Citi Investigated HR Complaints Against Wealth Head Sieg

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1:51You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Citi investigates HR complaints against wealth head Andy Sieg. Citigroup has hired law firm Paul Weiss to investigate complaints about the behavior of the bank's wealth management chief, Andy Sieg, who was brought on by Chief Executive Officer Jane Fraser as a high-profile hire to drive a key part of her turnaround plan.

2:47And one of the reporters on this story joins us now in our Bloomberg Interactive Broker Studio, Todd Gillespie, Bloomberg Finance reporter. Todd, talk to us about what's happening over at Citigroup with their wealth management chief, Andy Sieg. Am I pronouncing that correctly? Sieg is correct, yeah. Yeah, exactly. I mean, well, what we do know is that, you know, Andy C, you know, ran Merrill for a Bank of America's wire house for six years, came on in 2023 to turn around the wealth business at Citigroup, which was ailing, was a key priority for Jane Fraser's turnaround of, you know, Wall Street's one of the least profitable banks on Wall Street.

3:23He has been there for just under two years. But in that time, he has drawn several, you know, we know from at least six managing directors, complaints about his behavior, particularly his treatment of senior female executives, including Ida Liu, who left the bank after 18 years in January. Some of you might remember that as quite a sudden departure. and also towards one of the current, his behavior towards one of the current direct reports who runs the Wealth at Work business there, a woman named Kristen Bitterly. Now this type of behavior, it's just, it's not, from what I'm reading in your story, it's more just the way he speaks to them or maybe speaks of them or just his, it's not necessarily any sexual type of thing as far as we know now.

4:09It's just more his management style perhaps? Precisely, yeah. We call it intimidating behavior. their expletive-filled rants. We know about him reducing a male managing director to tears after berating him in front of colleagues, calling people's work pathetic in meetings with that person present and their colleagues present, and also undermining Ida Liu in particular and his COO, a man called Valentin Valdorbano, directing a managing director to exclude her from correspondence that was important to her business in the months before she departed the bank. Well, let's talk about just his performance business-wise, right?

4:49I mean, under his tenure, the unit reached record levels, improved returns. What was his style, if you will, under that wealth division? Yeah, absolutely. And it is important to note that Citigroup appeared to be standing by him. They do note that he's really improved profitability at the bank. The second quarter revenue was a record. and he's really done that by essentially moving the unit's focus away from what was quite a lending intensive balance sheet heavy private bank focus towards I guess more of a wire house style you might say like Merrill like Merrill Lynch where he you know basically grew up in the business and you know he's focused on attracting investment assets into the business and reducing that dependence you know on the balance sheet at the bank and that seems to have have reaped dividends.

5:37Stay with us. More from Bloomberg Intelligence coming up after this.

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7:29Target, tough numbers. That's one thing. I mean, the results were not great, I didn't think, but what do I know? And then the CEO, you're bringing in, keep an insider there. I think maybe the street wanted an outsider, John was suggesting. Stock down 7.5%. I don't know. If I were this guy, I would take it personally. Let's see if Jen Bartasch just takes it personally. She's a senior retail analyst at Bloomberg Intelligence. She covers Target in all these names. Jen, let's start first with the CEO news here. What do you make of this person, and should they maybe have gone outside the company? Good morning.

8:01Yeah, it's an interesting choice. And I think that investors for a little while now have been interested in seeing a CEO change. Brian Cornell has done a great job during his tenure, at least initially, in terms of really driving growth for Target. But an internal choice really implies much of the same strategy. And I think there were some hopes that there would be something a little different to maybe shake things up and bring something new to the company. You know, I'm wondering if Target is going through an existential crisis, right? Right. So this identity crisis, because you feel like I don't know about you, Pono, the last time you went into a target.

8:36Sure. But you feel like they've lost their mojo, Jennifer, because the last time I was in there, the store shelves were not stocked very well, felt disorganized, couldn't find a sales associate to help me. What does this new CEO have to do to help this company get back on track? Well, you know, it's very interesting. He's highlighted three priorities, but they're not really new priorities. but if they can bring focus to it, maybe that will help. And that's re-energizing the assortment, bringing back some of that style and value that people crave. It's about having a very good, consistent in-store execution and experience, which is what you were actually just talking about, having things in stock, having associates available.

9:21And then the third is an acceleration in the deployment of technology to maybe make processes faster, improve efficiency, that sort of thing. So we'll see if that happens. But it's really about getting back to what is it that consumers loved about Target and how do you get them back in that frame of mind so that they come to stores and spend there. Well, you're the expert here. I don't have a sense of what people go to Target for. What do you think they go to Target for? Well, what they traditionally have gone to Target for was that sense of discovery. You had a couple of things on your list. You got in and you were inspired.

9:56You saw home decoration items that you just were like, oh, that would look great in my living room. Or you would go through apparel and you would see something very stylish and value that you thought, oh, that's a great thing to add to my basket. And so that's what's a little bit missing. And part of that may be because of just the rise in digital orders. It's less conducive to those impromptu purchases, but it's also inspired by the assortment and by what people experience when they're in the stores. And that's really where they have to focus to get that magic back. And Jennifer, correct me if I'm wrong, I think Target has more exposure to tariffs than, say, Walmart, because of its mix of products.

10:37It doesn't have as much exposure to groceries as Walmart does, but it gets a lot of its products from overseas, places that are getting hit by these tariffs. How did that play out in this quarter, and how will it play out going forward? Yeah, it's a great question, and it is one of the things that's sort of been bogging down Target. Ever since we've had very high food inflation, the willingness to spend on discretionary categories has been a little bit more limited. And that's really the area that Target has always excelled. Things like apparel and electronics and toys and home decor. And so, you know, right now the company is saying they're doing a pretty good job of mitigating tariffs.

11:13But they are more exposed because of the merchandise mix that they have. So they said they've done some right sizing. They've paid off kind of the one-time cancellation charges they had while they were waiting on the tariff verdicts. We'll see what unfolds in third quarter, and especially because it's back to school, which is a really important quarter for Target. What's always, well, I guess what's recently in the last 10, 15 years really amazed me about Walmart is how effective their digital strategy was. And they actually went toe-to-toe with Amazon, and I think they more than hold their own.

11:44Talk just about Target and their digital strategy. How's that performing? me? Overall, Target's digital strategy has been doing pretty well. They've made a conscious decision to not go head to head with Walmart and Target. So for example, in their marketplace, it's not just an endless aisle of sellers. They have a very close criteria of who they let onto their platform. And that's worked well for them because it helps keep the product selection closer to what people expect from Target. Their digital sales were up in terms of same store sales this quarter well outpaced the visits to stores. And so they've been executing pretty well there.

12:23It's just a matter of how do they marry the two parts of the business to grow simultaneously. I want to look ahead to tomorrow because we get Walmart. They may strike a more cautious tone here. I'm curious if they're going to actually say the word tariffs, Paul and Jennifer, tomorrow, because last time when they did, Trump told them to eat the tariffs because they said they were blaming the tariffs on having to raise prices. What do you think we're going to hear from Walmart tomorrow, Jennifer? Well, I think tomorrow with Walmart, it's going to be more about the value, seeking behavior of customers.

12:56I think that any of these retailers, they're holding price increases back to the last possible resort with regards to mitigating tariffs. Walmart will certainly be asked about it. They certainly won't disclose any specific information about the cost of tariffs on their business or the specifics of how they're mitigating them. But I think they will remain very cautious. And they have mourned that there could be volatility from quarter to quarter, especially with regards to their margins. And we may see a little bit of that play out tomorrow. 30 seconds, Jen. What's the holiday look like, do you think, so far?

13:29What's the early take? With regards to holiday season, I think the retailers have good strategies to have streamlined inventory in place. It's really going to come down to how confident is the consumer and how much are they willing to spend. Stay with us. More from Bloomberg Intelligence coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks and free thousands of hours for strategic work.

14:06Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster. With revenue agents and automations working around the clock, you'll have everything you need to scale your go-to market efforts.

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15:49You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All right, let's get back to these markets. Lowe's is a stock that's in the news today. They reported some pretty decent numbers and also made a big acquisition buying a company called, what is this called? Foundation Building. Never heard of it. $8.8 billion cash deal, transformational deal, some analysts on Wall Street are calling it. So let's break it down with Drew Redding, Bloomberg Intelligence, U.S.

16:26home building analyst. Drew, first talk to us about this acquisition that Lowe's made. What is the company in and what's the upside for Lowe's here? Yeah, this is a pretty big story today. One we weren't necessarily expecting. They announced that they're going to acquire foundation building materials for$8.8 billion. They're basically a distributor of drywall, ceiling tiles, metal framing, insulation to builders and remodelers. What's interesting is if you think about how Lowe's has traditionally attacked the professional contractor segment, it's really been through small and medium-sized contractors.

17:05That's really been their bread and butter. What this deal does is it gives them access to larger-scale projects. It's really the area that Home Depot has been going over the last couple of years. But now it puts Lowe's firmly in that lane and really opens up a new growth opportunity for them. Yeah. And didn't Lowe's buy another sort of pro-type business earlier in the year? I know Home Depot did something similar. They bought GMS for over$4 billion. I wonder, though, what this means, Drew, for people like us who want to DIY it. Are we going to not be as catered to at the Lowe's and Home Depot's of the world?

17:44So you're right. Lowe's did just recently close on the acquisition of Artisan Design Group, who's a distributor of internal finishes, so things like countertops, flooring, and things along those lines. So now Lowe's is really able to go to large-scale contractors and builders and really provide an entire product suite on the interior of the business. In terms of DIY, I mean, DIY is still 70 % of the business for Lowe's. That'll remain core to their strategy. But what I think this speaks to is the relative weakness in that segment and the need for them to look for new avenues of growth out over the next several years.

18:24When we think about how the market is likely to unfold, and Lowe's alluded to this today during the call, we think a lot of the growth is going to come from big ticket spending that's been pent up over the last several years. And this gives them an entrance into that market somewhere where they didn't have that type of penetration before. This may surprise you, Drew, but I'm probably the least DIY guy you'll ever find. I have people for that, Drew. But so I don't really know much about the whole Lowe's thing. Tell me about how their earnings were this quarter. Yeah, so the earnings were really a non-event.

18:56Comps were up 1 % pretty much in line. The cadence of comps for the quarter was pretty much similar to what we heard from Home Depot. They exited at a 4.7 % comp, and that really had to do with how weather evolved throughout the quarter. Obviously, it wouldn't be a retailer call if we didn't mention the weather. We did see an improvement in big ticket spending, which was encouraging. And I think investors were pleased to see that despite a still challenging market out there, they maintain their guidance for same store sales for 2025, which calls for flat to up 1%. So they did mention that the environment's still tough.

19:33We think that the big ticket DIY discretionary categories that require financing, as we discussed with Home Depot, are still relative areas of weakness. But we think both of these retailers are executing well in a challenging market. So Drew, as our home building analyst, I just want to broaden this out for a moment and get your thoughts on this. So we saw that the gauge of future construction, right, new building permits down more than 5.5 % versus last year. But what we're seeing is sort of a divergence in the industry, right? Apartment construction is steadily climbing and not keeping pace with single-family homes.

20:10What's driving that? So a lot of it has to do with affordability. I mean, with the rise in home prices over the last five years up more than 50%, rates hovering at 6.5%, there's a lot of people that simply can't afford to buy in this market. We looked at some data last quarter on household growth, and really what that showed is that all the new household hold formations have been in the renter market at the expense of owner-occupied units. And it really goes back to affordability. So I think you're right. If we look at building permits, they were actually down 8.5 % on the single-family side compared to last year.

20:47There was a little bit of a surprise on starts, which tend to be volatile month to month. But what we're hearing from the builders is that they're not going to keep pushing new units into a soft-demand environment. We think they're going to continue to pull back on starts through the remainder of the year and into next year they look to work through the existing inventory that's out there in the market. If you look at the new home inventory, we're at 2007 level. So that's requiring builders to have to lean on incentives to a greater extent in order to clear that. And we think until we get through some more of that inventory, you're going to see further weakness in single family construction.

21:22Stay with us. More from Bloomberg Intelligence coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Everyone's talking about how AI is transforming work, especially in sales, While the landscape shifts, one thing remains the same, the thrill of closing a deal.

22:04Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart.

22:32Every sale comes down to a single second. The one between buy now and maybe later. PayPal is built to help your business win that moment. With a checkout experience that feels certain, reliable, and familiar. With a global two-sided network and hundreds of millions of buyers who already know us. All to keep you in control however buying happens next. new markets new ai powered selling services a whole new agentic era where you decide how your business will show up and stand up paypal is built to help your business come out ahead we're built for payments built for growth built for agentic paypal open built for all business visit paypalopen.com to get started that's paypalopen.com

23:29You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. TJ Maxx, TJX, owner of TJ Maxx, raised its full year guidance earnings per share outlook after better than expected results, citing shoppers turning to discounters due to economic uncertainty. Now, look at the stock. It's up 3.3 percent today. It's up 15 percent year to date, 52 week high. Seems like all is good at TJX. Let's break it down with Mary Ross Gilbert.

24:05She's a senior equity analyst. She covers the retail space for Bloomberg Intelligence. She's based out there in our Los Angeles bureau. Mary, it looks like TJX is doing pretty well here. What do you hear from the company? Yes, Paul, you're absolutely right. TJX is hitting it out of the park. This is a company that just executes seamlessly and consistently, something in retail that's very, very difficult to do. They saw strength across all categories, across all income groups, all age groups, and they know how to get the merchandise right by store, by region. So they have a terrific planning and allocation.