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On today's Bloomberg Intelligence Show, we dig inside the big business story is impacting Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries are analysts covered worldwide.
Today, we'll look at earnings reports from some of the world's largest retailers.
Plus look at why the Danish drug maker Novo Nordisk will be further lowering the prices of its obesity drugs for cash paying patients first.
We'll begin with earnings from chip Giant and Video.
This week, the company reported third quarter earnings that topped analyst estimates, and Vidia also delivered a surprisingly strong revenue forecast and pushback on the idea that the AI industry is in a bubble.
For more, we were joined by Kunjohn Sabani, Bloomberg Intelligence Senior Semiconductor analyst. We first asked Kunjohn for his take on in Vidia this week.
This was one of the more bullish earnings we have seen from this name in a while, not just on the numbers of the three Q four Q guide, which they blew past even the loftiest Byside targets, but just beyond that the long term the twenty six sort of and going into twenty seven demands signals that they showed, namely the half a trillion of the pipeline, which we think now is a conservative number given the number of
deals they have announced. If supply keeps on coming up as it has, and if their customers continue executing on these bills without any missteps, we think their significant upside to the current numbers.
Yeah, just looking through the numbers, clearly a beaten Rais report, but you know, the scale at which it can be in race is impressive. Although within the third quarter numbers, I did see that chips used in gaming PCs missed analess estimates, and I know that that's a shrinking part of the business, or at least it's not as big a part of the business, given that the data center is where the growth is really at. Are there any flaws in this earnings report? Conjohn?
Not really? I mean, look, the gaming is becoming so unimportant for analysts that the reliability of the predictability of those numbers against which we are comparing the bet and miss for gaming is no longer as reliable. So no real flaws to really point out in this. We did see their supply commitments go up quarter work quarter and
inventory is rising. I don't think that's a negative. While it might seem on the face that's just them getting up and getting ready for that next wave to supply the chips in the next year.
So could John what's the latest and Gentin want about how he've used China going forward?
Nothing has changed on the China side. They still don't assume any revenues when it comes to data center AI China GPUs or the H twenty has been shipped into They do have the clearance licenses so they could, but it seems because of the geopolitical issues, China has basically been shut down for American GPU providers or AC providers to be able to ship in the country. There isn't,
to be honest, no demand. So it seems, you know, because of geopolitical issues, the customers in China are not just reading and getting up to buy in media chips right now.
Jensenhang said that he from his vantage point, does not see anything like an AI bubble. We see something very different, and he says competitive pressures remain fairly low because this is a company with more than ninety percent of the market for those high end super fast AI chips. Who is the closest competitor if there is one t Invidia.
Yeah, in terms of the size of the markets, the next closest competitor would be the AIA six chips, So Broadcome is one of the biggest providers of AI six chips, namely the TPU that Google uses. Another example would be Amazon's Treanium chips, which are on different AI asic designers supply.
So in terms of revenues, or units in terms of the market that those are the next closest competitors within Nvidia's realm, which it sells merchant gipus, AMD would be the second closest competitor in that our Thanks.
To Kunjan Sabani, Bloomberg Intelligence Senior semiconductor analyst.
We continue in the tech space.
This week we heard that the tech giants Microsoft and Nvidia are committing to invest up to a combined fifteen billion dollars in the AI research and development company Anthropic.
We heard the investment will be part of anthropics next funding round. The companies also said Anthropic has committed to purchase thirty billion dollars of computing capacity for Microsoft's Azure cloud service.
So of course we had to enlist. Mandeep Singh, global tech research head at Bloomberg Intelligence.
First asked man Deep to tell us a little more about Anthropic and what it does well.
Anthropic is one of the five frontier lms that are remaining, I mean, and they are leading the charge when it comes to generative AI. So it's one of the five. The other one are Google, Open Ai, Meta and XAI. And so look, when it comes to these commitments, it's pretty obvious that open Ai has raised the bar by announcing they're going to spend one point four trillion. So the question is what are the other LLM companies going to do? And Entropic is also a pure play LLLM,
and in their case, they don't have the funding. I mean, they don't have the balance sheet like Google or Meta have, so they have to raise the money either in the private markets or from someone like Nvidia, or get into an agreement with Microsoft, which also has an agreement with open Ai. So that's where you know. Llms need compute. That's how you serve billion plus users, and that's where you know the numbers get bigger and bigger when it comes to the tie ups with cloud provider.
This is like the popular click in high school, where everyone knows each other and everyone's messing around with each other. Just give us a little bit of background here on Anthropic, because my understanding is that it was founded by folks who used to work at open Ai and some of the early investors like big stakeholders include Alphabet and include Amazon and now you've got Microsoft in there. I mean, is there anyone who's not part of Anthropic and not committed to investing in this company.
Well, you could say Meta, they're doing things.
They're doing their own thing.
They are doing their own thing in terms of, you know, using the computer internally, and they don't have a cloud business.
Is that a problem for them that Meta's out there on its own I know, it doesn't have its own cloud business, but it's not buying stakes or committed to invest up to five billion or ten billion in any of these AI companies.
I mean so far, just to go to Meta, it feels like, you know, investors were okay with them using
the GPU compute for their own family of apps. But the fact that they're talking about one hundred billion plus in capex for next year without having a substantial ROI and what I mean by rois in the case of Microsoft, yes they're raising their CAPEX two hundred and twenty billion, but they're winning deals like the one with Nthropic thirty billion dollar in commitment from Entropic, so somebody is paying for that compute. In the case of Microsoft, you don't
have that with a Meta. How are you generating ROI outside of your family of apps? And over there you have to show a really substantial increase in engagement to convince investors it's worth hundred billion plus in capex.
Any of these open aies anthropics, are they going to ever come public? Do you think?
I mean, in the case of Entropic, look, I know the numbers are getting big, but their gross margins at this point are probably better than open AI, which is doing too much any things. I mean, the biggest risk I see for Opening Eyes they feel they can get into any business, whether it's chip business, whether it's you know, obviously LLLM is their turf, any type of applications, and that's where there's a possibility of a misstep. You can end up wasting time because you just don't have, uh,
you know, the capability. Yeah, the focus Entropic is more.
Focused our thanks Toman deep saying, global tech research head at Bloomberg Intelligence.
We move next to some earnings from some of the world's largest retailers.
This week.
Target posted a drop in third quarter sales due to intense competition and a weakening economy, with shoppers pulling back on apparel and home goods.
Separately, Walmart reported third quarter earnings that beat analysts expectations. The retailer also increased its outlook for sales in the full year. It's a sign Walmart is winning over priced sensitive shoppers while digesting costs it expects to rise in the coming months.
For more, we were joined by Jennifer bartashis Bloomberg Intelligence senior analysts covering retail staples and packaged foods.
First test jenf for her take on the most recent results at Walmart.
You know, Walmart had another good quarter, and I think that it's very easy to attribute a lot of their success to just the value seeking behavior of consumers in this environment. But I think that would also be overlooking a lot of the investments they've made in things like convenience that is really spurring the e commerce growth. And that was really a notable takeaway.
Yeah, that e commerce aspect helps draw on higher income shoppers, so it's a larger pool of customers at Walmart now has access to and in our Bloomberg News reporting we indicate that the digital offerings now include luxury items like pre owned Chanel bags. I had no idea that that kind of stuff was available on walmart dot com.
Well, you know, Walmart has done a lot to really expand its marketplace, and that includes bringing in items that you know, will appeal to that higher income consumer, you know, And the tactic behind all of this is that the more people are integrated with e commerce in going to stores, they become sticky and they become loyal customers, so that when the macre can comic backdrop fades, it really increases Walmart's ability to hang onto these customers going forward, and
that just drives future growth. So it's a really interesting play out of how they're applying that tactic.
Jen, I also want to get your take on Walmart transferring. It's listing to the NASAC that's going to happen on December ninth, and that of course is to reflect as focus on being a tech forward company. But I'm wondering, I mean, how much of this is really just about being included in the Nazak one hundred and therefore the qqq etl Oh.
Yeah, there's certainly part of that scarlet where you know, that's that's probably part of the motivation. I think that there is. You know, obviously there's a perception with regards to being perceived more as a tech company, which Walmart in all truthfulness, has evolved into a tech company, especially amongst other retailers. By being listed at NASDAK, you know, long term, maybe it helps their valuation, you know, just in terms of having that perception of being more you know,
aligned with peers. You know, Amazon listed on Nasdaq, things like that. So I think that there's a lot of those components together combined, are really behind the move.
Jen nobody arguably has a better finger on the pulse of the consumer than Walmart. What are they saying these days?
Actually, they seem relatively optimistic. You know, they talk about you know, spending, holding study for kind of that middle income consumer, high end consumer seemed to be spending pretty freely, a little bit of concern about some of the lower end consumer, but it does seem to be sort of
evening out. And so when they were looking forward to the holiday season, which is you know, the most important thing with regards to the retailers that I cover, they seem cautiously optimistic that there will be a pretty good holiday season this year. We do think that they're going to people will prioritize spending on kids. That's usually what happens first if they're holding back in other parts of
their budget. But all indicators right now seem that we're headed towards a reasonably solid holiday season.
Are thanks to Jennifer Bartash's Bloomberg Intelligence senior analysts covering retail, staples and packaged food. Coming up, we'll take a look at why the global payments services provider Klarna reported record revenue in its first quarter since going public.
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We move next to earnings from some of the world's largest home improvement retailers.
This week, Low's reported third quarter profit that topped analyst estimates. This was a result of online sales and demand from professional contractors.
Separately, we heard from Home Depot, who cut its full of your guidance. This come as a company warned that some unsteady consumers are hitting the pause button on big ticket home purchases.
So we spoke with Drew Redding Bloomberg Intelligence US home building analyst.
We first Saske Drew to break down this week's results from Low's and how they compare it to Home Depots.
So, I think Loew's result could be best characterized as better than feared, particularly in light of what we heard from Home Depot. They did fall short of consensus estimates on same store sales, but I think the buy side was probably looking for something flat to lower, so a little bit better than they were looking for. Now that being said, they did trim their four year outlook. Now they're looking for four year comp sales to be flat from flat to up one percent, So that would imply
that four Q is relatively flat. But you know, similar to what we heard from Home Depot, they had about one hundred basis point impact from hurricane activity that was not replicated this year. So again, if you were to back that out, it looks like the underlying trends in the business are pretty stable.
You know.
That being said, they're still grappling with the same consumer uncertainty and you know, the same weak housing market that their competitors, so you know, still challenges out there in the market.
Drew, I think I understand it. Correctly that Lows has a lower percentage of sales to professional contractors than does Home Depot If so, are they trying to narrow the gap? Are they targeting that segment a little more?
Yeah, great question. So Low's is about thirty percent professional contractors seventy percent DIY. Home Depot is about fifty to fifty maybe even a little bit higher on the pro front. What's interesting, and to your point on investment, is the pro space, especially in building products distribution, has really become
a battleground among home improvement retailers. You had Home Depot recently do acquisitions for srs and gms, and then you have Lows who recently acquired foundation building materials, So it's certainly an area where they're making a concerted effort to grow. Now.
Lows has historically focused on the small and medium sized pro and what this acquisition does is it gives them exposure to larger pros who do more complex projects, so they're able to be the supplier of choice across more building product categories and at a larger scale.
So basically directly competing with Home DEEPO in many ways. Is this going to become a duopoly or are there's still a lot of other places that professional contractors can go to.
Yeah, so the building products distribution space is still very highly fragmented, you know, I wouldn't be surprised to see further consolidation within the industry, you know, across different categories. Home Depot and Lows are certainly, you know, two of the behemoths in the industry who have, you know, the scale and financial flexibility to further consolidate the industry. But
there's some other players as well, like QXO. So it is a mented industry, but I would expect, you know, in the coming years, it's something that continues to get consolidated.
I can't keep track of where all the tariffs are these days on all the different products, but I'm just guessing if I'm a Low's or Home Depot, my plywood from Canada that's probably being tariff A power tool from somewhere in Asia that's probably subject to tariff's. How are these companies dealing with it? What have they been telling you guys?
So, Lows gets about sixty percent of its products from the US, so their exposure internationally is maybe not as high as you would expect. China's probably around fifteen to twenty percent. You know, there hasn't been a whole lot of talk. I think we have seen their average ticket increase this quarter was up about three percent, and part of that is in response to tariff related price increases.
Loose told us that they were only modest increases, and you know, they'll take a portfolio approach to how they increase prices. They'll look at their product line up and see where they have more elasticity. But I think the impact of costs will start to come in a little greater as we look into Q four in early twenty twenty six. And you know some of the areas that we're looking at. You mentioned plywood so lumber tariffs from Canada.
We also had the implementation of tariffs on cabinetry both the kitchen and bath, which to go up to fifty percent in January. So I do think that the impact gets a little greater as we look at the next year. So I would expect further price increases from both retailers.
Are Thanks to Drew Reading Bloomberg Intelligence, US home building analyst.
We've moved to third quarter earnings from the global payment services provider Klina this week.
Kliner reported record revenue that beat analysts estimates on Wall Street. The firm also set aside more provisions for credit losses in its first set of earnings since going public.
For more, I was joined by Anthony Hughes, Bloomberg Equity Capital Markets reporter. I first asked Anthony to talk to us about Cliner's most recent results.
Yeah, Well, klan is a company that's actually been around for about two decades. It's just that since about twenty and nineteen they've really expanded quickly in.
The US and by now.
Pay Later is a lending slash payments product which basically allows people to buy products and obviously pay for them over time. And this is an alternative to the credit
card in a credit card option. So really a lot of Klana's growth really reflects the fact that this product's becoming more popular relative to credit cards and for a lot of consumers, it's a good way to manage your cash flow and you know, obviously buy a product and not have to pay for over time, and that suits a lot of people, and it is a fast growing part of the fintech or say consumer lending space.
And as a consumer, how does Clorina make money on my one hundred dollars purchase that they put on their system. Yeah, well they trudge me interest.
No, well, this number of different products that some of the longer term lending products do have interests associated with them. But that paying for product they talk about, which is paying in four installments over a few months, that is an interest free product. And really the source of revenue in this in that instance is from the merchant, and merchants pay merchant service fee. It's high for them, it's
higher than they pay on a credit card transaction. But basically they see the benefit of Klana bringing in extra customers so they can sell more product. And you know, people will ask themselves, well, who actually pays the merchant
service fee? While the merchant does pay that to Klana, but the merchant does incorporate that as a cost of doing business into the products that these sells to you and I. So we in the sense we all pay for the fees that are hidden within the payment system and really merchants passed on to the consumer depending on how you pay the interesting you pay for.
Your who's a typical Klarner consumer out there? Like what what's and what's kind of a typical transaction for a buy nine.
Yeah, well, these are mainly small transactions of you know, can be a few hundred dollars or you know, not not not large transactions. And and you know, this obviously suits a younger audience, and that's where a lot of the you know, a lot of their customer bases come from. But they've built a large business which globally has something like one hundred and ten billion of what they call gross merchandise volume, and that's you know, it's a fast
growing business in the US. It's been growing pretty fast for them, forty fifty percent in this recent quarter. And obviously there's a couple of other companies that are in this area as well, so it's a competitive area as well, with a firm which is another company went public perhaps about five years ago.
That was Anthony Hughes, Bloomberg Equity Capital Markets Reporter.
We moved to some news in the biotech space this week.
We heard that the Danish drug maker Novo Nordesk will be further lowering the prices of its obesity drugs for cash paying patients.
It's in an effort to call back a larger share of the US market from arch rival Eli Lilly. Nova said introductory doses of its blockbuster drugs we Govi and ozembic will be available for one hundred and ninety nine dollars a month.
That price applies to the first two months of treatment. After that, Nova will offer the drugs through its Novocare direct to consumer portal for three hundred and forty nine dollars a month, that is thirty percent less than the current self pay price.
For more, we were joined by Michael Shaw, Bloomberg Intelligence Senior pharma biotech analyst. Well first asked Michael to break down what exactly Nova nord Disk is doing.
And this is obviously ahead of the White House tales. So you're seeing starting dice is being reduced two hundred dollars per month and then doses thereafter being charged at an average of three hundred and fifty dollars per month compared to five hundred dollars previously. So, I mean, you know, those prices kind of align to, you know, the pricing in the White House statement coming from Trump RX, but compared to Lily, I mean they're under cutting them by
about you know, hundred dollars at each dose. And this is basically a ployed to basically compete for new patient starts. As we know, Lee's got the more effective product in terms of weight loss profile, and they're also you know, executing better on the launchers. And I think that's clear from three Q results where we saw contrasting fortunes between those two particular drug makers.
Mikey, give us a sense of this marketplace here, what percentage of the addressable market is actually taking these obesity drugs versus because it seems like as the price comes down, more and more people will be able to get access to them.
Yeah. Absolutely, I mean it's a highly priced sensitive market. When we look at penetration rates in the US, you know, low single digits, that's obviously going to accelerate as these drugs become cheaper. Looking outside the US, penetration rates are even lower, So there's you know, still significant kind of you know patient runway out there in terms of US penetration.
I mean, the White House pricing deal on GLP one drugs, you know, supports kind of use of these these GLP one drugs in medicare you know there we think that it can unlock you know, seven to eight million patients according to a White House statement. I think they said ten percent of Medicare beneficiaries would become eligible for GP one drugs based on the pilot program, and that's going to be introduced in twenty six, and I think it's going to become mandatory in twenty seven. And then they've
also you know, loaded the price in Medicaid too. I think the uplift in terms of patients there is a bit harder to deduce or to kind of model, given that you know, coverage is going to be on a state by state basis, and there's also kind of different qualifying criteria, which again is state dependent.
What does this mean, Michael? For the companies like Hymns and Hers, the companies that make compounded copycat versions of these anti obesity drugs, they've done very well. And I know those stock for Hymns and Hers has been kind of all over the place, but it is modestly higher from where it was at the start of the year.
Yeah, I mean I think that whole well, you know, the compounding situation. I believe that you know, one point two million patients from compounding GLP one at the moment. That's based on kind of comments and Novo made during their three key results obviously loaning down the price. Would kind of of the branded treatments would basically well, I mean it would it would you know, lessen the delta
between you know, coffycats and branded treatment. So I guess it's a negative for for for these you know, compounded GLP one drug makers.
Mikey.
When I look at the big cap farm of names, is it as simple as I want to own the ones with exposure to obesity market and not own the ones that don't. Because I'm looking at your your slate of stocks and you either up thirty percent or you're down.
Yeah, I mean I think you know, there's a there's a few large farmer names which which has entered the space. You know, in the in the recent years you've seen kind of deals with Ross and Zealand for an Amlin drug. Most recently you've obviously got the fires and met Sarah
an a deal. I mean, I think obesity is obviously appealing given you know the size of the target population, how underpenetrated it currently is, and you know, if you're looking to you know, offset patent expirations later in the decade, you know there's an abundance of of kind of Jill point on products out there as well as other assets too. So I think that's the appeal of the space. It's a large market, it's underpenetrated, and there's high demand for these treatments too.
I mentioned M and A, And of course we know that JANJ is making a purchase to increase its pipeline to get away from relying on these older drugs that have lost patent protection. Is every farmer company doing the same thing. Is that you know they're not only strategy, but is that the way they move forward? Is there anyone who's kind of like in a good position and doesn't need to make a deal.
I mean, I think that's always been part of the large farmer model. They supplement kind of in house innovation with extern of innovation, particularly if they want to get into areas perhaps outside of their cool competency. But I mean, I think that's just that the model in general. Biotechs always been the pipeline for large farmer companies, or at least help Bell cault that pipeline.
Our thanks to Michael shop Bloomberg Intelligence senior pharma biotech analyst coming up a look at why the global sports company a Maorsports raised it's full your guidance.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries.
You can access Bloomberg Intelligence through Bigo on the terminal. I'm Scarlett Foe.
And I'm Paul Sweeney, and this is Bloomberg.
This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney on Bloomberg Radio.
We move next to earnings from the department store TJX.
The off price retailer reported third quarter sales that beat analyst estimates. It also raised its guidance for comparable sales this year.
It's a sign that your shoppers are turning to cheaper options as economy shows signs of d for more. We were joined by Mary Ross, Gilbert, Bloomberg Intelligence Senior Equity Analyst.
We began by asking Mary for her take on this week's results and whether she is a fan of TJX.
I'm a fan too, and they it's because they carry such a variety of brands and it appeals to all income groups. So if you have a luxury consumer, you can get Balanciaga you can get Chloe low. So they
carry all of the brands. And then if you're more oppressed and you're really a valued consumer, they have Steve Madden, they have Theory, so they really they have Puma, they have Nike, Adidas, so they have all the brands that consumer want and that's why they're Marmax, which is tj max and Marshall's division, reported a comp sales increase of
six percent, and that's why. You know, if you look at the overall results, they were up five percent, so a lot of strength there within the Marmas home goods and of course Canada. Canada was up eight So we're seeing consumers flock to get the brands that they want and they've had some amazing buying opportunities, so their margins were higher.
So the way that TJX stocks at stores is that they get inventory that hasn't sold at full price stores. But if all these merchants, all these retailers are managing their inventories better and don't have a lot of excess inventory, where does tj X get its inventory. I mean it has to have another option, right.
Yeah, Scarlett, you raise a good question, But the fact is is that some of the retailers, but also the brands themselves. So if you think of for example, PVH, which has the Tommy Hill Figure and Calvin Klein brands,
we see those brands pretty prevalent throughout off price. So that's been a good channel for them to sort of release some of that excess inventory, and when they work with some of their wholesale partners, including the department stores, So were you have product that's not selling off price is just a natural fit to be able to release
that inventory. So you want to keep your inventory fresh in the stores, especially when you're a full price operator, and there hasn't been any slow down in terms of that excess inventory. And that's why even on the luxury side, where typically you wouldn't think you'd find markdowns, it's been pretty prevalent, especially with overall weakness and luxury.
So what does the folks at Cheak, TJ Max, what are they saying about the consumer these days?
Well, the consumer, I mean they're really seeing strength. So it's interesting because when you sort of read the take on Target with their results and they sort of cited you know, the consumer is very cautious, but that caution I think what's really going on is that they've got
the brands that consumers want. So those that are executing are the ones that are getting the sales, because even some retailers that are more full price oriented are generating sales or they may be promotional, so the consumer is flocking to value, There's no doubt about it. But we do see some you know operators. You've got Ralph Lauren on the luxury side. They continue to outperform and their
sales are always topping expectations too. And consumers there are willing to pay full price, so there are a lot less promotional every year. They seem to be less promotional for that reason, they're able to sell at full price.
So clearly TJX has a strategy that works well given the current environment, and even when the economy is doing well, I would argue it has a strategy that works well. At what point do investors want more from the company than just executing on the strategy? Well, they want I don't know, am an age or do they want consolidation? Do they want innovation from TJX?
Yeah, Well, so that's the reason why TGX is focused, you know, internationally, so they're going to be entering Spain in twenty twenty six, so coming next year. And of course they've had some They have two joint venture investments, one in Mexico and then one in the Middle East, and they're both off price retailers that they've invested in, So they're basically taking their talent and providing them a platform to leverage their talent in these joint ventures and
to grow that way. So they're always looking for ways. Because Scarlett, you bring up a good point. TJX trades at a pretty high premium in the off price space, and generally it's a pretty big premium that is due to their very consistent execution. But you're right, consumers keep wondering, well, how can they keep growing on top of all this growth, and yet they keep doing it. But as they talk about, look,
they have drops several times a week. There's not a lot of retailers that offer fresh merchandise several times a week, and they curate the merchandise by location, so they're very cognizant of the demographics for each location.
Thanks to Mary Ross Gilt at Bloomberg Intelligence, senior ecody analysts.
We moved next to news from the Global sports company a mere Sports.
This week, the company raised it's for your guidance for the third time this year. That's after a strong demand for its Solomon footwear drove quarterly sales to a record.
Sales growth at the group's other two units, including the technical apparel segment and the ball and Racket sports unit, also surpassed estimates, and overall group sales they hit a new high.
For more, we were joined by Abigail gil Martin Bloomberg Intelligence at leisure and footwear analysts on amer sports earnings, the first to as Abigail to break down amer sports most recent earnings report.
They did really well, you know, sales up thirty percent, broad based strength across regions, across channels, and across brands. I think the key thing people are looking for was China. Arctics recently had some controversy in China with fireworks display in the Himalayas that what fireworks display.
Displayed fireworks in the Himalayans.
Arctics for set off fireworks exactly. It was definitely a misstep for an outdoor brand that's really focused on sustainability, and there was definitely some concern that there would be a little backlash in China. There's definitely a lot of people upset about it, and they were fined by the
Chinese government and working to restore the ecology there. But Greater China was up forty seven percent, momentum is continuing into four Q so I think that was really a big takeaway, just quelling investors' concerns about potential backlash in China, especially because they're the number one outdoor sports brand in China.
Arctereric So, I had no idea that they have such strong brands. I mean, a Mare Sports on its own is kind of it doesn't it's not memorable the name, the parent company name, right, but the brands of course are Solomon, Arctic, so Wilson. As you mentioned, what does the tariff picture look like for this company.
Yeah, I think it's very similar to most of the other companies. I think for them, what benefits them as their premium positioning. They're able to raise prices and they're not seeing any from consumers or pullback. They're still seeing very strong full price sell through, so they're able to offset some of those tariff costs with that, which I
think is really helping. And we're seeing that with a lot of more of the premium brands are able to kind of navigate through the tariffs since their consumers are willing to pay upper KU, upper.
K of the K shaped economy.
I guess I know that's I guess where you want to be there. Talk to us about the footwear market here. I think you know, Nike, Adidas, all that kind of stuff. What's going on there?
Yeah, I think you know, we're in store for a very interesting holiday season. I think that we're going to continue to see the premium brands continue to do well on holdings. Recently just reported and did phenomenal, and they also said they're not seeing any backlash on raised prices and they'll continue to do you know, limited discounting through
the holidays. So we may see some differences between the two companies, but we just had our recent BI survey and Nike continues to let I think there's been concerns overnight, but they still are the major shareholder and still a favorite brand of millennials. Gen Z's everyone for the holidays, so they should continue to do well too.
What is the maorsports distribution strategy? Do they have a DTC offering or are they going through third party retailers.
Yeah, that's a great question. So it's a little different for each brand. For Arctics, they're leaning a lot more into DTC. They've changed their distribution strategy from basically nine eighty percent wholesale to eighty percent DTC over the last three years, and they're really focusing on growing their store base because I think not a lot of people know about Arctics. It's really going to help the brand awareness.
So even in the US, they're looking to double their store account by twenty thirty so that through Solomon continues to be wholesale, especially for footwear, we're seeing this holiday season consumers strap for cash.
They're wanting to.
Go into the stores and try on their shoes and make sure it's the right fit and buy them versus you know, buy five pairs and return them. Yeah, so the wholesale distribution for Solomon and is really key, and they're in a lot of key premium partners, I would say, and you know the running specialty stores as well.
I mean, I'm looking at your report here research your reportal on the sneaker business. I didn't know there were so many shoe manufacturers. I mean, Nike's the dominant one, as you said, but there's like fourteen in your survey here. Yeah, yeah, No, that's a competitive marketplace.
Definitely, it's getting even more competitive as consumers with AI technology, you know, there's just such more of a breath of discovery. So that's where product is really coming into play this holiday season. I think, you know, the innovation, product and style.
If there's one thing to be worried about when it comes to amre sports, what would it be? I mean, what's an area that they're not executing on?
So I think the China thing was the one uncertainty for this quarter that we were Definitely it could have gone either way, so that would be the biggest thing. But honestly, they're executing on most of their things as drivers are, DTC, Women's and China and all of those were up double digits and more. And they're really gaining share in women's which I think is a big new opportunity for them as more women joined the outdoor market.
All right, which have you purchased in the last twelve months? Sneaker brands for baby boomers? Sketchers?
Yeah?
What what Sketches continues to win?
It is Honestly, they're.
So comfortable, they're like the price point, the quality. I know, I know, I know, I know, but.
This is not something that they market out there, that they put out there.
No, and they're the third largest footwear brand globally. Really, yeah, I think right behind Adidas.
Next, you're going to tell me that, you know, the boomers are using the shoes with the little wheel in the back of.
The No, the wheelers, the wheels.
Yeah, No, they're doing the step ins.
You don't even have to bend down exact it.
That's what I think it is. I think you're right, all right, Yeah, there you go. I mean the kids, the gen z, the millennials, they're still in that Nike. You yet, brands still audience.
Or Hokahs, yeah, ka Hoka and on are gaining, but they're you know, they're still small, and I think people don't realize that just because there's been such a big boom, they're still very like West Coast East Coast oriented, you know, they still have a lot more room to grow brand awareness in the US, especially in the middle of America.
That was Abigail Gilbart and Bloomberg Intelligence at Leisure and Footwear Analysts.
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