Walmart’s Cautious Outlook Reflects Uneven State of US Economy

Summary

Bloomberg Intelligence Podcast Summary

Episode: Walmart’s Cautious Outlook Reflects Uneven State of US Economy
Date: February 19, 2026
Hosts: Paul Sweeney, Scarlet Fu

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Overview

This episode delves into recent earnings reports and strategic trends from major corporate players: Walmart (retail), John Deere (heavy equipment/agriculture), Six Flags (theme parks), and Nestlé (consumer staples). With insights from Bloomberg Intelligence analysts and reporters, the discussion highlights themes of cautious optimism, evolving consumer behavior, strategic investments, and sector-specific headwinds and opportunities in the context of a mixed US economic outlook.

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Key Discussion Points and Insights

1. Walmart’s Financials & Cautious Outlook

(02:25 – 08:12)

• Solid Quarter with Conservative Guidance

  • Walmart reported another strong Q4, continuing a pattern of conservative guidance followed by outperformance.
  • Emily Cohn (02:41):

    "They did come out with conservative guidance, which is pretty typical for Walmart...their guidance was also paired with some warning signs or cautious outlook about the economy, which I found interesting."

• Inflation and Consumer Sentiment

  • Pricing rose 1% during the quarter.
  • Walmart CFO highlighted that tariff-driven inflation is peaking but macro uncertainty persists, especially with tepid job growth and rising student loan delinquencies.
  • Emily Cohn (03:27):

    "They also mentioned other things like tepid job growth, student loan delinquencies, rising consumer sentiment being uneven. Things that would give any CEO or CFO or company pause..."

• Changing Customer Base

  • Higher-income shoppers are increasingly buying groceries at Walmart, benefiting from investments in organics and store experience.
  • Emily Cohn (04:06):

    "What they're seeing is wealthier clientele who might not have come to Walmart in the past, shopping at Walmart especially for things like their groceries."

• E-commerce & Technology Investments

  • Walmart+ is gaining traction, especially among higher-income demographics, challenging Amazon Prime.
  • Major focus on automation: fulfillment increasingly handled by automated warehouses.
  • Emily Cohn (06:11):

    "Most of their fulfillment for E-Commerce is coming from automated warehouses. They have really made huge gains here to speed up fulfillment centers and...cited store remodels and automation as the main areas where they're going to be continuing to invest."

• AI-Assisted Shopping

  • Uptick in shoppers utilizing Walmart’s AI assistant, correlating with higher spending.
  • Emily Cohn (06:57):

    "They've seen a huge amount of shoppers now ... interacting with their AI assistant ... that's really helping people make shopping decisions faster."

• Workforce & Technology

  • Growing tech workforce within Walmart, paralleling ongoing automation and digital initiatives.

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2. John Deere: Agriculture & Construction Recovery

(10:34 – 16:18)

• Earnings Beat and Cycle Trough

  • Deere's quarter marked by robust top-line and margins, with smaller ag and construction divisions leading the recovery.
  • Chris Ciolino (11:06):

    "The 1Q beat was broad based...particularly strength in the small ag business and construction. The large ag business...continues to be soft, but I think we're seeing that business stabilize."

• Early Signs of Recovery

  • Consensus that 2026 is the downturn's bottom, with green shoots in North American large ag order books, increased China trade flows, and ongoing government aid.

• Cyclical Nature & Market Exposure

  • Typical cycle: downswings last 2–4 years; upturns potentially longer, heavily influenced by crop prices and farmer profitability.
  • Deere remains heavily reliant on the US market, with South America growing in importance for larger, higher-margin equipment.
  • Chris Ciolino (13:55):

    "What markets matter for Deere? It's North America and South America is becoming more important ... those are the bigger producers of row crops."

• US Farmer Outlook

  • Market stabilizing but still challenged by crop prices; pent-up equipment demand may unlock with further stabilization and export growth.

• Stock Price Surge

  • Deere stock trading at record highs, reflecting anticipation of recovery and broader construction business strength as the US approaches a potential rate cut cycle.

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3. Six Flags: Operational Overhaul Amidst Industry Challenges

(18:41 – 22:52)

• Financial Engineering and Debt Management

  • Six Flags, along with Avis, taking impairment charges to boost EBITDA. Both focus on deleveraging and business turnaround.
  • Jodi Lurie (19:24):

    "Both companies had these large impairment charges to boost EBITDA, but it didn’t necessarily equate to cash generation...focused on improving their debt load."

• Evolving Competitive Set

  • Six Flags positions itself as a value alternative to big-ticket concerts and sporting events.
  • The idea of a regional or "all-park" pass (“epic pass” for amusement parks) is being piloted, aiming to boost customer visits and loyalty.

• Operational Challenges

  • Legacy Six Flags parks are in poorer condition than expected post-merger with Cedar Fair, raising operational and debt service concerns.
  • Jodi Lurie (21:15):

    "The legacy Six Flags assets...were in way worse shape than Cedar Fair anticipated ... they’re saddled with a lot of debt. So it’s really a question of if the capital markets are going to be encouraging enough to help them through."

• Park Enthusiast Market

  • Dedicated roller coaster fans constitute a small but highly engaged niche, with the potential for international impact (e.g., new parks in the Middle East).

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4. Nestlé: Strategic Refocusing Under New Leadership

(25:14 – 29:53)

• Divesting Ice Cream, Focusing on Core Categories

  • Nestlé is weighing an exit from its ice cream business due to lagging global market share, aiming to concentrate on coffee, pet food, and nutrition, which are global category leaders.
  • Duncan Fox (25:42):

    "It makes sense...to monetize that stake and put it into areas where they are global number one or number two..."

• New CEO’s Strategic Shift

  • Greater emphasis on core brands/assets, notably merging nutrition businesses and seeking efficiency/cost savings.
  • Some smaller “local” brands will remain for their strong cash generation (e.g., KitKat).
  • Duncan Fox (26:54):

    "He’s already sort of sharpened up the focus...making it much more the four big core asset basis...focusing very much on getting volume moving forward on their core categories..."

• Cost-Cutting Program

  • Ongoing global cost-cutting, including a major reduction in headcount (~16,000 employees, ~8% of workforce).
  • Anticipate CHF 2–3 billion in savings by 2027–28, through restructuring and streamlining.
  • Duncan Fox (28:29):

    "I think it was October they said that they were getting rid of 16,000 employees, which is shy 8% of the global workforce."

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Notable Quotes & Memorable Moments

• Cautious optimism at Walmart:
  “They did come out with conservative guidance, which is pretty typical… and then their guidance was also paired with some warning signs or cautious outlook about the economy.” — Emily Cohn (02:41)

• Walmart’s evolving customer:
  “Wealthier clientele who might not have come to Walmart in the past, shopping at Walmart especially for things like their groceries, which they've invested in a lot in the last 10 years.” — Emily Cohn (04:06)

• Shifts in automation and tech:
  “Most of their fulfillment for E-Commerce is coming from automated warehouses… They have really made huge gains here.” — Emily Cohn (06:11)

• On Deere’s market signals:
  “You’re starting to see some early signs of improvement in the North American large ag business… order books strengthened, particularly just in the last month of the quarter.” — Chris Ciolino (12:01)

• Six Flags’ amusement park paradox:
  “The legacy Six Flags assets...were in way worse shape than Cedar Fair anticipated when they took on the company and they're saddled with a lot of debt.” — Jodi Lurie (21:15)

• Nestlé’s strategic pivot:
  “It makes sense...to monetize that stake and put it into areas where they are global number one or number two, which is coffee, pet food and nutrition.” — Duncan Fox (25:42)

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Important Segment Timestamps

• Walmart’s quarterly review and cautious outlook: 02:25 – 08:12
• Deere earnings and sector cycle: 10:34 – 16:18
• Six Flags operations and strategy: 18:41 – 22:52
• Nestlé’s portfolio and cost-cutting strategy: 25:14 – 29:53

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Tone & Style

The episode maintains an analytical yet conversational tone, mixing clear data insights with personal observations (e.g., Paul’s “Walmart greeter” dream). The reporting is direct and accessible, aligning with the show’s mission of making in-depth financial research intelligible to professional and casual investors alike.

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Transcript

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[Paul]

Walmart reported some numbers. I thought they were pretty darn good. They're always seemingly pretty good out of Walmart. They know what they're doing over there. Stocks up 2% here today. Let's it down with Emily Cohn, Consumer Team Leader for Bloomberg News. Emily, talk to us about the quarter. What's what's the company saying about their business.

[Emily Cohn]

Yeah, I think you nailed it as another solid quarter for Wal Mart. In the fourth quarter they did come out with conservative guidance, which is pretty typical for Wal Mart. Come out with cautious guidance and then exceed it later in the year, which is sort of their playbook. And then their guidance was also paired with some warning signs or cautious outlook about the economy, which I found interesting.

[Scarlett]

Yeah, I want to pick up on that idea because the CFO talked to Bloomberg and mentioned that tariff driven inflation has reached or is reaching its peak, which I thought was really interesting given that there's so many people expecting rate cuts later on this year, given that inflation seems to have settled down. What more can they tell us about pricing?

[Emily Cohn]

I think they told us that prices rose 1% in the quarter, which I think was the same as the last quarter. But they also mentioned other things like tepid job growth, student loan delinquencies, rising consumer sentiment being uneven. Things that would give any CEO or CFO or company pause when they're trying to outlay what might happen in the coming year.

[Paul]

And I noticed over the last couple of years they've talked about how maybe their customer base is changing a little bit. People, some middle class, maybe even upper income areas coming down to Wal Mart, they're seeing more and more of that. Is that still the case?

[Emily Cohn]

I think yes, that's definitely the case. And that's sort of their superpower right now that, you know, poor. This is the case shaped economy that we talk about a lot. Poor customers are pulling back in areas but what they're seeing is wealthier clients, clientele who might not have come to Walmart in the past. Shopping at Walmart, especially for things like their groceries, which they've invested in a lot in the last 10 years. You can now find organic groceries in Walmart and that's really paying off.

[Scarlett]

And they also have this Walmart plus program which they're really putting a lot of emphasis on. It's actually one of the benefits if you're an American Express Platinum cardholder, which speaks to that idea that they're really reaching for the higher income consumer. How's that going and is it making any headway on stealing market share from Amazon with its prime program?

[Emily Cohn]

Yeah, they're seeing a huge growth in E Commerce. I think that was one of the major areas that grew this quarter that is drawing in higher income shoppers who actually pay even more than the membership for faster delivery deliveries, speedier pickup times. And that's helping them also grow market share among wealthier shoppers who are looking for convenience over everything else.

[Paul]

So what are they saying about, did they even talk about unconscious call tariffs anymore? Is that still a discussion point? And what's the company saying about tariffs?

[Emily Cohn]

Yeah, tariffs came up a little bit but they, they said that they, you know, expect that that tariff driven inflation to, to peak. Now I think they also benefit here again from their groceries. Groceries are a portion of their assortment that is less impacted by tariffs and they're really benefiting From, I think 60% of their sales come from groceries these days.

[Scarlett]

You mentioned E Commerce. It sounds like Walmart will continue to invest in technology and automation. What were some of the things that they flagged that they're working on in terms of innovation and building on the technology that they have already implemented into their system?

[Emily Cohn]

Yeah, it was, it was interesting. They said most of their fulfillment in stores is now coming from automated warehouses. Most of their fulfillment for E Commerce is coming from automated warehouses. They have really made huge gains here to speed up fulfillment centers and I think we should expect to see more of that in the coming quarters. They cited store remodels and automation as the main areas where they're going to be continuing to invest.

[Paul]

You know one of the things that's amazed me really for 10, 15 years about Walmart is how well their digital business has been their E commerce business. They have built that to not only, I mean they can go toe to toe with Amazon.com on just about anything it seems like. Is that still a growth story for them?

[Emily Cohn]

Yeah, I think they said something like a third. They've, they've seen a huge amount of shoppers are now actually interacting with their AI, their AI assistant on their app and on their website. That really helping people make shopping decisions faster. They're seeing an increasing spend from customers who interact with the shopping assistant they said which, which I think we can expect.

[Paul]

You know just in the last five years their EBITDA has roughly doubled but their capex is tripled.

[Scarlett]

Yeah, so there's that really commerce build out, that tech build out.

[Paul]

Yeah. So I mean they're putting their money where their mouth is here.

[Scarlett]

You know what Paul's dream is Emily? Must he mention this to you now

[Paul]

be a greeter at Walmart. See I'm a nice friendly guy.

[Scarlett]

This smock, he wants to wear this mark. But you know to that point Walmart employs about 2.1 million people which is, makes it a huge employer. Do we have a sense of whether they've been growing their employee base at all with this commitment to technology to automation.

[Emily Cohn]

I think they've definitely made a huge investment in technology. They have a lot more people working on tech than they ever have and I think we could expect to see more of that for sure.

[Paul]

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

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[Scarlett]

Hey, this is US Olympic Gold medalist

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As athletes, our lives are about having

[Chris Ciolino]

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So when it came to getting the

[Chris Ciolino]

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[Paul]

All right, let's move from cars to tractors. We can do that with John Deere. John Deere reported some really solid numbers. The stock's up 12% today, so a big move for Deere. It's up 42% year to date. And when you think about the John Deere company, you think about the US Farmer because that's the primary customer there. When a farmer has money, the farmer likes to buy some new tractors. Let's check in with Chris Ciolino. He covers all the big equipment companies for Bloomberg Intelligence. Chris, tell us about Deere. What did they tell us in their earnings report?

[Chris Ciolino]

Yeah, it was a really solid beat and raised quarter. And I think this kind of gives us the all clear on the cycle and that 26 will be the trough earnings year. The 1Q beat was broad based, all segments, better top line, better margins than expected, really on the back of higher shipment volumes, with particular strength in the small ag business and construction. Those are markets that have started to already recover. Now this year, the large ag business, which is obviously their bigger growth engine, continues to be soft, but I think we're seeing that business stabilize and really for the first time in years, we're starting to see some green shoots emerge. Their order books strengthened a little bit during the quarter as well.

[Scarlett]

How about, how does this compare and contrast with what CNH Industrial reported earlier this week, which took a more. It feels like a cautious stance.

[Chris Ciolino]

Yeah, you know, I think so. Both Companies are calling 26 as the bottom. I think that's pretty well understood at this point. I think the incremental piece coming out of Deere today is that you're starting to see some early signs of improvement in the North American large ag business. That's a market they're projecting in terms of unit volumes to be down 15 to 20% this year. That's going to put volumes at the lowest level in more than four decades. But what you're starting to hear from them this quarter is that the order books strengthened, particularly just in the last month of the quarter. You're starting to see a little bit more trade flows going to China. The fleets continue to age. You have the government aid support. So this is not a big step change, but it's really the first signs of incremental improvement.

[Paul]

You got to have a great sense of timing, Chris. As I said, deere is up 42% year to date. So the market's anticipating this business bottoming and then turning up. How long Is this cycle for some of these companies that you follow here that are cyclical?

[Chris Ciolino]

Yeah. So a typical downturn in this business will last anywhere from two to four years. This will be the third year of the downturn. So in terms of the downturn, it looks very similar to what we've seen historically. Typically the upturns last a little bit longer. But this is an incredibly volatile market and it's ultimately dictated by crop prices and farmer profitability. So the crop outlooks do have a significant impact here in terms of what farmers are willing and able to spend.

[Scarlett]

And it looks like Deere relies on the US for a huge part of its revenue, if not half. What is it doing in terms of growing its, its business overseas? Does it. Is it just kind of a trajectory of growth there that is similar to what it sees in the US or is it competing against some established players?

[Chris Ciolino]

Yes, they're regional markets, but in terms of what markets matter for deer, it's North America and South America is becoming more important. Reason being those are typically the bigger producers of row crops, corn, soybeans, they're larger farms, they utilize more of the larger equipment that is more conducive to some of the precision technologies which come in at a higher margin. Europe tends to be a little bit more stable. They get a lot of government support. So think of that market as less, less cyclical, you know, lower peaks, higher troughs. Those are really kind of the three big growth engines if you think about Deere's geographic exposure.

[Paul]

So what is Deere saying about the US farmer these days?

[Chris Ciolino]

Listen, things are still challenging, let's not understate that. You know, crop prices really haven't moved that much and still under tremendous pressure. As we look at another year of near record production, they are seeing some signs of stability, I would say. And like I mentioned earlier, I think we're starting to see some early signs of improved order activity again, albeit off a very low base. And a lot of that's predicated on, you know, we're starting to see a little bit more exports go into China, you have continued government support. And then also, you know, there's certainly a need for replacement. The age of the fleet is as old as it's been in a number of years, so. So as farmers get more money, you start to see some stability on the crop price front. That should unlock some pent up demand.

[Scarlett]

Yeah, I'm just looking at the stock price trading at a record high, but it really has gone on a tear over the past three weeks or two weeks. What accounts for that. It was an anticipation of this report or was it something else?

[Chris Ciolino]

A combination of things. You know I think, you know it's pretty well understood now that we this year will be the trough of the cycle. So I think there's some positioning ahead of that. And you know a lot of these heavy machinery companies typically do well early in the rate cut environment. So the anticipation of lower rates, stronger growth environment not only in the ag business but also construction, I think that sometimes get over gets overlooked. They're completely refreshing their excavator product lineup. They have a pretty strong position in construction equipment and I think the the growth dynamics there moving for 26 and 27 are still quite favorable.

[Paul]

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

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Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete Disclosures available at public.comdisclosures Pro drivers

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[Scarlett]

hey, this is US Olympic gold medalist

[Chris Ciolino]

Tara Davis Woodhull and I'm US Paralympic gold medalist Hunter Woodhull.

[Scarlett]

As athletes, our lives are about having

[Chris Ciolino]

a clear path and a team that you can absolutely trust.

[Scarlett]

So when it came to getting the

[Chris Ciolino]

best mortgage, we chose PennyMac.

[Scarlett]

PennyMac is proud to be the official mortgage provider of Team USA.

[Lenovo Sponsor]

And you learn more at pennymac.com PennyMac Loan Services, LLC equal housing lender and

[Public Investing Sponsor]

MLS ID 35953 licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Conditions and restrictions may apply.

[Podcast Host]

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]

Six Flags Great Adventure, my first amusement, second amusement park. The first one was Hershey Park.

[Duncan Fox]

Oh, okay.

[Scarlett]

Yeah, that's, that's a good, like starter amusement park.

[Paul]

Yeah, yeah, that was a good one. Then you go to, then you step up to Six Flags Great Adventure. That's some serious park there.

[Emily Cohn]

Yeah.

[Scarlett]

I mean, you have to be ready to kind of be, you know, have, have trouble standing because of the, the roller coaster rise being super aggressive.

[Paul]

Yep, absolutely. And they're still there. Cars going in, packing in all the time down there in Jackson, New Jersey. They're all around the country. They reported some earnings here today. Let's get down to it with Jodi Lurie. She's a credit analyst. She covers all the leisure companies, including Six Flags Entertainment. Jodi, thanks so much for joining us. What did you hear from Six Flags today with their earnings?

[Jodi Lurie]

So I think what's interesting, Paul, is that we're seeing that some of what Six Flags said, oddly, was similar to what we saw on Avis's call. And both companies had these large impairment charges to boost ebitda, but it didn't necessarily equate to cash generation. And both companies are focused on improving their debt load. And also just the core of the business, the operational side, adding in AI to boost the business and figuring out ways to turn around. And both companies are dealing with new CEOs, so it's just like a weird sort of compare contrast scenario that, that I've been toying with my head all morning.

[Scarlett]

I mean, Paul was talking about how Hershey park was his first amusement park and then obviously the big one would be Disney.

[Paul]

Yep.

[Scarlett]

Or Universal. Have you been there?

[Paul]

No.

[Scarlett]

Okay. That's a pretty good one.

[Lenovo Sponsor]

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[Scarlett]

Is that, is that the competition for Six Flags or does it work on a different level than those?

[Jodi Lurie]

It, it is and it isn't the competition, Scarlett. I mean, I think, you know, Six Flags likes to compare itself more to alternatives in leisure and entertainment. There was a great slide that they provided that, that showcased the value proposition. If you compare it to like concert tickets or, you know, insert sporting event. The amount of time that you spend at Six Flags in theory is all day, right? So the cost to enter and the cost for the, you know, all the sort of concessions is much lower than what you would pay to go to like a Taylor Swift concert. Now that said, I mean, I think what's so interesting is, is when the company combined, there is this image that they could create like an all pass promotion, right. That you can enter in all parks. They've only finally started rolling out something that's a regional pass recently. And I'm curious to see what could happen with the company as they improve those sort of points of it. Because what's funny is if you look at it from a revenue perspective, it did actually pretty well this year compared to 24. And 24 was a pretty strong year. Same thing with some of the per cap spending pieces of it, right? The per cap component, the admissions were down, but the in park spending was decent. And so you say, what, what's going on? Like, why are they having such issues? And it comes down to an opportunity operational issue. It comes down to the fact that the legacy Six Flags assets, I think were in way worse shape than Cedar Fair anticipated when they took on the company and they're saddled with a lot of debt. So it's really a question of if the capital markets are going to be encouraging enough to help them through. You know, they help them through in January with a new issue, but really are they able to sort of support the company through this transition.

[Scarlett]

That park pass you mentioned sounds like an, you know, the amusement park version of an epic pass, which makes sense. If you're a skier and you go are chasing the weather around the country, what does it make sense to go to the west coast for Six Flags and then come back? I don't know.

[Jodi Lurie]

It could. Scarlett, you. You don't talk to Ira Jersey enough, apparently, at least when it comes to roller coasters. You probably talked to him about interest rates. Next time when you have him on, ask him about his son's American coasters enthusiast card that he proudly carries. If you are deep into the roller coaster dynamics and culture, people will go to the end of the of the earth. And I am curious to see how the Middle east traction for Six Flags, for SeaWorld and for some of the other parks that expanded there, how that's going to play out. If you do see these park coaster enthusiasts fly out to Saudi Arabia, fly out to the UAE to ride certain coasters,

[Paul]

stay with us more from Bloomberg Intelligence Coming up after this.

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[Paul]

Our good friends over in Switzerland nestle a lot of news coming out of them today. They're talking about maybe backing away a little bit from the ice cream business. How can you do that? I don't know but let's check out what's going on with Nestle with our good friend Duncan Fox. He's Bloomberg Intelligence senior consumer Staples analyst. He's based over there in London. Duncan, what's going on with Nestle? Seems like they got considering some strategic moves here.

[Duncan Fox]

Well, yes, I think it's such a large organization. Ice cream is quite a small part of their business and it's already in it. Well, I love it too. But it's in a joint venture. Well, most of it's in a joint venture with Ferrari and they took about $2 billion out last year when Frenelli did a raising of capital. So I think it was sort of set that the chance would be that they would probably clean up their portfolio a little bit and try and concentrate on really where huge market share. As much as I love the Nestle ice cream, it is not the global leader Magnum is, and it's well behind. It's sort of half the market share globally that Magnum's got. So it makes sense, I think, to monetize that stake and put it into areas where they are global number one or number two, which is coffee, pet food and nutrition. So it does make sense.

[Scarlett]

And it makes sense in the context of there's a new CEO and he's kind of putting his stamp on the company and setting out strategic direction for Nestle based on what he's done so far. Is he still in the assessing stage of, you know, trying to figure out what works, what doesn't work, or is he ready to make actual moves?

[Duncan Fox]

It feels like he's ready to make those moves. I mean, he's already sort of sharpened up the focus in sort of making it much more the four big core asset basis and, you know, three of which are global. So he's merging two sort of nutrition businesses into one. So that should get some cost savings which should then be invested back into driving organic growth or particularly volume in the case of Nestle, which is something that's been a bit shy the last couple of years. So it really feels that he's sort of focusing very much on getting the volume moving forward on their core categories and sort of. I wouldn't say he's getting rid of everything else, but he's de emphasizing that the, the importance of some of the smaller parts of the business to make sure they get the large parts right. And, you know, if you can do that, then maybe there'll be some other assets to monetize over time. But you did say that in the food business there's a Lot of local assets there, things like KitKat which are, which are very, very big and very cash generative. So you know, there's, there are ways they've got to make sure they keep investing in some of those maybe smaller brands because they actually offer quite a lot of cash flow to the business. But it's really about focus, core areas where they can grow and really shape the business moving forward. So it does look like it's at the ground running.

[Paul]

Duncan, I know the part of the Nestle story is a cost cutting story. Give us a sense of kind of what costs they're looking to cut and kind of how far along are they in their, in their plans?

[Duncan Fox]

Well, I suspect they'll always be looking to cut costs. It's such a huge organization. I mean, I think it was October they said that they were getting rid of 16,000 employees, which is shy 8% of the global workforce. So I think there's probably quite a lot of middle managers in the business that could potentially be moved out. I mean they've got to keep the local sales force moving in the right direction. But it's quite clear that maybe the decision making was a little bit fuzzy in the past in that there were too many competing people trying to push the brands in one way or the other. So it does feel that they're going to be taking the cost out of that. They got about 3, 2 billion to 3 billion to take out by 2027, 2028. So I think they're well on the track on that. After that, merging the two, the two nutrition businesses together should, could generate a little bit more selling assets as well. You, you end up with some sort of stranded overhead which will presumably give them a little bit more to take out as and when those assets are sold. So I think this is going to be an ongoing story, but it won't be as big as the sort billion that they've got out there over the next sort of few years. So yeah, it'll be probably sort of. Most companies seem to say half a percent of percent of sales.

[Paul]

Right.

[Duncan Fox]

Which in Nestle's case 90 billion of 90 billion Swiss francs of sales. Quite a, quite a chunk coming out on an annual basis. Break basically.

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