyde (09:17)

• Marvell (10:13–11:15)

  • Despite positive outlook (raising next two-year sales outlook by 5–10% due to strong data center demand and custom AI chips), shares down after recent rapid gains, likely from profit taking.

• Salesforce (11:15–12:30, 16:24–21:32)

  • Salesforce reports record quarter (revenue and cash), but only up 1% post-earnings—market wants acceleration in organic growth, not just M&A contributions.
  • “People really want to see this acceleration of organic growth...there is a reticence in IT spending...we're nervous about the macro.” — Caroline Hyde (11:37)
  • Salesforce shifting toward AI usage-based products and away from pure per-seat subscription model (confirmed by Anurag Rana).
  • “...They are actually pivoting very strongly towards AI and...usage based products and the momentum is high.” — Anurag Rana (17:04)
  • Transition is causing slower organic seat growth as employers are not adding headcount; subscription and consumption models co-exist.
  • “That's the reason we are not so bullish in terms of the organic growth rate of software right now. Because the number of seats are not growing, people are not hiring at that same pace they were.” — Anurag Rana (19:17)
  • Model shake-up means slower profit growth/profitability as customers and software companies experiment with new payment structures.

Notable Quotes & Timestamps

• “Instead of just being seat based, it's going to be either entirely consumption based or a combination of consumption and subscription.” — Anurag Rana (19:17)
• “We think it's going to be more of an enterprise agreement where somebody like Salesforce or a Microsoft will tell a company, you spend this much money with me every month and we’re going to give you all these products that go with it.” — Anurag Rana (21:09)

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Retail Market Updates

Summary:
Mary Ross Gilbert joins to explore Kohl's, Gap, and the broader consumer landscape, focusing on execution, brand strategy, and resilient consumer behavior.

Key Discussion Points & Insights

• Kohl’s (24:39–27:06)

  • Shares up 16% on ‘less-bad-than-expected’ results, although sales are still declining (comps down 1.1% but beat negative estimates).
  • Success centered on private label brands, low price point “deal bars”, and impulse items.
  • “These are the things that their low core, low income consumer really wants. And so they're seeing success in women's particularly with their so juniors line...that was up 10% in the quarter.” — Mary Ross Gilbert (25:12)
  • Kohl’s’ CEO credited with turning focus to proprietary lines after years of declines; current results make for easier future improvement due to prior weakness.
  • Still faces stiff competition from off-price retailers like Burlington and TJX.

• Gap (28:21–30:01)

  • Noteworthy sales momentum from collaborations (e.g., Victoria Beckham, Malbon Golf).
  • “These collaborations, the campaigns all create a wonderful halo. And when you speak to Millennials and Gen Z, you will hear them talk about Gap.” — Mary Ross Gilbert (28:49)
  • Gap (the brand) now sees stronger comparable sales growth than Old Navy, thanks to these campaigns.

• Consumer Resilience

  • Despite low-end focus, both off-price and more traditional retailers report continued consumer willingness to spend on “something that really makes them happy,” even amid broader economic doubts.
  • “...the consumer, even at the very low end, is really proving resilient...So I still think that if there's some fresh newness or something that's exciting and they have to have it...they're going to make that discretionary purchase.” — Mary Ross Gilbert (30:07)

Notable Quotes & Timestamps

• “...they were cycling four years of stack declines...But these little initiatives seem to make sense...spring seasonal merchandise was up in the quarter, so that was encouraging.” — Mary Ross Gilbert (27:14)
• “...we're not seeing any pushback or signs of hesitancy on the consumer part in spending.” — Mary Ross Gilbert (30:07)

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Memorable Lighter Moment

• Caroline Hyde recounts her team winning an Emmy for their Bloomberg Originals tech series:
  • “We did. A little tired today because the Emmys—my first time going and yeah, we won...It was our first series that was up for the award...we won an Emmy. I'm so excited.” — Caroline Hyde (12:36)
  • A rare celebratory note in the midst of financial analysis.

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Episode Structure: Key Segments & Timestamps

• [02:14–06:39] – Caesars Buyout: Bondholder/credit analysis (Jodi Laurie)
• [09:17–12:30] – Tech Earnings: Snowflake, Marvell, Salesforce (Caroline Hyde)
• [16:24–21:32] – Deep dive: Salesforce’s business transition (Anurag Rana)
• [24:39–30:07] – Retail Roundup: Kohl’s, Gap, and consumer trends (Mary Ross Gilbert)
• [12:36] – Special Moment: Caroline Hyde’s Emmy win

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Conclusion

This episode provides a thorough examination of a major gaming industry deal and its financial underpinnings, combined with fast-moving analysis of technology and retail earnings. Experts highlight both opportunities and minefields across sectors—from complex credit market nuances and AI-driven business models to consumer brand experimentation and persistent spending power at the low end. The tone is insightful, energetic, and deeply informed, offering clarity on intricate deals and shifts shaping the investment landscape.

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Transcript

[Scarlet Fu]

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Bloomberg Audio Studios Podcasts Radio News you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Scarlet Fu]

All right, it's Thursday, but there's still some M and A deals about. It's a. It's a fairly sizable one, if not one that we had anticipated for a while.

[Paul Sweeney]

Yeah, and I'm glad we have our next guest because it's all about the debt side of the balance sheet.

[Scarlet Fu]

All right, let's talk to Jodi Laurie. Jodi Laurie is one of our credit analysts here and she covers the travel and leisure sector for us here at Bloomberg Intelligence. And it's about Caesars agreeing to buy I should say being taken over by Toman Fertitta Fertitta Entertainment is paying Caesar's shareholders $31 a share in cash buy. But in order to pay that cash, they're going to have to take out some debt. So, Jodi, this is something that, you know, feels like it's a long time coming because Tillman Fertitta has been working on this for a while. Right, right.

[Jodi Laurie]

So, Scarlett, I mean, I think, you know, this has been rumored about since actually around the time of the Ides of March. I was super excited that the announcement would happen on the Ides of March, just for all the references with Caesars. Unfortunately, we had to wait another couple months. That said, I think, you know, it's been so compelling about this story, and I think what sort of brings up a lot of uncomfortable in the bond market is the history with the name now, mind you, the Caesars now is actually El Dorado that bought Caesars out of bankruptcy, and that's not the same Caesars that we're talking about. That was the leverage buyout that went through the restructuring. And even so, I think a lot of bondholders, for good reason, are a little bit uncomfortable by this story in general.

[Paul Sweeney]

So I've got a net debt to ebitda, and I went through the Chase Manhattan bank credit training program way back in the day.

[Scarlet Fu]

Nice, nice.

[Paul Sweeney]

But I've got EBITDA of only, like, three points. I got north of six times on a leverage basis. Jodi, people like you, you guys don't like that.

[Jodi Laurie]

No. No, we don't, Paul. And to make matters worse, the big question that we're grappling with is whether or not the change of control provision gets executed. Not to go into too much detail, but to make it as simple as possible. In the course of a transaction, there's some bond terms that allow bondholders to put the bonds back to the company. And so in those instances, you get 101% of par. And that's not potentially happening here. We're not sure at the moment. And what we're seeing, though, is that if you look at the bonds, they're not trading like they would be put back at 101% of par. So every indication we're seeing is that perhaps that's not going to get executed, which means that. That it's only, you know, about a $6 billion price tag in terms of borrowing, as opposed to an $18 billion price price tag in terms of borrowing.

[Caroline Hyde]

So that's a.

[Jodi Laurie]

That's a big nut to sort of grapple with, is whether they have to refinance all that almost $12 billion of debt, or if they just have to issue new debt and lever up the balance sheet further and bondholders are along for the ride.

[Scarlet Fu]

Okay, so any way you look at it, there's going to be a lot of moving parts here in order to get this deal done. Just. Jodi, you mentioned that there's some discomfort here for Caesar's bondholders. Is this going to get in the way of there being enough demand? I mean, is this going to affect pricing and the concessions that might need to be made?

[Jodi Laurie]

I think, Scarlett, it really depends on timing. It depends on the communication there. We've, we've been really sort of surprised over and again by the appetite of, of bondholders and potential creditors out there. Now, will they have to pay up for it? It's very possible. And I think that that creates the sort of interesting component too, is that if you're talking about a company that is already having issues from a profitability perspective, cash flow hasn't been where it wants to be. Management was focused up until Icahn got involved last year. They were actually focused on deleveraging, but they weren't getting EBITDA up. So they were bringing down debt and they were refinancing debt and they were improving the capital structure. But EBITDA wasn't budging. So now we're in a scenario where we say, okay, we're, you know, lever up the company further from a net profit, a cash flow standpoint. What does that necessarily mean if they're going to be paying up on an interest basis? So it's really a complicated conversation and I think it's one where nobody's going to be looking at this. Lighthearted when they're, when they, if and when the deal goes through and if and when they do issue debt, I think there's going to be a lot of people calling over many documents to decide if it makes sense for them.

[Scarlet Fu]

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[Podcast Host / Narrator]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Paul Sweeney]

Scarlet Fu and Paul Sweeney live here in our Bloomberg Interactive Brokers studio, streaming live on YouTube as well. A lot of tech news as always. And so fortunately we have an expert that can help us out here, Caroline Hyde Btech co anchor for Bloomberg News, joining us here in our studio. Caroline, let's start with Snowflake. There's a software company that said we're doing just fine, thank you. And the stock is up like 30% or something crazy.

[Caroline Hyde]

It is adding $22 billion to its market cap on the day. It is surging 35% because its product revenue is up 34% and it guided that. That's the kind of rate you should be expecting. This growth rate is going to be about 31% for the full year. And it's all about AI being intertwined into this business. They've got COR, which is their coding tool, more than 7,000 subscriptions to that already. And it's just adding to the annual revenue run rate where you can see monetization of generative AI. And also they're striking big deals with Amazon, which seems to be a bit of a win win. Yes Amazon gets $6 billion of snowflakes for infrastructure and chips. But Snowflake in return gets more deeply intertwined into Amazon's business model. They can build out to yet more customers and also they get more efficient, cheaper chips. So the idea is they bring down their own computing costs.

[Scarlet Fu]

Okay, so that's the kind of news that investors want to see. Like Marvell is a chip maker, right?

[Podcast Host / Narrator]

It is.

[Scarlet Fu]

And the stock is down. But the headlines sound pretty positive.

[Caroline Hyde]

Yeah, like this is a company that many had been excited running into. Like it was up about 100% so far year to date and the rally had been extending overnight. Maybe we pull back a bit today. Maybe there is profit taking but shares initially post market had been in the pre market have been higher. As the results the outlook look pretty good. It's all about again it's all about Asics is about custom chips being built. This is about the future of how we're not just Nvidia as the only key winner. Look, with Amazon striking its deal with Snowflake, it's seeing its Graviton chips being used a little bit more, maybe replacing an intel and Blue bank. Intelligence is saying around Marvell that, that they're raising the fiscal 2020, 2027 and 2028 sales outlook by about 5%, 10%. Stronger data center demand is really what's driving this accelerating growth. This is what investors want to see, a reacceleration of growth, organic acceleration of growth. And that is coming in the back of whether it's AI adoption, whether it's AI infrastructure, no matter how you cut it. But maybe with some of these stocks they have just run so far so fast. Remember like the likes of Snowflake have been pretty beaten up running into these.

[Paul Sweeney]

Now it's interesting you mentioned like with Snowflake if you put up the numbers and that's what a lot of like Anuragrana was saying. Hey these software companies, they've been beaten up. So the only recourse you have is to put up the numbers.

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Snowflake did.

[Paul Sweeney]

I thought Salesforce did last night as well. But stocks only up like 1% and the guidance was a little tepid relative to expectations. So maybe they didn't get the convincing job that they needed.

[Caroline Hyde]

I mean what more can Mark Benioff say apart from repeating that was a record quarter and it was record sales and record cash pile. But people really want to see this acceleration of organic growth. Now we know that Mart Benioff has been very good at acquisitions over the years and Informatica was helping with this latest quarter and we saw an addition of revenue there. But how much of this is actually Salesforce's bread and butter, more subscriptions, more bums on seats is kind of the way they're still currently asking for to be paid here. And with Anuragrant has done such great work from Bloomberg Intelligence side saying look there is still actually apart from AI there is a reticence in IT spending right now we are nervous about the macro. So is Agent Force going to make up for that? The annual revenue run rate there is going to be $1.2 billion. That's nothing to be sniffed at. But in the grander scheme of revenues for, for, for CRM for this Salesforce, it's only a few percentage points. We need to see more addition there.

[Scarlet Fu]

I think great context. And Caroline, before we let you go, I understand that you were part of a team that won an Emmy.

[Caroline Hyde]

We did a little tired today because the Emmys my first time going and yeah we won for primer we do on Bloomberg Originals. We do a really interesting 20 minute primer on anything to do with technology really. We've had. It was our first series that was up for the award and then all about magnets and how important geopolitically they are, why China versus us. What the. And these things keep coming back. We've got the latest. We just finished the latest series, Series two where it's about nuclear, it's about semiconductors, it's about things that you're hearing about time and time again. How can you get an evergreen non hyped view on what this technology really means? Cut through the jargon and we won an Emmy. I'm so excited. Well they're back being like etched into. Apparently they're quite expensive. You get one for free which Alan Jeffries has got, who's the amazing producer on the show. And apparently we've got to wait a few weeks for ours.

[Scarlet Fu]

You have to order the rest.

[Caroline Hyde]

Got to order the rest.

[Scarlet Fu]

I see.

[Paul Sweeney]

Let's just walk around with it.

[Caroline Hyde]

And I walked. I've got a lot of photo.

[Mary Ross Gilbert]

I'm just going to.

[Caroline Hyde]

I'm going to throw photos your way.

[Scarlet Fu]

You can dine out on that one for a while. Stay with us. More from Bloomberg Intelligence coming up after this.

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you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Paul Sweeney]

Well, one of the derivative plays of the growth of AI has been who's going to potentially lose in an AI world? And a lot of folks are calling out, you know, earlier this year, software Stocks, particularly software as services stocks.

[Scarlet Fu]

Yep.

[Paul Sweeney]

Names we've kind of all thought of as kind of Teflon names like a salesforce.com Salesforce reported numbers last night. I don't know, the numbers look really good to me. The stock's up 1% but they got to convince the street that they can continue to grow in a world of AI. So did they get it done last night? Anuragrana joins us, technology analyst for Bloomberg Intelligence. Anra, what did you hear from CRM Salesforce from their quarter?

[Anurag Rana]

So one of the most important things we learned yesterday was they are actually pivoting very strongly towards AI and you know, instead of subscription but usage based products and the momentum is high. But what happens is whenever you go through this transition when you don't grow seats, you will see a little bit of blip in terms of the bookings growth. So organically if you take out Informatica acquisition we are still looking at, you know, soft 8, 9, 10% or so booking growth at this point. And I think that's where some of the concerns are on the positive side, as I said, their usage of token is actually skyrocketed and the company actually was very confident in calling out a second half rebound in organic sales growth. And I think we're all trying to figure out whether that will happen or not.

[Caroline Hyde]

Right.

[Scarlet Fu]

And of course Salesforce's own AI tool is called Agent Force and that's something that has actually seen revenue pick up over the past couple of months and years. On rock, you had mentioned the Informatica purchase. Does the advent of AI and the threat of IT taking over software companies are taking over the roles of software companies mean that Salesforce needs to do more M and A.

[Anurag Rana]

So I think the problem, you know, company like Informatica, which is a company that does software for data management, I think this is where the biggest difference is going to be between consumer AI and enterprise AI because data is the biggest differentiator for enterprise AI. So company needs to, all the companies in the world need to figure out what is their data strategy, how are they going to take a look at their internal data, whether that's finance data, customer service data, how are they going to pull all of that together and then they're going to train that or fine tune that with a large language model and that's where Informatica comes in. So to your broader questions, Salesforce should be doing more acquisitions but frankly speaking, yesterday we saw a massive buyback and I think that's what I like more at this point. Given where the stock is rather than acquisitions.

[Paul Sweeney]

Anurag, talk to us about how these software companies typically generate the revenue. I'm particularly interested in the in the seat, the per seat model, how that works and how I may disrupt that. Because that's what I'm understanding is maybe

[Anurag Rana]

a risk point that is single biggest important factor right now. In fact, that's the reason we are not so bullish in terms of the organic growth rate of software right now. Because the number of seats are not growing, people are not hiring at that same pace they were. In fact, you see layoffs right now. So when you see that, you know, whether you're selling HR software or software to salespeople, you're going to see a decline in that. What the micro what Microsoft is basically telling people is it's not going to be just a subscription based model anymore, it's going to be subscription and a usage based models. Which is just because you have a subscription to Gemini or a Copilot, that doesn't mean you can just burn all the tokens that you want. You will get up till a certain amount tokens to burn and after that you're going to be charged or metered for that use. We see that in coding tools right now. We see that with cloud computing services that's on AWS infrastructure. And I think a lot of that model comes to the SaaS model that instead of just being seed based, it's going to be either entirely consumption based or a combination of consumption and subscription.

[Scarlet Fu]

Is that something that investors have priced in already on rug or is that something they're still working out?

[Anurag Rana]

I think one of the negative things about the software industry is that because of that disruption in the model they will not be as profitable at this point. And that's partially the reason why the valuations are going down. A lot of these companies are making slow pivot to that shift because on the buyer side you really don't want to sign up for an unlimited plan without knowing what your token bill will be by the end of the month or the end of the quarter. At the same time, the software company does not want to give up that lucrative, very high margin seed based business. So I think what we are seeing is a little bit of both companies are experimenting with pricing models that are consumption based. The buyers are doing the same thing. And I think it will take I think two to three years before we finally figure out what combination of seed based and consumption based model wins. We think it's going to be more of an enterprise agreement where somebody like Salesforce or a Microsoft will tell a company, you spend this much money with me every month and we're going to give you all these products that go with it.

[Scarlet Fu]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Scarlet Fu]

Coles shares are up 16% on better than expected results. When I say better, it just means compared to estimates because the numbers are still going in the wrong direction here. We're still looking at a loss for the bottom line and comparable sales continue to be in the negative range. Mary Ross Gilbert is our senior equity analyst covering retail and joins us now with more especially let's let's start with Kohl's. Because I mentioned comparable sales down 1.1%. Analysts were looking for a drop of 1.67%. What is Kohl's doing differently to stem the tide?

[Mary Ross Gilbert]

Yeah, Scarlet. So what Kohl's is doing is they've really ramped up their private brands. Those are the opening price point items. And these are the things that their low core, low income consumer really wants. And so they're seeing success in women's particularly with their so juniors line. So that's their own proprietary brand and that was up 10% in the quarter. The overall proprietary brands was up 6%. But remember that they're also cycling a period in which private brands was previously de emphasized. And so with the current CEO, Michael Bender, when he came on board, that was the first thing he did was ramp up private brands. And that's the reason why you're starting to see sales lift there. But Scarlett, you raised a valid point. Sales were still down. They were down 1.1%. They were cycling four years of stack declines, really three if you exclude 2021 when they were really benefiting from that sort of post Covid lift. So you know, yeah, it's sales are not in the right direction yet. Could they get there by the fourth quarter maybe? All of the initiatives that they're doing with these deal bars, you know, these are items that are priced at like 499, 599 and you know, everything is under $10. Same with the toy towers that they have. And then Also they have impulse items. And so all of those little things add to the basket and that's helping to minimize the declines in sales. But again, they're cycling four years of stack declines going forward, so that makes for an easy comparison. And when we look at the data, we're seeing that the second quarter is tracking in line to slightly better than consensus estimates for 1% sales decline in the second quarter.

[Paul Sweeney]

How much of this is kind of the market they're in, the segment they're in, versus their own execution?

[Mary Ross Gilbert]

Well, actually, Paul, so it's really, it's their own execution. And so the current CEO, and he's like the fourth that they've had in the last probably four years, it seems like he's making the most progress. But again, we are coming from a long period of sales declines. But these little initiatives seem to make sense. They're doing a better job with planning and allocation. So there's spring seasonal merchandise was up in the quarter, so that was encouraging. And they learned that because they sort of missed sales in the fall last year. The other thing is they've right sided their promotional activity. They missed out on that during the crucial holiday period. So now they've really ramped that up because let's face it, in the first quarter There was a $2.6 billion gain just in off price sales just from the big three. So they're continuing to lose share to the big three and off price. You know, we just had Burlington's numbers out today. Their comparable sales were up 6%.

[Scarlet Fu]

Yeah. And then let's not even get into the TJX of the world, which are kind of in their own category. I want to get your take on a more traditional retailer, kind of a legacy retailer, and that's Gap. Gap will be reporting results as well. It's got a number of different brands. Old Navy, Banana Republic, and of course the, I guess they call it just the blue brand. Gap. Overall, I think about Gap and how it's really picked up a lot of cachet of late. There is a collaboration with, I think Victoria Beckham was it.

[Mary Ross Gilbert]

Absolutely, yeah.

[Scarlet Fu]

And things like that get people's attention. I don't know if it's translating into sales though, is it?

[Mary Ross Gilbert]

Oh, it absolutely is translating into sale. I mean, sales. When you look at their comparable sales gains, they've been higher than that of Old Navy. Old Navy is their largest brand. It's about 56% of revenues. Gap is the next largest brand and that's, you know, almost 30% somewhere around there. And so no, they've been experiencing very strong comp gains there. I think what they're looking for in the quarter is, you know, somewhere around that 3 to 4% for the gap brand. So you're right, you're seeing some strength. And I think that these collaborations, the campaigns all create a wonderful halo. And when you speak to Millennials and Gen Z, you will hear them talk about Gap. So in fact, I'm wearing a collab from last year. This is Gap x Malbonne. It's a favorite golf brand and I really like it and I hope they come out with another one that one and then do one I also like like the Doan collab as well. So, so it does work by it does work.

[Paul Sweeney]

So what are your companies, Mary? What are they saying just about the consumer in general these days?

[Mary Ross Gilbert]

Paul what we're finding out is that the consumer, even at the very low end, is really proving resilient. So in fact, that was something that Burlington noted, that they haven't seen any sign of weakness. And of course, in the off price, their customer base, most of their customers are really at the very low end. They go paycheck to paycheck. And Kohl's is sort of similarly positioned in terms of their core customer. So same sort of thing. Except it's hard with Kohl's because there's other issues going on in terms of execution. But generally with all the retailers that have reported so far, we're not seeing any pushback or signs of hesitancy on the consumer part in spending. So I still think that if there's some fresh newness or something that's exciting and they have to have it, maybe they might pass up on buying a favorite food brand in the grocery store or cut back there. But if there's something that really makes them happy, I think they're going to make that discretionary purchase. Particularly since really with a low unemployment rate, when you have a job, you feel pretty good.

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