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Lululemons, that's up three point two percent today. That's a good news. The bad news it's down twenty percent year to date. It's down fifty percent over the trailing twelve months. I understand they don't have a CEO either, so I'm not sure what's going on there. Big fan of Lululemon, don't get me wrong, but I think there's a little bit of them.
What was the last Lululemon item you bought?
Not one, but I'm a big admirer.
Okay, yep?
Put them.
Goyle, Senior US e Commerce and Retail Story Intelligence joins us from Princeton.
Put them.
I note Lululemon reported some results here. A what did you see in the results? And B what's the latest on their CEO search?
Absolutely on their CEO searches that it's still undergoing and we don't know where they are as far as the results are. Concerned. They posted respectable for Q numbers last night. A one percent increase in revenue was better than the one percent roughly declined that we expected, so a little better. The concern was really the guidance the outlook for the next quarter, which is one queue and the full year
was still very light. Now, I don't know if it's that they're being conservative because clearly the turnaround hasn't begun to take hold, or that things are still soft as they continue to mark down product to get rid of some of that inventory and bring in new product. So I'd say mixed results overall, Still cautious on the turnaround. We're not confident that it's beginning to take hold just yet, but we can somewhat say that, you know, maybe we've hit the bottom.
Okay, I have a seventy five dollars credit at Lululemon every quarter because I have an American Express Platinum card. Of course you do, and this is one of the benefit of it. But I struggle to use it because I haven't found anything that I want to spend it on. And I go and Reddit and a lot of people feel this way. They do, or they did talk about having a new designer and some new product, but that
has not made its way into stores just yet. What is the latest in terms of just innovation, new design, freshing up their lineup?
You know, Yeah, so you're starting to see some of that trickle through. We were just at stores last week and we did see some new styles come through. I'd say the bulk of it, though, we'll be in the spring and summer, so that is when you will start to see some of the new product flow through and hopefully more exciting lineups that you will feel excited to spend your seventy five dollars credit on. I'd say on the women's side, that's where most of the work is needed.
For men's though they've done really really well. Their men's lineup is pretty solid. They're doing really well internationally. I do agree that in women's in North America specifically, they need to show more and deliver more, and we expect to see some of that in spring summer and we'll know more if they'll resonate to see if the turnaround can actually take hold.
So the other thing that Lula Lemon has to contend with is Chick Wilson, the founder. As far as I know, he doesn't actually have an operating role in the company. He's not on the board, but he is kind of in the peanut gallery agitating for changes overhauls. What kind of influence does this have on the existing board and on investors' expectations.
Yeah, he's been advocating for change for quite some time now. We did see some change come through just recently where they did appoint a new board of director and one of the current board of directors will not be renewing, so you're starting to see some shake up. I think he's still calling for more rightfully. So you know, lul Lemon has definitely lost its mojo over the last three years and it's given up a lot of the upside
to competition. So I think change is coming, especially as we wait for the new incoming CEO to see who that will be. I think that'll be the key inflection point to say, you know, can this new person bring Lulu Lemon back on board kind of reignite the double digit gains that we're used to because quite frankly, a low single legit increase is not what you expect to see at a Lula Lemon.
So I'm looking at the an R function on the Bloomberg terminal for Lululemon. I got three buys, one cell and thirty holds. What are those thirty analysts waiting for putam.
And new ceo, new direction? Do we want to see the new product?
I mean I can go out there and go to LinkedIn and find them somebody.
Well, Paul, you're applying, you know it has to be the right person, right, you have to get the right person. We need to make sure that we get a person who understands the DNA of Little Lemon, who understands the athletic work space, and really is a product led a person like for me, it's important to see that someone comes through who understands that retail one on one is about the product first and everything else after.
Okay, But Calvin McDonald, the CEO who has just left and who's come under pressure because things started to kind of slide at the end of his tenure, he was that person initially because when he first joined sales took off and he came over from Sephora. So he clearly has a merchandising background.
He does, but it's in beauty if you remember. As soon as he came on, I think the first big pressures he had was let's launch a skincare line, you know, the deodorant and some of the lotions, etc. That didn't go too well. It was a nice idea very high gross margins eighty percent, so in theory sounded great, but it didn't really resonate and get a Little Lemon anywhere. I think what we need is someone who understands the
apparel and the at leisure space. Someone who knows that you need style with performance, because that is what this brand demands. And constant newness, like a Little Lemon, has to outshine the broader competition, and that's become harder with just technologies being almost available to everyone.
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All right, it is still earning season, believe it or not, and the retailers are reporting results. We heard about Lulu Lemon earlier. Let's talk about Macy's. The stock is up about five percent. In this morning's trade. Mary Ross Gilbert is our senior equity analyst covering retail and she joins us. Now, Mary, what do we learn from Macy's.
What we learned from Macy's is that Macy's has inflected to positive comp sales. They were looking to achieve sustainable growth. We think they're there, and for this year they're providing i think, very tepid guidance. They want to kind of budget where you know, do higher gas prices have an impact, But overall, the consumer is very resilient and they're attracting more of the middle income to higher income consumer, you know, across their brands, primarily you know, the Macy's name plate.
So they're expecting comp sales though they're guiding to be down half a percent to up half a percent, but we think they'll easily beat that. And of course for the first quarter they're already seeing strong traction and at the high end they're guiding for comp sales to rise one and a half percent. So what we're seeing is that the name plate looks like it has inflected to positive comps, and we certainly see the changes when we go in the store.
What do you see when you go in the store, Mary that that that's different or maybe positive in general.
Yeah, So what we're seeing is the stores are constantly evolving. I mean every time I go in there, I'm seeing something new. So I'm seeing new brands, and what the company reported on the calls, they've added sixty brands. So when I go in there and I'm you know, obviously focused on women's wear, but I did kind of take a look and I saw Roden Gun in our local store, so that was kind of a nice addition. And the stores are just the merchandising is so strong, and the
sales people. This has been the best encounter that I've had with sales associates. When I went in the store just yesterday, I encountered at least three associates. They were well appointed, absolutely charming and engaging. And because they have some of these new labels, I actually tried something on. I'm really a Bloomingdale's person. I really love the premium brands, but I did see some really good brands in there.
My favorite is a Vec lo Fee and I tried on some of those genes and they're oh, they were amazing, absolutely amazing. So I really think that Macy's has come back. They're bringing in all the brands that consumers care about, They're attracting younger consumers. So I really see very good execution here with the company.
What about execution at Bloomingdale's, And I bring this up particularly with Sax's issues. SAX of course in bankruptcy protection right now and trying to find a way to get through all of its step problems.
That's all been a benefit for bloomingdale. So Bloomingdale's has been executing, you know, for the last few years, and it's an ongoing process. So just in our local store just opened was the Christian Lubaton shoe boutique. And of course these are licensed businesses, but it doesn't matter. You know, they're not reporting comp sales on all these different basis. It's just comp sales. So it does include the benefit of licensed brands. But so they now have a Chanelle boutique,
and they now have the Christian Lubaton. But they're always if you go to Ready to wear, you're seeing constantly, you know, new labels coming in. So it's very exciting. I love Bloomingdale's and that explains why their comp sales were up ten percent. Essentially in the fourth quarter. I think that is some of the gains coming from Sachs and Neiman Marcus customers given the bankruptcy lack of product
during that time. So they're they're the beneficiary, and that's why they really emphasized how they're focused on expanding the chain this year and the company, one of the executives did indicate probably a month ago that they would look at some of the stores that might be closing if
it's relevant. So they're they're looking to see what opportunities are out there because they're only in fourteen markets, so there's a there's a great uh, I think expansion opportunity to with Bloomingdale's right.
Well, Scarlett Mary, she shops in only the best locations. Westfield Century City, that's where she goes to. The race is there, and that you think the short Holds mall is nice, The Westfield Century City Mall is spectact there and by the way, Lolover's offices are right there. Oh, so that's how it works. It's good on lunch to them all and that's that work. We love it. What's
makes you say about their store count in general? Here, because there was a decade or more of the department store industry really reducing store count.
Yeah, so they're they're closing fourteen stores that's probably mostly closed at this point, and then going forward, there's about sixty five more to gore to go and those will close through twenty twenty eight. They're not in a hurry to close them. They want to make sure they maximize the real estate value. And it's okay because those stores are profitable. But the go forward store base continues to be the three hundred and fifty stores, and so they
will get there. Like I said, by twenty twenty eight, they'll have gotten rid of the last of the sixty five stores they plan to close. So I think, you know what, once we move past that, you know, the overall top line should look good.
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Let's get back to the market. Talk about an individual name here, Unilever. What we've seen in the package goods sector is a lot of companies trying to figure out a way to jump start growth as inflation has eroded some of their pricing power and cause some challenges for the stocks. One of them is Unilever. We want to get the latest on what they may be thinking about in terms of maybe changing up the company and strategies.
We're joined by Diana Gomes, Bloomberg Intelligence senior equity analysts. Diana, what can you tell us about Unilever? I mean, we kind of know the brands, there's a million brands underneath a Unilever umbrella, but what are they doing to think about juicing growth at that company?
Yes, thank you for having me so. Nil Ever is really coming through a few years of transformation where they split the Magnum ice cream for instance, to really focus more in their core business, which is personal care and beauty as central stage. That's where the company has been really refocusing their premium and innovation and really getting the marketing machine behind that segment in order to get to that four to six percent organic sales growth target in
the medium term. However, we see some challenges, especially in the near term to get there, and the guidance for two twenty six was already quite cautious, partly because the food business has been seen quite weak demand, particularly in Europe, even though they have very strong brands, so Almans and no are the leading stars in that unit. But obviously with the geopolitics uncertainty that that's some level of additional risk.
Right And when it comes to its food business, Unilever has been consistently reducing its exposure. It's sold off its spreads business, the part of the business that contains I can't believe it's not butter. Last year it sparat off its ice cream division into Magnum ice Cream. It still holds a twenty percent stare, it is steadily selling that down.
Is the goal here to shrink foods into something that's not meaningful because the CEO is at the end of the day, really a beauty and wellness guy rather than a food sky.
That's an interesting question when when asked about it, ever, keeps defending that they are very behind the main brands of the foods business. But obviously they are in the middle of that program to divest about one and a half billion euros in what they call non core brands food brands, and this would include some European local brands, where probably the effort to to really pull up that growth is seen as too much for the return and
it can be distracting for for management as well. But this food business is still quite margin creative for the whole UNI level group now without Magnum ice cream also cash a creative, so it still makes sense to to
have it in the portfolio to some extent. But I do see why, especially in this background, why there could be some vision to try and accelerate the that split and considering different options as as they have been saying that they are, but just a reiteration of that in the last in the last day or so.
So I look at the A n R function Diana for a Unilever and I see eleven buys, eleven holes and four cells. It shows to me the street has no idea what to do with this dock. What do you think the bulls want out of Unilever today?
So it is about where people would be, I guess in terms of not wanting to put words into their mouths. But the way I look at it, it depends where we see their journey to get to accelerate that growth further. The main goal is really to drive volume growth, and Unilever already showed that they can get to the two percent at least two percent mark in the fourth Q results in the back of some of the fixes they
had been doing also in emerging markets. So it is about, I would say, where people's confidence is in terms of where it goes from here versus where it's already and the very the drive really is on the premium innovation and that focus. And we saw already a lot of the transformation bringing in benefits already in last year in twenty twenty five, So can they do better in the new term?
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General Mills Cheerios right, yes, that's how I start my day with the bullet cheeriers. What happened with General Mills? What did they report?
So basically it was mixed. Results were mixed compared to consensus. They they seem to be doing better obviously, there were some puts and takes, some tatwinds, but they seem to be a little bit more quarter dense rather than something that we can extrapolate into next quarter. So yeah, I mean, obviously I think the stock is down and it's because you know, while volume underneath underlying volume is improving, it's still it's still weak and to get volume growth it's still very expensive.
Just looking at the PGeo function that breaks down kind of where they get their revenue whore they break it down pretty finally baking mixes and ingredients, dough, super premium ice cream, cereal, convenient meal, snacks, yogurt, pet other way they break it down. So what are there certain segments that are doing better than others? Are Are they one of these consumer product companies that are saying, if something's not working, we'll sell it and will try to invest in the areas that are growing.
That is, you know, all of these companies have done some portfolio reshaping. You know, yogurt has been a headwind because they spin it off, so that is obviously one of the things the latest you know spin offs that they have done. But yeah, they are very sharp in terms of their portfolio. You know, reshaping, but it seems that now they're investing more on making the brands that they have grow, and some of them are growing and some of them are not.
Stock is year to date down about seventeen percent, hit a fifty two week low today. Here, how are the General Mills of the world, the Proctor and the gammeles, How are they dealing with the consumer facing particularly the bottom end of the K shaped economy, facing economic pressures now it's more money to fill up your car with gas. How are they dealing with that?
Yes, so this company, in particular General Mills, they actually reduced guidance during Cagney last month, and it was basically because volume growth is just not there and they're trying to increase marketing. They're not necessarily trying to rely on price cuts, but it seems that that is going to
have to start happening. More competition they're seeing, for example, for snacking, they seem to be a little bit more competitive then the category used to be dog seems to be still a little bit of a headwind for them. So we're seeing, you know, there seems to be a little bit more of cautionary tail for the consumer and definitely with prices spiking for gas, it's not necessarily helping.
You know, I don't know if it's just me, but I mean when I go to a supermarket now, I see many more store brands in more categories, and they're also getting better placement in the shows, which it's important for you guys. Yes, talks about just the competitive landscape of brands, name brands versus kind of the store brands.
Yes, So basically retailers have been investing on their private label portfolio. Uh, it's about a quarter of of their revenue at this point. They're trying to obviously navigate. They don't necessarily want to anger the national brands, but they tend to fill out certain white spaces that are not necessarily cater by by these national brands. And at some point,
you know, sometimes they're competitive more competitive. They have tiers of of you know, pricing for for this private label, and you know some people actually go to these stores to buy their private label.
What's the we're now, I guess, you know, roughly a year into these teriffs, what are the consumer project companies are? What are they saying these days about tariffs and passing it along versus taking into their margin. Where are we knowing at.
Yes, so some of a lot of it has gone through the P and L. They they're very hesitant about increasing prices again, they're thinking it's more on the price competition. They're going to be more price competitive going forward. So we're seeing headwinds on the on the margins rather than you know, just passing through.
I'm looking at this company, General Mills, and they have a six point three percent dividend yield.
That's pretty good.
Yes, How safe is that? How do they committed? What's their policy on all that?
Well, they usually try to grow it at the same rate of earnings, so we don't necessarily see them as as you know, being a little bit you know, increasing share repurchases are probably like spiking the dividend. We're probably going to see a lot of the same, you know, just dividend growing at the same pace of earnings.
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