Bloomberg's Shah on Retail: Too Many Stores, Categories (Audio)

with global reach under long history of disruptive innovation. To learn more about her Cove, is it h u r c O dot com, slash Investors NASDAK ticker symbol h u r C. Now let's head right over to the first Word Breaking news desk for today's afternoon call, and here's Bill Maloney. Good afternoon, Charlie. Equities are under pressure around the world, thought of that North Korean nuclear test

and the FEDS rosen grens hawkish comments. Dallas currently down three hundred points, SESSP s drop forty one and NAZAC is lower by a hundred and four. But Dow in S and P fell below their to fifty day moving averages. The small cap six hundreds down two point six percent, and the US ten yell hit one point six seven percent,

driving higher yielding stocks lower. All ten SP sectors fell, led by losses in telecom, utilities and the materials down Transports dropped two hundred nine points and as a biotext fault anyone and the vix is up by thirty two percent. Down Leaders to the downside included Verizon, Coca Cola, Bowling,

and Caterpillar. Finnisar surged as much as eighteen percent after its results, while diamondov Shore felt ten percent amid declines and energy Live from the first Breaking news desk on Bill Maloney, Try alrighty, thank you very much, and to hear live breaking news over your Bloomberg type squawk s Q you a w K on your terminal. I'm Charlie Pellop. That's sub Bloomberg Business Flash. You're listening to taking stock

with bim Box and Kathleen Hayes on Bloomberg Radio. If you happen to be a shareholder of Peer one Imports, the retailer um, you'd be forgiven if you feel as if you walked off a pier. In the last two trading sessions, Peer one Imports stock has lost nearly twenty percent of its value. Here to tell us more about the consumer discretionary sector of the economy is Sema Shaw our consumer discretionary analyst for Bloomberg Intelligence. You can follow

Seema on Twitter at Sema m Shah. Bloomberg Intelligence, of course providing unique in real time research and a variety of industries as well as markets and government factors that affect business. Our terminal customers can access this function by just typing b I go on the Bloomberg Seema thank you very much for joining me. Um. You heard what I said about Peer one imports. I'm wondering if you can kind of dissect those results, but in the context

of perhaps overall weakness and consumer discretionaries spending. Sure for peer one pre announced their two key results they actually supposed to report at the end of the month. There sames to sales fell four percent, But this is in spite of a rise in e commerce by three d basis points in terms of penetration year over year. So what that tells you is they've been spending money on their omni channel investment, but they're not picking up extra

sales or extra traffic. So O, just the clarifi, omni channel means they'll sell it to you anywhere, whether it's over the exactly whatever works for you, And what's happening is you're seeing them basically destroy value in the company because they're spending money and they're not getting a return on And what I think is happening is they're just they're not seeing the traffic, and poor traffic is permeated across the retail industry. Target mentioned it um In fact,

Barnes and Nobles mentioned it. I heard you talk about them earlier, and what he said those very interesting is many of these retailers have historically been located adjacent to other retailers that drove traffic. So when their peers and other categories, say Barnes and Noble and Best Buy, they both see traffic decline, it multiplies the multiplier effects so that the negative traffic experienced by both is even higher.

And I think that something to take into consideration. So you have that aspect, and I think generally consumers do have less extra money to spend, and if they do they have to spend, they have a lot of necessary discretionary items to spend it on first before spend it on funt stuff. Before we get into the details of

that kind of discretionary spending. I'm wondering if you could just sort of put together when what we've heard about department stores, because we know that Macy's is in the process of exitings or more right, so, as we've seen people move online, a lot of retailers are closing locations and the ones that they are leaving open have to be very productive um generating positive cash flow, and they're trying to eventually integrate those stores into being distribution center

so they can ship product from those locations to lower freight costs and also to get the product to the customer quickly and better compete with Amazon. So what you're seeing across the board as the United of States just has too many stores and too many categories. That's everybody overbuilt in the late two thousand. Now they're trying to close it and be nimbler so they can compete with Amazon and the other players that are coming up. What

have you learned from the Goldman Sachs Consumer Conference. UM, there is a lot of focus on omni channel, which we discussed earlier. That's really where every retailers trying to going in. I think in terms of the consumer, it's been mixed. Tractors supply pre announced and said that things were weak, and while they cited weather, energy related states, and also agriculture. It seems like the negative effect from

those commodity shocks is spreading to community. So and then and I think, you know, even the Dollar Store spoke about UM a weaker consumer on the low end, So I think that's pretty broad span of companies. And then you have Restoration Hardware last night, which you know is performed well today, but their core their core calms were down three. So despite the fact that they are total sales increase, a lot of it was from the acquisition of Waterworks and some of their new store. So the

core business is still slow. And you're still seeing retailer site driving traffic as a problem. And that's sort of what we thought the Consumer conference Luxury Retailing tell us about that UM Luxury retailing continues to be tough. Tourism, you know, they're going to anniversary, which means that like the start of the decline in tourism starts a like Q three, so you'll see easier compares for these retailers, so they might do better year year and versus street estimates.

But global, I guess a global tourism remains weak. Other parts are the regions of the world continue to be remained weak. And even the Chinese tourists who used to be coming here and spending they've increased their tourism within their own geography within Asia, so that also hurts retailers here, and the US luxury consumer is not picking up the slack. I've waited for last to just ask you about the Amazon effect, because that ends up being something that's a

bigger and bigger footnote and pact, maybe a paragraph. Now, Amazon stealing business from everybody, I think for the most part, yes, maybe not in a specialized brand, maybe not in high end jewelry, but I think what they They're number one, and I think it's really, as I mentioned, a race to number two in your category, and that's what people are spending on on having an app, on having that

seamless transaction. But as I mentioned, was pure one. A lot of these retailers are also seeing value destruction in terms of their return on invested capital because they're not getting that sales returned. So Amazon continues to be a threatened They move into more and more categories, and you have to be nimble if you want to compete with them and survives. Much is our consumer discretionary analyst for

Bloomberg Intelligence. For more on Bloomberg Intelligence, just type V I go on the Bloomberg Coming up on taking stock. Former Minnesota Governor Jesse Ventura he is gung ho on his marijuana manifesto. We've got details ahead.