John (4:43)

That's right. I'd be sitting there eating my cereal and he'd have those pages of tiny print circling ticker symbols. It was a whole thing.

Ann Berry (4:49)

I love that image, actually. Look, I have to admit I'm nostalgic for print newspapers. They're my luxury read with a good cup of coffee on the weekends. That's the print copy. But times have changed, and for the serious business of investing, we have Public, the investing platform made for this century with a clean, intuitive modern design. Public combines a wide range of asset classes with the tools you need to build and manage your wealth, whether it's with stocks, options, bonds or crypto. Fund your account in minutes or less. Get started at public.com brewmarkets that's public.com.

John (5:18)

BrewMarkets paid for by Public Investing. Full disclosures in Podcast Description well, we.

Ann Berry (5:24)

Are in the final week of earnings and appropriately enough, as we come up to those big sales we've come to expect on Black Friday next week, several large retailers getting ahead of the game reporting earnings this morning. So we saw T.J. maxx, Williams Sonoma tomorrow, my favorite Walmart. But all eyes are really locked on Target today with outstanding questions about the retailers ability to turn things around. So John, let's start with some results from this one and see has it gone from being sluggish to getting a little dose of energy, right?

John (5:55)

No, not yet.

Ann Berry (5:57)

We'll get not burying the lead on this one.

John (5:59)

Net sales reported $25 billion. That's down one and a half percent year over year. Operating income of 950 million, down 19% year over year. Comparable store sales, a decline of 3.8%. And that's a big one. And now that's three consecutive quarters of negative same store sales. And for the fourth quarter of 2025, Target maintained its expectations of a low single digit decline.

Ann Berry (6:24)

Yeah, there we are hanging on at the edge of our seat just to hear Target say more declines actually coming. Well, the market's reactions you would expect. Shares were down 3 1/2% ish over the course of today, down 36% year to date. And it's, it's funny John, because we just opened the show talking about Adobe's existential crisis. I do fundamentally believe it has one. And Target to me is emblematic of a retailer, a bricks and mortar OG that's really trying to figure out what is reason, what its reason for being actually is. So look, Target is trying to turn things around. Has a new CEO, Michael Fidelke taking over next February. But he is not new to Target. He's been there forever, right, in leading operating roles. But he is starting to make his mark. Last month Target did say it's cutting 1,800 jobs, that's 8% roughly of its corporate workforce. That is actually a very meaningful percentage. That's clearly the beginning of his new chapter. But he is also facing a world in which his peer is going to be someone new too. There is a new CEO of Walmart coming in at almost exactly the same time. So these traditional rivals, these sort of gladiators in the arena are both seeing changes at the top of the guard.

John (7:33)

And is Target going to make changes that are big enough? That's the question. Like you were talking about with Adobe.

Ann Berry (7:37)

Yes.

John (7:38)

And so here are some recent announcements. This morning, just this morning, Target announced a partnership with ChatGPT. This is one of many we've been hearing about.

Ann Berry (7:46)

Join the club. Right?

John (7:47)

Yeah. Exactly. Where a shopper can say, help me plan a holiday party to ChatGPT and it'll return item suggestions that you can put in your cart and check out with the Target app. But of course, we saw that with Walmart. And like you said, join the club. So I don't think that's particularly innovative or unique in this moment.

Ann Berry (8:03)

And.

John (8:04)

And then on Monday, a press release went out that a new frozen peppermint hot chocolate drink will be available exclusively at Starbucks inside Target stores. And so that also doesn't seem like that big of a deal. Like, that's not going to turn the ship around.

Ann Berry (8:18)

Can I just ask a question which is even more minor? How can something be both frozen and hot at the same time? How is it frozen peppermint hot chocolate? Can you please explain that?

John (8:27)

And my premise was that this wasn't engaging and then you engaged with it, so it's working.

Ann Berry (8:31)

I thought you were just going to.

John (8:32)

I think you're going to have to go to Target.

Ann Berry (8:33)

I am actually going to do some diligence and come back to everyone with a perspective on what exactly a frozen peppermint hot chocolate drink actually is. So, okay, so what can Target do that's actually going to make a mark on this business? Well, the company has announced that it will spend an additional $1 billion next year to revamp merchandise and improve its stores. That's a 25% capex increase. So that's pretty meaningful. And it is incredibly expensive to improve your stores. Can you imagine you just walk into the square footage. These are actually very big properties. And the idea that you're going in, cleaning things up, changing the layout, in some cases, putting in place new fixtures and fittings, even thinking about doing that in your own home, let alone at the scale of these stores. One thing that's just really different, though, to think about is the reason for being is so tied to what its value proposition is and how it's perceived to be, even if perception's not necessarily reality. So if we go back in time, Target famously used to be called Ty. Exactly. Bougie Target. And whether it was always accurate or not, and there were moments of time, I thought it wasn't actually accurate. The perception was you could walk into Target and for a value pricing level, walk out with an item of clothing or a piece of home furnishing that was designed and felt more premium than you'd expect for that price. Like I said, I don't think it was always true, but it was certainly the feeling that you got as you sort of roamed the the aisles of Target. The question that's being asked at the moment is is Target stuck in the middle of the K shaped economy that is getting so much coverage at the moment? The idea that you've got higher incomes doing really well going up and to the right, that's growth. And those doing not so well frankly. And we're seeing their disposable incomes decline to the right and to the bottom. So Target is neither cheap enough nor high end enough, right?

John (10:24)

Exactly. And so if I'm thinking, oh, I want to save money, there's pressure on me as a consumer, I might go to TJ Maxx instead of going to Target. And TJ Max today they posted stronger than expected. Third quarter they raised their full year guidance. And the CEO of TJ Maxx today said, we believe this is a testament to our value proposition and treasure hunting shopping experience. And so on one end you've got this chain and TJ Maxx of course is also, that's tjx, but they're also Marshalls and Home goods.

Ann Berry (10:55)

Yeah, the whole slew of discounts.

John (10:56)

So that's a place where folks can go if they're looking to save money. And I don't know if they're thinking, oh, you know, money is tight, I'm going to go to Target. And Target's new CEO coming in said, we believe there is a path to win regardless of how the macro environments will continue to evolve around us. I don't know what that means. He's saying, don't worry, we'll continue even the Mac. So part of the earnings call, the company blamed pressure on the consumer.

Ann Berry (11:22)

Yep.

John (11:23)

And then in that statement says, well, it doesn't matter what happens with the consumer, we'll find a path. It's unclear what that path is.

Ann Berry (11:29)

Well, the only way I can think of interpreting that is talking about market share. And I think one of the things that Target has experienced has been the loss of market share to Walmart. You know, Walmart has said it a lot in its recent earnings reports and frankly longer than that. Over the course of the last 12 months that Walmart has been gaining share across all income levels that they're providing, for example, private label that's much more compelling to those of lower incomes because they're getting better value at Walmart, famous for everyday low prices. At the same time, Walmart's been investing quite heavily in it's sort of higher end or premium selections or just getting big ticket items to be available more cheaply so that folks with higher income still have a compelling reason to keep going back to Walmart. But the other thing is too, is, you know, what does that mean in terms of Target's merchandising portfolio? Can you really be all things to all people at one point in time? You know, Walmart's sort of saying, yes, we can. I guess this is Target's way of saying, if Walmart can do it, we can do it too. And then the question is, is that billion dollars actually enough? Is it enough to try and change strategy? And just to put this in context, an extra billion dollars of Capex next year? That sounds like a big number, but again, and you said it at the top, John, the actual revenue, the sales generated by target was $25 billion in sales for this quarter alone. So that Capex number, you know, you put it over the course of a year compared to that sales number, that's not a big percent of your revenue being reinvested back into the business.

John (12:52)

And if the plan is just a refresh of some stores, yeah, some of.

Ann Berry (12:56)

Them need it, some of them retired. I got to tell you, I walk into cvs, I walk into pharmacies, and I'm like, I really wish these guys had a Capex budget. There's also just to this point of an existential crisis. I don't want to be too negative about it, but we do just need to be eyes wide open because we often think it's unimaginable for gigantic companies to go away, but it does happen. Like Kmart being one example.

John (13:15)

I'm so glad you're bringing this up because I thought that might be too dramatic of a thought, but 30 years ago, Kmart had 2300 US locations. The last one full size Walmart Kmart closed last year, just in October of last year. So over 30 years they lost 2300 stores. Currently Target is at 2000. And so it happens.

Ann Berry (13:37)

It can happen. It can happen. It might take 30 years, but these things can in fact happen. Well, let's switch gears and talk about travel. Very excited. We were very lucky to talk to the CEO of Clear here on the show yesterday. Different kind of travel, not airports. This time we're going to talk about one of my favorite Topics which is being on the water. Let's talk about cruising.

John (13:58)

Yes. And this is a slightly different type of cruise than I was expecting. Looking into the company. This is Viking River Cruises Ticker Vik on the New York Stock Exchange.

Ann Berry (14:07)

Great ads, by the way. Do you see their ads on the telly?

John (14:09)

Oh, yes.

Ann Berry (14:10)

Are we going to talk about. We're going to talk about it. Absolutely. Are we going to talk about it?

John (14:13)

You and I are watching the same.

Ann Berry (14:14)

We're watching the same telly.

John (14:16)

Market cap of $27 billion was founded in 1997. They IPO'd just last year in May and shares were up over 5% today, up over 38% year to date. I'll just go over quick. The earnings, total revenue of $2 billion was up 19% year over year. Adjusted EBITDA was 700 million. That was up 27% year over year. And then this number that you see in cruises, net yield, that's an important metric. It's the available revenue generated per passenger per day after expenses. So a sort of profitability. And net yields were up $617, which was up 7% year over year.

Ann Berry (14:55)

Pretty good. Pretty good. And occupancy.

John (14:58)

Occupancy is so important. Occupancy was at 96% in the last quarter, which was 19% higher year over year. And the company is already looking forward to next year. They're already booked for. For 2026, they've booked 70% of their cruise lines.

Ann Berry (15:13)

This is one of the reasons I'm obsessed with the cruise industry. Reason number one is because there's a lot of discussion around the value proposition. It always comes back to the value propos of these businesses. And the idea is that if you go on a cruise and it's all inclusive and you've got buffets and you don't need to worry about currency changes and there's entertainment. There's this perception which I think's been proven out by the popularity of cruises, whether it's Viking or it's Royal Caribbean or it's Carnival over a long period of time, that the dollar value you get, the bang for your buck that you get relative to booking a flight and going somewhere on the land is actually pretty compelling. So you see that play out over and over again for the sector. But it's the thing that you just said, John, which is the second reason I'm fascinated by this business, is follow the money, right? Follow the cash. 70% of its available cruise days for the next year's season already booked as of November 2, which means people like you and me, or in my case, mum and dad and grandparents have actually gone and paid a cash deposit. They've already put money down, if not completely paid for the entirety of their trip. So that cash flow profile is also pretty attractive. But they are differentiating themselves from other cruise lines. One thing, one thing to say here is unlike Carnival, Royal Caribbean, Disney, those are ocean going vessels.

John (16:30)

Yes.

Ann Berry (16:30)

Viking Superpower is actually riverboats, which is an area that's been growing in popularity in recent years.

John (16:36)

Right. They just were lauding that they got 100 ships in their fleet. And so these boats have about a capacity of 100 to 200. And like you're saying those big ocean liners are 3, 4, 5400. But they point out, Viking points out that when you have these smaller ships, they're all veranda ships, no internal rooms like you might have on other cruise. And they also say that these boats can go where others can't dock because they're smaller. Including, for example, if you went to Paris, you could dock just 800 meters from the Eiffel Tower. And I loved this quote. This is, the company keeps pointing out that this is not a normal shake your butt cruise quote. Elegant ships designed not for entertainment but for enrichment.

Ann Berry (17:19)

And to go back to those ads, you watch it, someone with this very sophisticated Scandinavian accent in keeping with the Viking brand name speaks. You have this sort of beautifully paced, beautiful landscape. It's all very elevated. It's really extraordinary. You know, one of the favorite projects I ever worked on. And this was sort of midway through my career, I, I actually met one of the founders of Royal Caribbean. Amazing man called Ed Stefan. And he was just very stately and very regal in his bearing. And actually we were, I was looking at investing behind, starting a new cruise line with him. And the one thing I will always remember, he since sadly has passed away. But he was very kind to me. He said, anne, never call the cruise ship a boat. Oh, it is a ship. Like very, very clear that the river going vessels were boats and the ocean going vessels were ships. So I'm always very sort of pedantic about what I say in response to that. Um, we're gonna have to talk about Jeopardy. Talk to me. You watch Jeopardy. I don't watch Jeopardy. I watch it in the back of a taxi.

John (18:14)

Well, that's where I see those ads. And they're, they're luxurious like you were talking about refined. But the folks on those ads are retiree looking people holding a glass of wine and what I learned today is that Viking is adults only.

Ann Berry (18:28)

Oh, there we go.

John (18:29)

They don't want your kids. In fact, the CEO said today on the call, it really means that as people get older, which happens to the best of us, people get older and get tired of being on ships with children.

Ann Berry (18:39)

So they're basically saying designed for enrichment but just not if you're under 18 years old.

John (18:43)

Right, exactly.

Ann Berry (18:44)

Got it. Okay. Well, they're super clear. Interestingly though, actually, if you take a step back and look at cruise demand, overall millennials fastest growing demographic for customers for these cruise lines. So we'll see if they end up, you know, continuing to embrace their spot in the market.

John (18:58)

And one other point about not having children, they point out that it gives a year round advantage to Viking River Cruise. They're not worrying about booking around summer or when the kids are off of school. These retirees are ready to travel whenever.

Ann Berry (19:11)

They want one day. You too, John. You too, John. Croteau will be roaming around on river cruises whenever you want. Let's take a quick break and when we come, no, your calendar is not broken. I answer your question about a 53 week year and how it could possibly come about. And now a word from our sponsor, Surf Air Mobility. Surf Air Mobility is looking to drive one of the next big shifts in air travel.

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Ann Berry (19:40)

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John (19:47)

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Ann Berry (19:53)

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John (19:59)

This is a paid advertisement for Surfair Mobility Inc.

Walmart Announcer (20:02)

The who's down and who Newville were making their list. But some didn't know. Walmart has the best brands for their gifts.

Ann Berry (20:09)

What about toys?

John (20:10)

Do they have brands kids have been wanting all year?

Ann Berry (20:12)

Yep. Bar Tonys and Lego gifts that will make them all cheer.

John (20:16)

Do you mean they have all the brands I adore?

Ann Berry (20:18)

They have Nintendo, Nespresso, Apple and more.

Walmart Announcer (20:22)

What about so the who answered questions from friends till they were blue? Each one listened and shouted from Walmart. Who knew? Shop gifts from top brands for everyone on your list in the Walmart app.

Ann Berry (20:32)

John, we have a question from the audience today.

John (20:35)

That's right. Damon in Mesa, Arizona wrote and I saw in the Home Depot Earnings yesterday that the company called out an adjustment for a 52 week versus 53 week year. What does that mean?

Ann Berry (20:46)

Oh, I love a chance to get to be nerdy and talk about the calendars. A great question, Damon, and actually very timely because as we get all these retailer earnings this week, this is something we do actually have to look out for because we most often see this concept in the retail sector. Also in hospitality. I'll get back to that. Well, instead of running a calendar year from January 1 to December 31, a retailer or restaurant chain might end its fiscal year on the last Sunday of January or the Saturday closest to July 31st. And the reason for this is to try to get consistency so that each quarter always contains the same number of weekends, specifically because that's crucial for businesses where sales patterns spike on Fridays, Saturdays and over holidays, which is what we might expect with stores when people go shopping the most, and also with certain kinds of restaurants. So we often look at this in the dining sector too. Well, instead of following the calendar year when they report earnings, retailers and hospitality players often use what's called a 52 or 53 week fiscal year. So it's not referring to months or dates. It's a system designed to keep reporting periods neatly aligned by day of the week instead. So here's where the 53 week year comes in. A 52 week year is only 364 days, so it's one day short of a normal calendar cycle. And roughly every five or six years, that one day gap adds months up. So to realign the fiscal calendar with the actual calendar, companies insert an extra week, creating a 53 week year. It's not a bonus quarter, it's just a longer reporting period that keeps the system fully synced up. Now, that extra week can have real implications for investors because a 53 week year typically boosts revenues and profits on paper. Again, that's just because you're seeing additional days of sales being counted. It also affects seasonality. If a company's fiscal year suddenly shifts holiday spending into a different quarter, for example, performance can look unusually strong or weak. And again, these are the kinds of sectors where holidays really matter. Now, all of this is why Home Depot flagged in its earnings Release yesterday that 2025 is a 52 week year compared to its fiscal 2024, a 53 week one. Allowing analysts. That's why it's flagging it, to normalize results. That's basically Home Depot's way of saying to the market, go figure out how to strip out the extra week so that you can judge the company's real apples to apples growth rate. So basically guiding the market to say don't try and read our numbers the wrong way. Wow.

John (23:09)

And if you have a question for Ann, send an email or Voice Memo to BrewMarketShow Morning Broadcom.

Ann Berry (23:14)

Was that a wow because it was fascinating or wow because it was just a lot? Well, there's the bell. It's 4pm on the east Coast. The markets have closed. We don't have a ticker tape. So let's throw it over to our human ticket, our producer John.

John (23:27)

That's right. After up and down all day, the major indices finished up. The S&P 500 was up 4.10 of a percent. The NASDAQ was up 6.10 of a percent and the Dow finished up 1/10 of a percent. A quick market headline, shares in Constellation energy were up nearly 6%. On the news today that the company will receive a $1 billion federal loan to restart Unit 1 at the Three Mile Island Nuclear power plant facility in Pennsylvania. The reactor is set to start producing power again in 2027 and will be renamed the Crane Clean Energy Center.

Ann Berry (24:00)

Well, as a final thought, we're going to have to just touch on Nvidia results literally out any minute now for its third quarter earnings. All eyes on this one. We've seen a sell off in the AI trade over the last week or so. We saw Nvidia hitting the headlines again yesterday in partnership with Microsoft and Anthropic with yet another 10 billion dollar investment in an LLM leader. So we're going to have to see what they says. The thing I'm watching out for is any mention of Reven China. Don't forget that Nvidia has had to withhold guidance on China from its outlook. Otherwise, just given what's going on in the in the trade wars and negotiations between the United States and China. And also we're really going to have to wait to hear how those capex numbers and projections across the ecosystem are forecast to hit Nvidia and its production cycle. We will be all over this for you tomorrow. In the meantime, we're off to get more coffee to stay on top of all of this. And that's it for today's Brew Markets Daily.

John (24:49)

And Brew Markets Daily is hosted by Anne Barry and produced by Jacque Ritteau, Tarek Abdelatif and Emily Milian. Our technical director is Lonnie Fisk, Brittany Dotto is our audio engineer and the president of Morning Brew Inc. Is Devin Emery.

Ann Berry (25:01)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. We will see you back here tomorrow, same time, same.