Macy’s Falls on Guidance Despite Sales Beat, Better Outlook

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2:04Catch 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. Consumer-facing companies are feeling some pressure. Macy's is one of those, and it's because of its latest earnings report. Macy's shares are down about 3%. Emily Cohn is our Bloomberg Consumer Team Leader, and she's here with us to talk about Macy's. Emily, Macy's, which of course is the parent company of Bloomingdale's as well, did give a sales beat and also gave a better outlook, but the stock is still down.

2:39So just talk us through how and why investors seem to be disappointed. Yeah, so overall, this is a pretty strong report. It's a really strong beat on Q2. As you noted, it's an outlook raise. But investors have high expectations for this company now. And looking at, you know, they had a really strong third quarter last year. So I think the company is being conservative with its growth forecast, measuring year over year after last year's really strong quarter. They're giving themselves some room. And I think analysts and investors have high expectations. What's the strategy now for Macy's? How does Macy's want to position itself in the retail space these days?

3:25This is really interesting. So if you look at their results, what's working the best? I mean, Bloomingdale's had a blowout quarter in Q2. I think they had their strongest Q2 revenue ever. The higher end is doing well. And Blue Mercury had posted strong results, too. That's their higher end cosmetics. cosmetics, sorry, like hair and creams and cosmetics brand. And now we're seeing them talk a little bit about this like higher end Macy's that we're going to begin to see with real fur and real leather. They're definitely leaning in on the higher end consumer. That seems to be the play, Paul, for all these consumer facing companies.

4:09You've got a K-shaped economy and the higher income customer is spending and that's where the growth is. And everyone else is feeling the pressure and being much more selective. So why cater to people who are going to be a lot more selective about their spending? Go chase the higher end consumer. Even like the airlines putting in more higher price seats versus the lower. I mean, I've seen it across the board. So I don't know. It's a trend. Why not in retail too? So what's the story here? I mean, what are they saying about the consumer in general? Are they kind of, because I mean, they probably have a pretty good finger on the pulse.

4:39So we heard them call out the lower end shopper coming in two or three times before buying something, being more deliberate. We also heard them say GLP ones are helping the business. People have to go out and buy new wardrobes, which is really interesting where they're struggling. They're struggling in their plus size department that this is a really interesting storyline here where consumers is. I mean, if these drugs get more and more available, you know, the rose of the world and all that stuff. Wow. Yeah, totally. It's a constant thing. It's not a one-time thing either, right? Because you have new groups of people who are going to be using GLP-1 drugs.

5:15So this market just kind of expands or is constant at least. And it's a global story. And I think we're not even there yet in terms of like these drugs are still pretty expensive. But as the competition heats up, as when generics eventually hit the market, they're already hitting the market in countries like Brazil. This is going to be a huge potential tailwind for the retailers. At one point, I remember Macy's was shutting down some less non-performing stores or stores that weren't performing as well. Where are they with that? Are they at the right number? Do they think that they have the right kind of presence across different communities?

5:54Yeah, we saw we're still seeing the store count go down, which I think is a smart move. They definitely, you know, there was an era when every Macy's earnings report was doom and gloom. They had too many stores. We're definitely seeing that store count come down. And that's sort of the hallmark of Tony Springs strategy for this company. Figure out where the best performing stores are, invest in them, and close down the underperforming ones. Stay with us. More from Bloomberg Intelligence coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done.

6:35ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise.

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8:32Explore the possibilities at 4imprint.com. 4imprint. 4certain. 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. Big news out of Cupertino yesterday. New Apple iPhone. I think this has kind of been one of the more anticipated iPhones we've had in a really long time. The iPhone Duo. It's a foldable thing. I don't know. I think it looks pretty cool. I saw the ad that they have for it. It's a very cool ad. I saw it online yesterday.

9:11And it kind of reminds you of some of those really cool ads from back in the day when Apple was kind of introducing the world to smartphones. Anurag Rana joins us here. He covers the stock. He's the senior tech analyst for Bloomberg Intelligence. Anurag, what did you make of the product announcements yesterday from Cupertino? So I think, well, not just you. I think everybody felt this was going back to the roots of Apple, of design and the uniqueness. I think that is what everybody took. I've never seen the stock up after, you know, them announcing any of the new products because it's always the same thing with, you know, another digit at the end.

9:45But this is creativity. I mean, this is really, really cool stuff that came out yesterday. Talk to us about just the importance of phones for Apple. And because it's evolved, they have so many products, services is such a big part of their business. Talk to us about how phones impact the P &L. Yeah, so phones are critical to the entire ecosystem. They're over 50 % of revenue and truly the only thing that's holding up the entire, you could say, Apple ecosystem. Because services are important, but they will not exist if the phones weren't there. So, phones are very important. And one of the things, the biggest criticism we have heard over the last five, six years is they really don't have anything new to sell to the public.

10:26And yesterday's product, I get that it was still started up under Tim Cook. But the new CEO came out, he introduced it, and he talked a lot about the importance of design and the ecosystem, the combination of software and services and hardware. It really sounded like, you know, Apple's really focused a lot more on creating new hardware products or making the existing one far more appealing to the audience than they have been in the past. I think this is partially we are getting, you could say, a positive reaction from the street. The other thing that I would also say is I know it's a$2 ,000 tag, but frankly speaking, they waited nine years to get the actual physical look of this product right.

11:10When you open the phone, I mean, the software follows with you. It is truly a new, I would say, user interface or an experience that people don't use to get it. If you're used to a phone, this will be a different experience for a new user. So what's the latest, Anurag, in terms of how the market's viewing Apple as it relates to AI? What's the investment call these days? The biggest thing is that Apple talked a lot about their ability to infuse more AI on the device. Now, this is something that is probably not talked about as much because people only talk about the ability to get through a cloud-based chatbot and all the things.

11:54I mean, that's available as well. But yesterday, they talked a lot about getting the AI done on the device. Now, good thing for Apple is, at least for the time being, they are licensing technology from Google to run a lot of their foundation models. I think that is an important thing. The earlier efforts were not as promising. But from what comments I've heard from Mark Gurman, that he's been beta testing the new Siri, and it's done pretty nicely. So it is likely that when that new software comes in along with all these devices, Apple's perception may change of being a laggard in AI. And we think that would be another potential catalyst for people to change their perception on the company.

12:37What that also means is they may have to spend more into capital expenditures next year. But our number is nowhere close to what some of the other hyperscale cloud providers are doing. you know, they're spending about 3 % of their revenue right now. Maybe that goes up to about 5%. So it's not like, you know, it's not going to dent their, you know, cash flow and balance sheet. Stay with us. More from Bloomberg Intelligence coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work.

13:20It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com by selecting Work Mode, available on Plus and Pro plans. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.

14:05With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands, drinkware that's enjoyed again and again, bags, notebooks, tools, and tech items that don't just look good, but actually get used.

14:43With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. For certain. 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.

15:22Listen on demand wherever you get your podcasts or watch us live on YouTube. It's Scarlett, Phil, and Paul Sweeney. We're live here in our Bloomberg Interactive Broker Studio in New York City. streaming live on youtube as well all right when i came up in wall street in the mid 80s greed is good was the line that was the line it was right in the movie straight out of the movie capitalism that's where it's at maximizing shareholder value that's it we didn't never even heard the word stakeholder things have changed here and we want to talk about how maybe purpose is changing uh capitalism paim zamani joins us here he's the founder and ceo of one planet group and author of the new book Crossing the Desert.

16:02It joins us live here in our Bloomberg Interactive Broker studio. Payam, thanks so much for joining us. Love to start with just, you know, if you can put your life in 30 or 60 seconds, kind of what got you to right here. We'd love to hear that part of the story. All right, I'll put 345 pages in 30 seconds. I was born in Iran and in a Baha 'i family and when the revolution happened and the Islamic Republic came about in 1979, they made life very difficult for minorities, Christians, Jews, but particularly Baha 'is. And I'm a Baha 'i, and they killed hundreds of Baha 'is in the 1980s. They expelled Baha 'is from schools.

16:37I was expelled in the most horrific way from school when I was in sixth grade with an attempt to kill me. 47 years later, Baha 'is are still not allowed to attend universities in Iran. And so I ended up getting smuggled out of the country when I was 16 in 1987. And I became a refugee. I came to the U.S. in 1988 with$75 in my pocket with my brother and I. And I end up going to college. And as luck will have it, in 1994, I co-founded a company on the internet that became AutoWeb.com. Took that public in 1999, only in America. 11 years after arriving in the US, I was in lower Manhattan taking my company public.

17:15Yep, that's the story. That's a pretty incredible story. Do you think if that were to happen today, if you left Iran today and arrived in America today, you could do that again? that the conditions are there for someone like you to achieve all of that? I think so. I think that America represents a foundation that was built over 250 years. And this foundation is very strong, very robust. And the American dream is an invitation, not a guarantee. So you have to put in the work. But at the same time, there are always speed bumps along the way, but the road is never blocked. So I feel like still this is a very special country that provides hope to the world.

17:53And I don't think that has changed. How do you define capitalism now? And has it changed over your lifetime? So I feel like extremes have become more extreme. If you look at the extreme left in this country, extreme right in this country, they're both after greed. And I think that the left is also kidding themselves, thinking that they're not after greed. They both are after greed. But one wants someone else's money and the other one wants to have it all. So I think that that is what I see, that extremes of capitalism that we are practicing have gone us to a point that I think is untenable. Now, I'm a capitalist.

18:31You know, I believe in free markets and I'm an entrepreneur. I've taken a company public. But at the same time, I think that extremes of capitalism can actually affect the businesses that we run and the environment we rely on. So in that spirit, you have kind of, I guess, not tweaked, but evolved your thinking of what capitalism entails and how it should be. You have now coined this term spiritual capitalism. What does that mean and how do you actually put it into practice? So, you know, when you think about the problems in the world, especially the US, environmental issues, racism, extreme forms of partisan politics, all of these things, I feel like point us to one direction.

19:15we need a spiritual transformation as a people because the only thing that will stop us from doing bad things is if our hearts change and our hearts are not gonna change until I look at you as a noble being and to look at you as a noble being I need to really consider who you are truly not a token of economic value but something way beyond that but the fact is we choose not to do it and until that happens I think that we're gonna see that things are going to point to us down a day of reckoning. So One Planet Group is a private equity firm. How is your, what's a typical company? What do you look for in a company to invest in, given your philosophy and what you've learned over the years?

19:56I mean, the number one thing I look for is the founder. Business models change, they evolve, and that's fine. But is that founder the kind of founder I want to invest in? The ripple effect of my investment. And, you know, we talk about AI. I mean, these days, the gentleman who's out there talking about how he's scared of the direction the AI is going. I've always said that. I'm not afraid of AI. I'm afraid of the innovator behind it. And so, yes, I am worried about founders who may not have the right values for us to invest in. But unfortunately, when you think about the extremes of capitalism, we invest simply based on the idea of ROI, return on investment.

20:35We don't care about the ripple effect and potentially negative effects of investing in someone who does not have the right values. So business models can change. The focus of the industry can change. Market conditions can change. But the DNA of the founder is the constant that you're looking for. Absolutely. If that founder doesn't have the right values, the right DNA and can do bad in the world, magnify that when they're successful. So give us an example of what a founder with that right DNA looks like. How would they solve a problem that perhaps their peers would shy away from? Well, I mean, the number one thing you just get to know people based on what drives them.

21:16If what drives them is just maximizing their wealth, I'm not talking the right founder. I need people who care about the betterment of the world. In fact, anyone we invest in, we have them sign a document that the headline of that document is for the betterment of the world. that I will on purpose for the love I have for humanity will do things that we have listed. It's not a contractual obligation, but it allows us to sift through founders and find the right ones who really care about something much deeper. And by the way, you know, the companies we invest in, that they follow the kinds of things that we suggest to them, they end up doing better on average anyways, because those happen to be good business ideals also.

21:58And the founders are by far more fulfilled because they don't feel empty that they got a lot of money, but an empty heart. Stay with us. More from Bloomberg Intelligence coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful.

22:42Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level.

23:18Michigan. Pure opportunity. Seize your opportunity at michiganbusiness.org. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget.

23:57You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. For certain. 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.

24:35Scarlett, you may be surprised, but I'm a huge NASCAR fan. This is the first I've heard of that. It all started in 1994 when I was on an investment banking team and we took Speedway Motorsports Public. They were owners of the raceways around the country. Charlotte, Bristol, Atlanta. We built a ton, one in Vegas, one in out west. Made a ton of money off of those guys. Went to 24 Winston Cup races in like a four-year period. Tried to take the NASCAR public, but the France family did not want anything to do with that. They liked being private. Yeah, we pitched them hard, but no way. We're talking NASCAR today because we have very fortunate Tyler Reddick in our studio.

25:09He's a driver for 23xi Racing on the NASCAR circuit, joining us here in studio. He's part of a panel today at Bloomberg. We've got a conference here talking about leadership, and the panel is NASCAR's Next Gear. So he's speaking for the great sport of stock car racing. Tyler, thanks so much for joining us here. I've got to go start with 23xi Racing. I think that means your boss is Michael Jordan. Yeah. What's it like working for that guy who's a little bit intense, I understand. It's really awesome. Yeah, you know, you were mentioning the name there, 2311. The 23 in the name comes from Michael, and the 11 comes from co-owner Denny Hamlin as well.

25:51So, yeah, as if, you know, having someone like Michael Jordan being a part of the ownership makes that interesting enough, right? Also, you know, Denny Hamlin, who I compete against, who still races on Sundays, is also in the ownership role as well. So, yeah, just a very unique, very, you know, fortunate to have a dynamic like that where you have someone like Michael to lean on, then a fellow competitor who knows the sport. And he's into it, as I understand. Yeah, he is. I think he's into everything that he gets his hands on. I think he got exposed to it when he went to the University of North Carolina.