Need-Based Retail Prevails Over Want-Based: Telsey

earnings and all things retail. To do that, nobody better to talk to than Dana Telsey. Dana is the CEO and founder of Tells, the Advisory Group based in New York. Dana, thanks so much for joining us. Let's start with those earnings that we've got today, Target and Lows, blockbuster numbers, stocks really popping. Gives your takeaways, I think overall, what you're seeing is value and convenience is working. When you see things in open air centers, they definitely are gaining

the traffic and gaining share. When you think about both Target and Low. Of the numbers certainly came in a little bit better than expected. I mean, that's better than expected same store sales. That target was very impressive. Keep in mind that comp of three point four percent better than the the consensus number at just around three percent,

and it's traffic up two point four percent. That certainly is is very super impressive, and it comes from the merchandise assortment that they've had, the price investment that they've made, the new private brands and remodeling stores. And then you see Low's also they maintained their guidance but delivered a beat on the second quarter, and their US CAMP of three point their US CAMP of three point two percent

was quite solid. It basically mirrored and came in slightly better than home depots US CAMP of three point one percent. So I think overall, these big companies have been able to integrate, certainly omni channel initiatives they're using buy online, pickup in store. The product assortment and price investments are working, and there delivering on the gross margin, a big difference than what we've seen in some of the apparel companies.

We've seen gross margin headwinds and apparel companies, we've seen gross margin improvement at some of the discounters and home retailers, Dana, It's interesting to me to see how people are viewing these earnings in light of the US economy. In other words, people looking at Target, Walmart and Lows and saying, look, they beat. The consumer is strong. And on the flip side, these are traditionally discount stores, and Lows not a discount store.

But people usually renovate rather than move if they don't want to make an investment in buying a home. Uh So, how are you viewing the beats in terms of that broader perspective? I think overall, when I think about the US consumer, what it tells me is that the consumer is healthy. When I have traffic games like up two point four percent in traffic games at Walmart, that's encouraging. It wasn't done just on price the loan. It was

done on more consumers walking in the door. When I think about what I'm seeing in apparel, it's a different worlds and apparel. The head winds of tariffs are definitely going to be an issue, and you had Macy CEO who basically said that trying to pass on some of the price increases, the consumer won't accept the price increases. There's needs and there's wants. I think both the home improvement retailers the discounters are more need based retailers. I

think apparel retailers are more want based retailers. And certainly an apparel given that you've had a consolidation of wearing occasions work weekend, Jim and going to a party work weekend in gim er all one, you can basically get more value for your money in in apparel in different places today than what you have in the past because you don't need to buy as many different outfits, so you better get it right in order to make the difference.

So Dana, give us a sense. Just you've covered the broad retail space for such a long time, you've got your finger on the pulse of it. You know. One of the concerns out there that I hear from investors is that the US, despite all the store closings that we've seen, whether it's toys, r ust or whatever, the US is still way overstored. Can you give us your

thoughts on that. I think overall, when you're thinking about stores today, I think we do have a smaller store base that's required for retailers than you had in the past. It's got to be the right stores, and it's got to be the right centers, and you're seeing transformations happen. I call it reinvention for relevancy, and I think you're seeing experiential factors being placed in shopping centers. It's being placed in retailers too, in order to create that destination.

And whether it's food, whether it's events, you're seeing every type of retailer in order to connect to their customers. You have to innovate, you need to offer speed, and you need to learn from the data of what to offer them. So when I think about the number of stores, you're not seeing as many stores open, you're not seeing as many shopping centers open. Reinvesting in both the center and the store is required to stay relevant. DNA. It's

so interesting when you talk about investing. It really highlights how companies that have money and have scope have such an advantage right now over those that are struggling under the load of big debts or just a lack of cash. Right and so you're seeing sort of a tale of two cities within the retail space. But I have to wonder size is it a benefit or a detractor? Because people were talking about how department stores are trying to be everything to all people, and that became a problem.

On the other hand, Walmart and Target are doing well because they are able to sort of leverage all these different aspects of their businesses and provide a holistic kind of you know, role for for the consumer. I'm just wondering where when a size good and when is it not. I think, whether you're big or whether you're small, if you don't have an innovative products, it won't drive demand. When you think of what's happening with the apparel companies,

the apparel companies, brands, whether it's Levi's reinvented themselves. We can look at companies like what BF is doing with north Face, with Vans, which has been the collaborations they've had, which has been so compelled selling. You're taking a look at companies that are in the midst of transformation like Tiffany's, who is upgrading their business while you're having Target and Walmart.

Look at big bought small Target. I mean Walmart has bought many smaller companies in order to be able to enhance their speed, to identify omni channel and integrate omni channel into their business. Look what Greg Bran at Walmart. At Walmart did with their U S stores. I think investing isn't isn't a just nice to do, It's a must do. And I'd rather be small and more profitable if you're investing and you're making yourself essential to the consumer,

rather than just have size for size six steake. Scale matters as long as you can drop profits to the bottom line. So Dana has Retail America have they weathered the Amazon storm? I look at the Target did their Their digital sales are kind of really strong. Digital sales at Walmart as well as as retail America kind of weather that initial on a lot by Amazon over the last a dozen years or so. I think they have.

I think if anything, we've seen every company turned themselves inside out and basically having Amazon taught them that we need to make the best better and make the best better, whether it's data, whether it's logistics, whether it's supply chain. There's speed to markets getting faster, and looked at today, whatever goes down the runway today should be able to be bought in the same time. So I think that the paste of newness is faster than it's ever been before.

Danta Telsey, thank you so much for spending time with us today. Dana Telsey, chief executive officer in chief research officer at Telsey Advisory Group, who owns Greenland? Who should own Greenland? President Trump says that he would like to buy Greenland. Dana's primate chain is Minister Meta Frederickson. Spoke on this issue at a press conference at nine Eastern talking about Trump and Greenland. She was speaking in Copenhagen. Listen to what she had to say. A discussion has, however,

been very raised about a potential sale of Greenland. Um. This has clearly been rejected by Kim Kitchen, a position that I share. Of course, this does not change the character of our good relations. Well, perhaps it doesn't change the character of the good relations between what's going on there and the u AS. But President Trump decided to cancel our reschedule a meeting with the Prime Minister due

to the issue over Greenland. Here to give us a sense of what this hall is about, Morton Butler, political reporter for Bloomberg News, coming to us from Copenhagen in Denmark. Martin, why is this even a debate right now? Why are we talking about Greenland? Well, Greenland. Um, it's got a

prominent role in international politics right now. Arctics. The Arctics are really dominant in both Russian politics, Chinese politics, US politics, and of course in the Nordic region as well because their massive resources up their natural gas and oil and sorts, and a very important trade route UM by Sea is opening up up there. So so this area really compiles a lot of attention right now all over the globe. Basically, Yeah, but what what gave President Trump the idea that this

was actually for sale? Well, I mean, he's not the first American president to try to purchase this particular island. Truman made similar efforts in forty six. I believe it was UM. I suppose UM. With the upcoming trip to tow to Denmark and with Greenland in the center of attention for that trip, perhaps this seems to be um

an idea that has has emerged somehow in the White House. Okay, so Morton, I guess that then there's a question of let's put aside the idea that Denmark is going to sell at stake in Greenland and just talk about the strategic role of Greenland. Is there a sense that Denmark is establishing closer ties with say, rivals of the United States over America in terms of giving sort of a

strategic upper hand with the resources you were talking about. No, on the contrary, actually, China a few years back made efforts I think actually last year made efforts to invest in infrastructure, critical airport infrastructure in Greenland that Denmark. I don't know if it's a courtesy to the US, because Denmark also had interest in this particul going to move, but decided to co fund airports in Greenland instead of

letting China pitch in on this. So so this is just one of many examples of Denmark trying to sort of allow us to play a role in in Greenland domestic and international politics up there. But also there are trying to keep other players out of Greenland, of which I mean Greenland has an extensive home rule, but Denmark has the final say in security, defense and international affairs. So more than you're in Copenhagen right now. What's the sense on the street in Copenhagen, the folks in Denmark,

what do they think about this issue? Well, um, I think most people and you could tell by the trader reaction this morning, because obviously, Trump tweeted last night and a local US time, which was in the middle of a night here in Denmark. So most people woke up to sort of a big surprise that this visit who remember another only to visit the prime minister, but also to visit the Queen of Denmark. Um was like a

big surprise to a lot of people. Remarks on Twitter thing like sort of dismay thing that it's incomprehensible, that it's um disrespectful. Some are even talking about the potential diplomatic crisis between Denmark and the US. I remember, Denmark is not just any Scandinavian or European country here. Denmark is a founding member of NATO, is a US ally in the Iraq War, um longstanding trading partner, as the US is Denmark's second biggest export nation, so there are

strong ties between the two countries historically. So so this of course took a lot of Dames by surprise, Martin, It took a lot of people by surprise. I mean, let's just be completely honest, a cost space spade. I mean, when this happened, I think a lot of people destruct and said Greenland like, I mean, why why are why are we talking about this now and when we with the sale etcetera. It just seems a little bit out

of left field. Are there any ways to explain this, uh, you know, perhaps under the cover or just something some other motivation that could be behind this that we're not really understanding. From a Danish perspective, I haven't heard any other speculation than the fact that this, of course would be a central part of the meeting between p M

Frederickson and Greenland PM King Keelson and of course Donald Trump. Um. Obviously, when this is supposed to be on the table at a meeting, the President gets some sort of of of intel and Evans get some meeting preparations, and I mean this seems to be the situation where the President then decided to to to to talk about potentially purchasing Greenland. This is not something that has been mentioned in Danish media or in the local media and Greenland recently recently.

This took a lot of people by surprise when it was initially reported last week. UM, and it was also debated when the Danish Prime Minister Frederickson actually went to Greenland an other assignment on Sunday. So this was clearly coming as a surprise as well for the for the Danish PM interesting a lot of as elately so mentioned, a surprise to a lot of people uh in around the world. I think that Morton Butler, political reporter for Bloomberg News, thank you so much for joining us and

giving us some local color. Morgan's based in Copenhagen, Denmark, so giving a sense that it was certainly this discussion about the US possibly purchasing Greenland came certainly as a surprise to the Danes who woke up to the tweets this morning from President Trump about Greenland. A hundred and eighty one chief executive officers gathered together and discussed their role in this world. Their result was that we have a purpose beyond just that of shareholders shorting us down

to discuss Brian Stafford's CEO of Diligent. He also is the co author of Corporate Governance in the Digital Age. So Brian, let's just start there. What did you make of this sort of I guess resolution coming out of the business round table that had signatories such as Black Rocks, Larry Fink as well as JP Morgan's Jamie Diamond. Yeah, it's super interesting. Um, conclusion coming out of the Business Roundtable, I guess not unexpected in the grand scheme of things.

Larry Think has been writing about this for a while State Street as well, that the expectation should be for business leaders to actually serve a broader purpose rather than just profits and only profits. And it is a realization that other stakeholders matter. And then if you really take a long term interest in um in the role that your business plays, and in communities, in the um UH and with your employees, it's actually it's actually good for business.

So one of the issues some of the pushback that I've read is that if some of these CEOs were so concerned about the inequality UM in income, wouldn't it be better for them to raise wages for their employees and maybe lower executive pay. Well, I mean you do see this in many places, with some companies actually raising kind of um the average um UH income level or the average wage of entry level employees. So I think

you will see more of that um. Of course, Walmart did that a few years ago, and you saw actually an increase in UH in the net promoter scores of of Walmart stores because actually people who are happier treated customers in a better way, and that should translate into ideally customers buying more. So you will see that I be interesting challenges them to being that actually hasn't really been reported in this is you know, the average tenure for a board director is close to eight years of

a public company. The average tenure for CEO is only five years, and so I think the reason why that's important is the board can take a longer term view of governance and the corporation existing over longer period of time. I think it can be challenging for the individual CEO, who typically has a shorter time horizon or window, to not focus more on profit and and change the focus

more on broader stakeholders. And I think that's a little bit of the shift that you've seen the business roundtable, which end up being unbelievably tenured CEOs kind of steering organizations. And you know, brand a cynic might say CEOs are doing this as the cycle turns and want to make an excuse for why they may underperform because they're catering

to the greater good and not their shareholders. What would you say to that, I think it's a fair comment to actually say, you know, how how is the climate evolving and how it is the climate changing? And is this in in um? Uh? Is this in response to the changing climate? Um? We do have a rise of populism, it's in every story that we hear kind of on a day to day basis on on your program. Uh. And we do have a rise in next generation buyers UM in gen Z buyers who actually care more about

an organization. And it's it's culturalate sense of good in the world. So I think it is it is in partial response to the environment that we're in today, which is less of an end of the cycle comment, but more of the different environment that we operate and live in. So the CEO stated that the rising cost of healthcare and and and all the student debt associated with higher education is certainly a motivation for some of their plans.

Do you anticipate Corporate America ever trying to tackle meaningfully either of these two issues? Are both? Uh? You know what I see and what I thought was an interest in going to come out of the business round table? Was um actually a slightly different angle on that? And

and diligent. We recently published the Place on on the increasing tone and conversation around political uncertainty and boards that at organizations and corporations are having to deal with in many cases, which is a lack of leadership coming from UM countries and CEOs and boards actually having to take more of a leadership role. And to what I expect leading organizations to take more of a role around societal issues.

You brought up student debt, healthcare, etcetera. Um, yes, I think you will see UM CEOs taking incorporations taking increasing role in that because maybe that leadership doesn't exist within the public sector. You know, Brian, it's an interesting, uh, it's an interesting sort of conflict here. How do you lead? How do you sort of have a role in these debates? Is it sort of a verbal political injection into the conversation or is it something just leading by example? Right?

I mean, so, how do you expect these executives to engage beyond just their obligations to their shareholders. It's a great question, and I think you've seen that evolve in the last few years where I think see those and organizations used to fall into more of a lead by example kind of silent approach and what you've seen more now and Jamie Diamond is increasingly vocal about it UM, but actually CEO as having a perspective and a point

of view around UM different issues. And you know, ultimately UM organizations, consumers, employees actually follow authentic leaders and also authentic organizations. So an organization taking a stand for something they believe in. You've seen this on issues of immigration, You've seen this on increasingly number of issues. So I don't think that's going going away. What we hear often from boards is how does the CEO do it in

the right way? Maybe maybe not going off on social media, but how do people use the right forum and use their standing to actually have a point of view, to be an authentic leader and do it in the right way. So, Brian, do you expect to see changes in any executive compensation? I know, you know the biggest a lot of executive conversation is tied to stock frice performance with through option and stock grants, and uh is that now going and

that's tied to shareholder you know, stock price performance? Is that going to be now include maybe E s G scores or employee morale or any other kind of metrics to kind of measure some of these stakeholder issues. Yeah, I think you saw a proposal for that even with UM, with Uber and their board and Dara's compensation being tied to diversity metrics. So I think you're seeing elements of this rollout into CEO compensation and I would expect that

to continue. How much of that is driven by specific CEO targets and how much it is driven by UM the board behind closed doors, and maybe with the CEO vocally saying we care about our environment, we care about the quality of of living of our employees, and so how much is specifically tied to compensation versus just comes down the tone and tenor UM. We'll have to see,

but you do see it creeping its way into executive compensation. Brian, just real quick here, I'm wondering, do you think that this meeting is sort of the outcome from the business roundtable, will actually affect change in anyway. I think you've been seeing organizations in the tone of organizations begin to change and focus not just on UH each individual dollar of profit, but more on the broader set of stakeholders being customers,

being UM, the environments we live in, being employees. So I think this was a more formal announcement of it, But like you mentioned. You know, Larry Fink and Black Rock have been talking about this for a while, and you're also as you see a trend in ownership moving away from kind of active managed funds to more index fund in the state streets the world, and the Black Rocks owning more and more of the stock of these organizations, that ends up having a broader role. So I think

we're still in the early innings of that evolution. How much of it is hard targets versus um changing in tone, we'll have to see. Bryan Stafford, thanks so much for joining us. Brian as the CEO of Diligent UH is also the co author of the book of Corporate Governance in the Digital Age of very interesting discussion on the changing role of CEOs, branching a little bit more from just returns to shareholders to maybe more for stakeholders. It

was the auction heard around the world. Germany sold thirty year bonds with a coupon of zero, an effective yield of negative eleven basis points, mind boggling data reaching records. The question is who wanted to buy it, and it turns out not that many people did. Joining us now to talk about it. Marcus Ashworth, a columnists covering European markets for Bloomberg Opinion in London. Marcus, thank you so much for being with us. First, just give us a

sense of how lackluster the demand was for this auction. Well, often German auctions don't get the full allotment. It's a weird thing seeing how low they are in yield. You think they'll be huge scrambles for them, but it's such a tightly control market. The ECB had told us well a year and a half ago that an essence is only about a ten or fift free float. Uh, we're reality. It's all going both by the ECB and by other

foreign central banks, the majority of of German governments. Nonetheless, these things trade and they got auctioned and a regular schedule. And what the Bunner's Bank, the German Central Bank does is it is it takes the rough of the smooth. It allows them to be not taken up fully. In July only was taken down. This time only um so

eight hundred and twenty yard million was sold. The balance of a one point nearly one point two billion will be taken by the Bunner's Bank and will be drip fed out over the course of the next few years and months, but months using But the reality is is that everyone I had thought this was going to be a challenge, because we know this is the first ever globally in the history of mankind that a thirty year bond would have been sold with a zero coupon and

effect actually sold below that zero yield level. It would be a struggle. But on a relative value basis, it's actually quite cheap because the tenure is near the negative seventy basis points, so the spread between tens and thirties as we follow I'm sure you know in the States, so actively um, it's something which you're looking on our relative value basis actually, and it gone below zero yield.

The previous thirty year Germany had gone below zero yield in the second third of August and dropped as far as near the negative thirty so negative ten it's almost the bargain, but it seems not. So what does this mean going forward? I mean, is this just a case of investors just saying we're not going to take it anymore? And I mean, is this potentially sitting at signaling some higher rates in Germany? Well, I think you should look

at it this way. There was a five year bond sold by a triple B rated entity called Eon E dot O N you can look at on Bloomberg. It's it's the German Unsility Electricity Unit utility. They sold a five year bond basically the same negative ten, negative fifteen basis points. You know, why on earth would you buy a credit bond triple B at negative fifteen basis points

of five years is beyond me? And then you compare it to a triple A the best quality of all in Europe, German thirty year at actually four basis points more. It almost makes that third year look cheap. So you know, this is the choice which I think you have to appreciate is left to people in Europe. There is nothing. You can't even get a triple B credit utility giving you for five years any year either. So Morgats just sort of taking a step back and and tying this together.

Should we view this German thirty year auction sort of shot across the bow that investors will protest and say enough is enough at a certain level? Or is this just an idiosyncrasy of German bond auctions paired with the idea that you know, they're just you know, there is tepid demand, but that you know this is not going to change anytime soon. I think I think you've got

the tone there. On the latter point, I think this is a little bit of rejection, a little bit of yield gag and the sense of indigestion coming here that they know maybe they don't want to pay up and look stupid paying uh this little level. Nonetheless, they'll be back in for it. And it is, you know, intrinsically linked to the fact that that in September twenty five European Central Bank will be announcing yet more quey for the rest of Europe and including particularly increasingly longer dated

bonds in Germany. These things will get snappled up slowly. But surely this wasn't a great auction. Um it was. It was a step too far just here right now. But you've got problems in Italy, you've got a recession in Germany almost certainly, and they could well spill out the rest of Europe. And you've got a European Central Bank he wants to not only cut rates but at again something they stopped then the last year, back to restarting que Look this is a train of events which

I'm almos. Certainly he's going to leave to you yields at some point, and I think these these bonds will get swallowed up quite happy. Mark Sashworth, thank you so much. Marcus is a calmness covering European markets for Bloomberg Opinion. You can read more on this and other stories from Bloomberg Opinion at Bloomberg dot com, slash Opinion and on the terminal by typing O p I n go. Thanks

for listening to the Bloomberg PIML podcast. You can subscribe and listen to interviews at Apple Podcast or whatever podcast platform you prefer it. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa Abram Woods. I'm on Twitter at Lisa abram woits one before the podcast. You can always catch us worldwide on Bloomberg Radio.