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- [00:01]
Baillie Gifford Narrator
What is Actual Investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Bailey Gifford Actual Investors Find out more@baileygifford.com.
- [00:29]
Paul
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is, you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public you can put together a multi asset portfolio for the long haul. Stack stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing.
- [01:13]
Public Investing Disclaimer Voice
All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member finra and SIPC. CryptoTrip provided by ZeroHash complete disclosures available@public.com.
- [01:28]
Chase for Business Announcer
Disclosures being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances, from banking to payments to credit cards all in one place with their digital tools. Plus access online resources designed to help your business thrive. Learn more@chase.com business chase for business make more of what's yours. The Chase Mobile app is available for select mobile devices. Message and data rates may apply. JP Morgan Chase Bank NA Member FDIC Copyright 2025 JPMorgan Chase &.
- [02:05]
Bloomberg Intelligence Podcast Announcer
Co.
- [02:09]
Bloomberg Audio Studios Podcasts Radio news.
- [02:16]
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.
- [02:29]
Paul
YouTube. A lot of tech stories out there, including the one here, Microsoft here. The question is, I guess the information was out earlier that multiple Microsoft divisions lowered how much? Salespeople are supposed to grow their sales of certain air products after many missed sales goals in the fiscal Year ended June. That's what the information reported earlier today. Microsoft though has not lowered sales quotas and targets for its salespeople. That's according to cnbc. They reported that on air citing an email statement from Microsoft. So I don't know what's going on out there. Microsoft stocks down a little bit here. Anuragrana, technology analyst at Bloomberg Intelligence joins us here. Anrak just kind of put that information reporting the CNBC kind of rebutting it. I mean just give us a sense of kind of AI sales, how this thing is kind of progressing because I can't imagine there's any material slowdown in AI from what I've.
- [03:21]
Anurag Rana
Heard. Yeah Paul. So when you look at there are two different elements of it. One is the infrastructure piece of it. Well there is no slowdown in Microsoft at that point. In fact that Microsoft is capacity constraints right now. But to be honest that's not the sales quota. Somebody is looking at it that just comes in because you're hosting somebody's model or you're trying to get your hosting ChatGPT. The sales quotas would be for products such as, you know, Microsoft copilot, office copilot, GitHub copilot, all those products. And you know that's not same for everything. There are certain products that sell better than the others because of the use case of it. GitHub Copilot for example because it's a coding software platform. The Microsoft Office Copilot is a good piece of software or Copilot but it's very expensive. It's I think $30 per user per month. So it's not an apples to apples comparison throughout the board. One of the things that we've been talking about is even when you look at the broader tech spending there is a big slowdown when you exclude AI. So that could be one that enterprise are not comfortable spending that level of money right now on those individual software pieces. The second piece could be the implementation part of it because you're buying these sometimes this data products that you have to include in your core software or your core applications and that may take time. So there is a lot to to be digest from a macro piece. I don't think there is any.
- [04:46]
Interviewer
Slowdown. Honorang how is Microsoft tracking against its competitors in terms of AI.
- [04:51]
Anurag Rana
Software? It is doing much better than everybody else. But again with the caveat because they host ChatGPT this is when they invested in ChatGPT. You know, I don't know, six, seven years ago. That is part of that thing was when you're running that application, it runs on their cloud. So when you see that, you know, within a three year period you have what, 500, 600 million users out there. When we use ChatGPT, a large portion of that revenue flows into Microsoft cloud. So when they are the ones that have seen the first phase of the big benefit of AI. But as we have said many times before, all the other vendors will see that down the road when adoption grows in other areas of the.
- [05:32]
Paul
Ecosystem. Salesforce reports, after the close here, what should we expect from.
- [05:38]
Anurag Rana
Them? Yeah, it goes back to the first piece of what I said was enterprise spending is weak. When you're looking at Fortune 2000 companies, they are not hiring at that same pace that they used to and we will exclude companies from it. And that weighs on the sales of somebody like a Salesforce, somebody like a workday because they bill on a per head basis. So when these companies are not hiring at that same rate, Salesforce has a tough time to grow their subscription base. And we think it is going to be very much in line with what they had last time, somewhere around 9, 10%, which is not bad, but it's not very exciting as.
- [06:17]
Paul
Well. I mean, is that enough for the stock to be down as much as it is here to date? I mean it just seems like 30% down. Exactly down 30% for this is a company that just has been such a great growth.
- [06:30]
Anurag Rana
Story. Yeah, when you look at last year, there was a lot of excitement when they launched a product called AgentForce, which was their answer or the answer to the rest of the universe. But what happened was the adoption rate has not been as strong as the initial. You could say the demo was. You look at the stock price kind of went quite a bit up when they first launched that particular product. Now this year it's not showing up in the numbers. And this is one of the reasons you're not seeing the stock recovering from.
- [07:00]
Interviewer
That. What about Oracle? It seems like there's some worries around artificial intelligence there as well. We're looking at a credit risk gauge reaching its highest since.
- [07:08]
Anurag Rana
2009. Yeah, and that is, I think a very, very valid question is what happens to Oracle when you look at this entire AI bubble narrative or the framework. You know, you have the big cloud providers that are spending the most amount of money. We say when you look at somebody like an Amazon, Microsoft and Google, they are spending quite a bit, but they have real awesome cash flow that's coming in. Plus they have businesses. So even if they overbuild, they will have capacity to use it. The bigger question is what happens to OpenAI? Oracle Relationship OpenAI has said that they have given Oracle, you could say a contract of about $300 billion to bleed in in terms of sales over the next several years. They're going to first build some massive data centers and then they're going to use Oracle as a cloud provider. The big question is where is OpenAI going to get money from? And that's really what's weighing on that particular part of the equation. And to be very honest, there is genuine reason to figure out like how how is OpenAI is going to raise that money and how are they going to spend? So there is some reason to to be concerned, but not so much on the cred side of it, but so much more as the estimates that are out there for the out.
- [08:19]
Paul
Years.
- [08:21]
Stay with us. More from Bloomberg Intelligence coming up after.
- [08:24]
Baillie Gifford Narrator
This.
- [08:26]
What is actual Investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term, it's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual Investors Find out.
- [08:54]
Paul
More@Baileygifford.Com support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [09:38]
Public Investing Disclaimer Voice
Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by ZeroHash complete disclosures available at public.com disclosures introducing the.
- [09:56]
Chase for Business Announcer
All new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with.
- [10:26]
Bloomberg Intelligence Podcast Announcer
Acrobat.
- [10:28]
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. Listen on demand, wherever you get your podcasts or watch us live on.
- [10:41]
Paul
YouTube. All right, let's talk a little retail. Macy's at with some numbers. I thought the numbers were pretty Good. Stocks off 1.7%. So what do I know? Mary Ross Gilbert, senior equity analyst, she covers the retailer. She's the expert for Bloomberg Intelligence. She's based out there in la. Mary, talk to us about Macy's. What do we hear from them today with their.
- [11:00]
Mary Ross Gilbert
Results?
- [11:03]
So Paul, we saw actually, I think great results coming out of Macy's this morning. See, and so when you, when you think about it, the stock is off. But that's because the company put out conservative fourth quarter guidance and that's really what they always do. They seek to beat their numbers. And so that guidance came in very close. You know, at the high end, it's right around where analysts are because they already saw strong results come in from other retailers. But we think when we think about it, we think there's upside here. So we really view the results as look Macy's nameplate because of all the changes that they're making. And what that means is they're bringing in more relevant brands that are resonating with their consumer. Not only that, but the stores look brighter. There's really kind of exciting music in the stores. The store associates are more engaged with the customer. We've noticed that on our channel checks, particularly on Black Friday, we saw more traffic in the store than we've seen in years past. So we think that the changes that CEO Tony Spring is making and he's really taking his cues from what he's done at Bloomingdale's. It's resonating, it's working. And so we think this momentum is building. And we certainly saw it in the third quarter numbers with comp sales up 2.7% for the go forward stores. And so with that, I mean that's a big improvement sequentially. And so we think that's building, you know, going into the fourth quarter and just with, you know, the constant improvement that we're seeing.
- [12:37]
Interviewer
There. So when most people think about the retail space right now, a lot of people think about the transition to E commerce. But it sounds as though from what you're explaining, a lot of people are going there in person. I mean, I'm looking at Kohl's, I'm looking at Dillard's. All of these stocks are up pretty substantially on the year alongside Macy's. What are they doing in particular that's really attracting customers to come through the doors? Is it also collaborations with celebrities by.
- [13:01]
Mary Ross Gilbert
Chance?
- [13:03]
Yes, you raised a valid point and it is. It does include collaboration. So for example, they Aqua, you know, they're under their Bloomingdale's brand currently has a collab going out with a designer out of Milan. And so yes, these collaborations also even, you know, they'll have some events, but all of that is, is certainly drawing in new customers. And I think Macy's nameplate could certainly do more on that end. They had their first Collab with their on 34th brand this year. But we think we're going to see more next year. Because if you look at what Dillard's has been doing over the last few years and they have a different business model than Macy's does. They're not really promotional. For example, for Black Friday they just had clearance sales and it was pretty comparable to last year. So that didn't mean that the rest of the merchandise was on sale. Macy's, the, you know, is far more promotional but by doing collaborations, you know, by getting celebrities involved. So for example, for the holiday they have Jennifer Hudson that's, you know, fronting their campaign for the holiday and they're also engaging with social influencers. So yes, all of that is resonating. We're seeing it with other brands like for example with American Eagle, which just tapped Martha Stewart and that, that's appealing to Gen Z. Oh.
- [14:29]
Interviewer
Wow. So, yeah, I miss that.
- [14:31]
Mary Ross Gilbert
One. Yeah. So these bold campaigns that these brands are doing, Macy's is also getting involved there and they're dipping their, I would say they're dipping their toe in the water. But I think we're going to see that increase, you know, and build as we get into 2026. And when you talk about the digital business because of course you're, you're always hearing, let's say, stronger growth on digital. For example, when we looked at Black Friday, you know, over the weekend through Cyber Monday, the sales strength was really led by digital. Digital was up double digits versus, you know, low to mid single digits for in store. So I think that's really positive there. But so when we look at Macy's, a third of their sales come from digital. So still in store is, is very big. But it's also Omni Channel. Well, the ability to buy online, take back in store or buy online, pick up in.
- [15:27]
Paul
Store. Well, when I walk to Penn Station today I'm going to walk past Macy's as I always do. But today I'm going to go in. Okay, I'm going to do a store walk is what the kid, what the retail analysts call it, store walk. And I'm going to check if John Tucker's wooden escalator still.
- [15:41]
Interviewer
There. We're counting on.
- [15:42]
Paul
You. Okay, I'll report back. Mary, just real quick, 30 seconds. What's Macy's saying about the consumer out.
- [15:48]
Mary Ross Gilbert
There? Yeah, so they're saying that the lower end consumer is really feeling pinched and that's where they're seeing some challenges on some of the price increases on their lower price point items. But the higher middle income and the higher income consumer is resilient and they haven't flashed or batted an eye with higher prices that they took to offset tariffs and they're still.
- [16:12]
Paul
Buying. Stay with us. More from Bloomberg Intelligence coming up after this.
- [16:19]
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [17:01]
Public Investing Disclaimer Voice
Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC Crypto trading provided by ZeroHash complete disclosures available at.
- [17:16]
Chase for Business Announcer
Public.Com disclosures introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time? Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make your business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more@chase.com business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JP Morgan Chase Bank Naomi Member FDIC Copyright 2025 JP Morgan Chase.
- [18:48]
Bloomberg Intelligence Podcast Announcer
& Co.
- [18:51]
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.
- [19:04]
Paul
On YouTube. We continue to get some earnings from the retailers today. Dollar Tree came out with some numbers, pretty good numbers. The street likes it. The stock's up 3.4% today. Dollar Tree is up 50% year to date. So a great move for that company, that stock. Let's turn to Lily Meyer here, Bloomberg deals reporter for Bloomberg News. She covers all the retail companies out there. Talk to us about Dollar Tree. What did they say here on the.
- [19:31]
Lily Meyer
Latest earnings? Yeah, so Dollar Tree did well this quarter. It met expectations on revenue and same store sales and it raised its profit outlook for the year. I think they really have hit a niche in being able to capture consumers, both lower end consumers who need cheaper goods and then high income consumers who are looking to.
- [19:51]
Interviewer
Trade down. So I mean, what do we think about elasticity of the lower end consumer right now? Because I mean if you think about Walmart, I used to think of this as a company that, you know, was a cheaper place to shop. But it seems as though it's appealing to multiple consumer types. But it seems as though Dollar Tree really is a great place for the lower.
- [20:08]
Mary Ross Gilbert
End.
- [20:08]
Lily Meyer
Consumer. Yeah. And actually recently Dollar Tree has been looking to kind of break into that higher income shopper as well. So it has this pricing strategy. So it has some products that are still cheaper, but then it has some, it's getting more products that are.
- [20:24]
Paul
More expensive. What, what is Dollar Tree saying about its core consumer out there? Who, who is that core consumer and how are.
- [20:32]
Lily Meyer
They behaving? Yeah, so I think it's core consumer is still a lower income shopper. 85% of their products are $2 and under. So they really still have a lot of value. So they're seeing those shoppers continue to go in. But this quarter they saw traffic down and they attributed that to.
- [20:48]
Interviewer
Tariff increases. See, I missed when things were actually a dollar at Dollar Tree and Dollar General, she said, what did.
- [20:53]
Deb Aitken
You.
- [20:53]
Paul
Say? $2. John and.
- [20:55]
Interviewer
I remember. Should we change.
- [20:57]
Paul
The name? Well, John and I remember John and I remember the five.
- [21:00]
Public Investing Disclaimer Voice
And Dimension. Oh yeah, and.
- [21:02]
Paul
Penny Candy.
- [21:03]
Chase for Business Announcer
Yeah, exactly.
- [21:04]
Paul
Dating.
- [21:04]
Interviewer
Ourselves. Ourselves. All right, so what's the takeaway in terms of the outlook? I mean you talked about tariffs still being a.
- [21:10]
Mary Ross Gilbert
Drag.
- [21:10]
Lily Meyer
Here. Yeah. So tariffs are really drag this quarter. They said that's going to lessen. So I think this was the quarter where we're really seeing the biggest tariff impact. It'll be really interesting to see what they predict for consumers next year. I'm interested to hear about that. And also what they see for holiday, if they continue to see higher income shoppers trading down for gifts.
- [21:31]
Paul
Is do dollar stores, do they see a surge in sales, seasonal surge in sales from holiday sales? Is that, do they see that like, like a department.
- [21:39]
Mary Ross Gilbert
Store.
- [21:39]
Lily Meyer
Would? Yeah. I don't know if it's the same surge but you know, they sell a lot of gift wrapping and gift bags and some of those smaller gift stocking stuffers. So I think they see a lot of that around.
- [21:49]
Interviewer
The holidays. So what are we seeing in terms of just the broader read on the retail space? This kind of gives us a picture of the lower end consumer. But what are you seeing across the board.
- [21:57]
Lily Meyer
So broadly? We're really still seeing consumer spend. So there hasn't been that massive pullback that I think some of us were imagining might happen. We're still seeing consumer spend, but they're really value driven. So they're looking for the best deals they can get. They're trading down when they need to. They're stocking up.
- [22:13]
Paul
On essentials. How promotional are retailers right now? Because I mean, I know talking to Poonam Goyal, the retail analyst at Bloomberg Intelligence, he says, you know, the more promotions you see out there, that's going to be that goes right to the margins, the profit margins of some of these retailers. What are we seeing.
- [22:30]
Lily Meyer
This season? That's a good question. So this season we've actually seen some retailers pull back on deals to protect their margin. So some companies are doing that as part of a broader strategy and then some are having to do that because of tariffs. So, you know, for Black Friday, typically they'd offer big discounts and some are pulling back or not offering discounts.
- [22:48]
Interviewer
At all. So consumers have still been broadly spending in the retail space. What are they spending on? Is it, you know, are we spending money on essentials right now, skipping.
- [22:58]
Lily Meyer
The splurging? Yeah, yeah, that's exactly it. So this Black Friday, we talked to a lot of folks who were saying they're gonna just get essentials this Black Friday. So instead of buying, you know, a Lake Crusade Dutch oven, they were, we talked to someone who instead was gonna buy like three bags of 40 pound.
- [23:15]
Paul
Dog food. Oh, that.
- [23:17]
Chase for Business Announcer
Sounds.
- [23:17]
Paul
Okay. Yeah. They don't have.
- [23:18]
Interviewer
A dog.
- [23:20]
It's for.
- [23:21]
Lily Meyer
Them, right? Yeah. Chewy.com chewy.com so really using, you know, deals to get things that they need for themselves rather than getting that big ticket item they.
- [23:31]
Paul
Waited for. The what I learned from talking to retail folks is omnichannel retail, which is you use both the online and the bricks and mortar and maybe you look at something online but then you want to go touch and feel it or maybe you order it, then you pick it up at the store. Omnichannel. Is that still.
- [23:47]
Chase for Business Announcer
A thing?
- [23:48]
Lily Meyer
Yeah, yeah. So we, we were out there on Black Friday in some of the stores and you know, while a lot of people have switched their holiday shopping to be online, we still saw a ton of people in stores, especially at stores with really good deals. And stores that appeal appealed to young shoppers. So brands like Addicted and Princess Polly that are in malls were really flooded with.
- [24:08]
Paul
Young people. Stay with us. More from Bloomberg Intelligence coming up after this.
- [24:14]
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.6% APY high yield cash account Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by.
- [24:56]
Public Investing Disclaimer Voice
Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities, options and bonds and a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Zerohash complete disclosures available at public.com disclosures being.
- [25:14]
Chase for Business Announcer
A small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make your business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all all in one place. With their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more@chase.com business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices, message and data rates. May apply JP Morgan Chase Bank Naomi Member FDIC Copyright 2025 JPMorgan Chase & Co. Introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do.
- [26:43]
Bloomberg Intelligence Podcast Announcer
That with Acrobat.
- [26:46]
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.
- [26:58]
Paul
Live on YouTube. Let's talk a little luxury here that's right down John Tucker Investors alley here. Deb Aitken. She's the expert luxury goods analyst at Bloomberg Intelligence. She's based in London there. Deb, just give us kind of a postmortem how is 2025 for the luxury companies and maybe what's the.
- [27:17]
Mary Ross Gilbert
Outlook.
- [27:17]
Deb Aitken
For 26?
- [27:19]
Hi. Yeah, so we started out 2025 with an expectation that we'd move back to growth and that certainly didn't materialize through the first half of the year.
- [27:33]
But we seem to be ending at around 3 to 4% growth as we exit 2025. Now, the US has been robust, Middle east doing very well, but particularly in the first half of the year, it was China which was the drag. And what we've noticed as we end the year, we've actually just heard on a fireside chat over the last few days from l', Oreal where they're mentioning high end beauty doing very well out of the US but also in China too. So they're adding to what we've heard from the luxury companies where we've seen two thirds of luxury companies and most of the top 10 switching to growth in China in Q3 from a low base from negatives a year ago, but actually that we're calling green shoots into the.
- [28:21]
Interviewer
End of year. How are these companies holding up as it relates.
- [28:24]
Deb Aitken
To tariff overhangs?
- [28:28]
Yeah, so we did a lot of work around May, time and again through July and August with the different tariff rates moving around. And what we've actually seen, it was less detrimental overall in our numbers, we probably think that EPS won't be pulled as much as was expected because there have been some cost savings and the biggest companies and those that were where brands were really in favour have managed to pass on price. And generally because these companies operate on high gross margin, the cost into the US, they've moved around 2 to 4% on additional price into the US as well as 2 to 3% from the beginning of the year. So some of those brands have absorbed passing through 6, 7% pricing to the US consumer. And we think into 2026 that moves nearer to 2 to 3% overall. So it should be less intimidating for the consumer overall, 2026. So it's one of our drivers for.
- [29:28]
Paul
The year ahead. Deb, talk to us about the Chinese consumer. We don't see the Chinese consumer here. I'm going to walk the Penn Station today, walk down Fifth Avenue, Madison Avenue. I see a lot of Europeans, I see a lot of American tourists. I won't see many from Asia. Are they not traveling? So is that an impact for New York and London and Paris and.
- [29:48]
Deb Aitken
Things like that? We actually have a survey out of our Asia office that we've just incorporated into a document which we'll be Producing, but this piece of work is already produced and actually on October 1, May, the China consumer is looking to travel more into Europe to start with. So that's the first big positive. I think part of that is just on the way the tariff situation has gone, maybe so that would be the first time that we're looking for them to come back. So versus three months ago they're looking at traveling outside of Asia. But overall, what we call the China cohort, that's actually really operating more avidly across the Asia region, we're not seeing so much travel from Chinese into Japan. And of course we know that there are, there's some political commentary there as well. So we wouldn't expect that to pick up next year. But we are seeing Korea, Singapore, Australia and others being positive and the first move to Europe should hopefully indicate that towards the end of the year and as tariffs settle more in 2026, that we see some of that to the.
- [31:00]
Interviewer
US as well. And sticking with China. How are we thinking about supply chain operations as it relates to a lot of these luxury firms, especially.
- [31:08]
Deb Aitken
Stemming from China?
- [31:11]
Yeah, so if we think about maybe if, if we, we look at it from some of the aspirational entry level luxury companies, then they will have some production moving around the Asia region. But if we think about the heritage traditional higher end luxury companies, then most of their production is France, Italy, some Portugal, some parts of southern Spain. Not so much going on in the Asia region. And so they've been able to manage on the 20% tariff from made in Europe over to the US more so than some of the peer group. For example, one of our entry level that we call branded affordable jewelry, Pandora producers out of Thailand, it's really suffered in terms of share price this year versus some of the Asian retail jewelers who've done very, very well on the.
- [32:07]
Paul
Price of gold.
- [32:10]
So you got to explain this whole handbag thing to me, Deb. I was in Italy in September. We toured some place factories and artisan shops where they make these handbags and they sell them for tens of thousands of dollars in Euros. What is going on there?
- [32:23]
Deb Aitken
Who buys that? You know, it has, I always say if you bought at Hermes, you have a just as good or a better correlation than if you'd have held gold. So I think that these bags, particularly for sought after material, the craftsmanship and the fact that they have continued value are seen as investment pieces. And so we have the middle ground. You know, if we look over the last year and one of the things that we think for 2020 bags from Tapestry, from Coach, Ralph Lauren, others as well as Ready to Wear have done very, very well, resonated with a consumer who's been a little bit more skeptical on the consumer sentiment side and maybe shopped around $1,000 or so. But at the very high end, there hasn't been much of a move. So we've seen Hermes, Brunello, Cuccinelli and others doing very, very well at.
- [33:21]
Bloomberg Intelligence Podcast Announcer
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- [33:43]
Paul
The Bloomberg terminal.
- [33:49]
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Deb Aitken
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Janice Torres here and.
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Paul
I'm Austin Hankwitz. We host the podcast Mind the Small Business Success Stories produced by Ruby Studio in partnership.
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Paul
Excited about is to be part of that change. So listen on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.