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Ackman’s Pershing Square Seeks Up to $10 Billion in NYSE IPO · Bloomberg Intelligence

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  Speaker 2: I mean, one thing that we'll know that we can
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  Speaker 2: look at to return to normal is dealmaking, is fundraising.
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  Speaker 2: That'll be a sign that people feel comfortable, companies feel
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  Speaker 2: comfortable with the current market environment. And it looks like
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  Speaker 2: at least one person feels good about how things are
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  Speaker 2: shaping up. Bill Ackman has filed to take public his
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  Speaker 2: hedge fund firm, Pershing Square and a new closed end
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  Speaker 2: fund at the same time. Billy Lipschultz is Bloomberg News
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  Speaker 2: a senior equities reporter. He's been covering IPOs for years,
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  Speaker 2: and this is something we had been anticipating, Billy, because
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  Speaker 2: there was this effort to list the hedge fund, Pershing
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  Speaker 2: Square back in twenty twenty four that didn't get very
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  Speaker 2: far well.
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  Speaker 3: So back in twenty four, the initial thought process from
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  Speaker 3: our understanding from Perching Square was we're going to raise
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  Speaker 3: a lot of money in a closed end fund, so
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  Speaker 3: that way we can have an even higher feebase. We
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  Speaker 3: want to raise more than twenty billion dollars. Then that
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  Speaker 3: number became like ten, then it became five. Then it
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  Speaker 3: didn't actually get off the ground. So that was for
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  Speaker 3: the closed end fund. Now we're seeing them come back
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  Speaker 3: with this i'll call a novel pitch that if you
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  Speaker 3: invest in the closed end fund, we'll give you some
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  Speaker 3: shares to the actual management company. As a way to
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  Speaker 3: entice people to buy. Their pitch was, you know, we
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  Speaker 3: had a few billion dollars in demand last time. We
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  Speaker 3: now have two point eight billion dollars in private demand.
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  Speaker 3: As long as we can bridge the app to more
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  Speaker 3: than five billion dollars in this closed end fund ups
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  Speaker 3: our fees and also gives us something else to give investors,
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  Speaker 3: and it ultimately takes the company public.
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  Speaker 4: So it's fee. What's the motivated here is it fees?
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  Speaker 3: It's creating a vehicle. Well, it goes back to kind
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  Speaker 3: of the pitch that I'm.
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  Speaker 4: Just trying to assess whether or not like this is
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  Speaker 4: a sign of healthy markets and it's a good move.
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  Speaker 3: It's something that they need to do. So point blank,
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  Speaker 3: Pershing Square failed to raise a handful of billions of
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  Speaker 3: dollars in a closed end fund two years ago.
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  Speaker 4: He's not coming at this from a position of strength,
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  Speaker 4: or is he? I know, I'm really pressing.
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  Speaker 3: I mean maybe, Okay, things that we know they wanted
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  Speaker 3: to raise tens of billions of dollars before they did not,
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  Speaker 3: they had discussed potentially taking.
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  Speaker 5: The management company public.
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  Speaker 3: Now with this process both can happen. Potentially raising five
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  Speaker 3: to ten billion dollars increases the amount of fees that
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  Speaker 3: the company can generate the management company, and it takes
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  Speaker 3: the management company public.
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  Speaker 2: A lot of people know Bill Ackman as an activist investor.
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  Speaker 2: They think of Herbal Life, they think of all these
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  Speaker 2: other companies that he kind of targeted, made his case against,
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  Speaker 2: or made his case four.
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  Speaker 6: He no longer really does that, does he.
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  Speaker 3: No, it's pretty much holding a handful of companies. So
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  Speaker 3: whether it's Toole or Alphabet Brookfield like kind of buying
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  Speaker 3: a concentrated portfolio and holding it.
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  Speaker 5: He's also now even.
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  Speaker 6: Like Warren Buffett, kind of using that playbook.
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  Speaker 3: That's exactly what he's trying to lean into. Though a
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  Speaker 3: bit more vocal on social media with his views, which
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  Speaker 3: depending who you talk to, is bullish or bearish, but
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  Speaker 3: really trying to cater with this offering to retail investors.
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  Speaker 5: Point Blake is kind of the view of this pitch.
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  Speaker 4: So now he's going to listen to retail investors, and
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  Speaker 4: you know, right.
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  Speaker 5: He engages with them. Though he does engage, he shares
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  Speaker 5: a lot of things on social media.
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  Speaker 4: I'm just still trying to wrap my head of why
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  Speaker 4: he'd want to go public with anything and then be
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  Speaker 4: open to so much more scrutiny and regulation or whatever.
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  Speaker 3: Well, I think that's kind of the discussion going back
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  Speaker 3: to twenty twenty four when they sold a stake in
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  Speaker 3: the company Perching Proper, that was viewed as a way.
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  Speaker 5: To start the process to going public.
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  Speaker 3: So there was always a vision to ipoing or taking
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  Speaker 3: public the management company in some capacity. And it does
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  Speaker 3: benefit by if you're a management company and you're collecting
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  Speaker 3: a two percent management fee. The more assets you have
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  Speaker 3: under management, the more fees you have, the more attractive
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  Speaker 3: the company does.
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  Speaker 4: Then. So what's the timeline now, are.
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  Speaker 3: So base case at a bare minimum, you need fifteen
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  Speaker 3: days from this filing before you can launch an IPO
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  Speaker 3: process takes about a week or so.
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  Speaker 5: When you look at the calendar.
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  Speaker 3: Two and a half weeks from now you get closer
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  Speaker 3: to some of the holidays, So maybe this is something
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  Speaker 3: that we see starts to hit the road after the
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  Speaker 3: Easter holiday when people are back in their seats. But
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  Speaker 3: at a minimum, this process cannot formally start for at
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  Speaker 3: least fifteen days and then we'll move from there, but
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  Speaker 3: we're expecting it probably just looking at the calendar.
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  Speaker 5: Call it right on the other side of April, okay.
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  Speaker 2: Ageain, and I mean some sign of confidence from Bill
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  Speaker 2: Ackman that he's moving forward with this in a period
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  Speaker 2: where there's a lot of uncertainty about acid prices, about
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  Speaker 2: the global economy, and.
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  Speaker 3: That's something that they kind of call out in his
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  Speaker 3: eight page line let are basically saying that you know,
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  Speaker 3: most of the time companies who are looking at ipoing
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  Speaker 3: will not go when there's volatility in the market. Their
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  Speaker 3: pitches well, if you're giving us money to turn around
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  Speaker 3: and invest, well, we should be buying low and then
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  Speaker 3: ultimately profiting from there.
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  Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 4: Coles they had results. In fact, they reported worse than
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  Speaker 4: expected sales for the last quarter. They continue to struggle
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  Speaker 4: to revive years of declining sales. Let's figure out the
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  Speaker 4: cold story this morning. Mary Ross Gilbert, senior equity analysts
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  Speaker 4: with BI covering retail. We actually may just did an
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  Speaker 4: informal survey in the studio. Charlie Pellett the last time
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  Speaker 4: he was in at Coles was ten years years ago.
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  Speaker 2: Scarlet ten twelve years ago.
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  Speaker 4: Yeah, okay me. Actually I do go there, but probably
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  Speaker 4: about six months ago. Who is Coal's customer, I mean
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  Speaker 4: clearly not us.
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  Speaker 7: So, John. The Cole's customer is largely a low to
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  Speaker 7: middle income consumer. And I just went there yesterday just
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  Speaker 7: to see what the store look like. And I did
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  Speaker 7: observe that their customers are definitely seeking value. You don't
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  Speaker 7: always see a lot of bags because they're in there
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  Speaker 7: carefully choosing, trying to find value. And so this is
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  Speaker 7: why the company has brought on deal bars. Those are
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  Speaker 7: ten dollars and under items. And now they've announced that
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  Speaker 7: they're also bringing in toy bars, so they want to
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  Speaker 7: also feature items again ten dollars an under with different
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  Speaker 7: price points of like four ninety nine, five ninety nine,
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  Speaker 7: et cetera. So they're really trying to gain you know,
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  Speaker 7: traffic and conversion. But really they're also leaning into their
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  Speaker 7: private brands. So for example, I did observe that Els
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  Speaker 7: Louren Conrad, which is their women's label. It's a really
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  Speaker 7: a fun label and they did a great presentation in
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  Speaker 7: the store yesterday. The problem is that the rest of
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  Speaker 7: the store is still it's not really cohesive, so we
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  Speaker 7: don't really not there in terms of where we need
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  Speaker 7: to be where you can see a real cohesive strategy.
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  Speaker 7: And we saw a lot of clearance in the stores
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  Speaker 7: as well, so they still have a road ahead, as
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  Speaker 7: you highlighted with the four years of stacked comparable sales declines.
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  Speaker 6: Yeah, that's quite a track record to have to turn around. Mary.
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  Speaker 2: According to a company presentation at the earnings, Coles admitted
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  Speaker 2: that it lost competitive ground during high traffic shopping windows
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  Speaker 2: including Black Friday, Cyber Monday, and the week falling Christmas.
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  Speaker 2: When I read that, I thought that that was a
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  Speaker 2: fairly startling admission. How do you interpret that.
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  Speaker 7: I wasn't so prize candidly because we were there on
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  Speaker 7: Black Friday, and I could see that shoppers were trying
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  Speaker 7: to spend because you get sort of a free the
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  Speaker 7: minute you walk in the door. You get a free
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  Speaker 7: Coal's cash and you scratch it to figure out how
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  Speaker 7: much cash you get, and trying to find a way
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  Speaker 7: to spend it was a challenge because there were a
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  Speaker 7: number of excluded items and while they've increased the number
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  Speaker 7: of brands that are not excluded, they're still a fair amount.
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  Speaker 7: So there was some confusion and not a lot of
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  Speaker 7: customers were walking out with bags, is what we observed.
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  Speaker 7: So we we felt like, you know, it was hard pressed,
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  Speaker 7: let's say, to find find a way to spend the money.
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  Speaker 7: So they really needed to do a better job, and
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  Speaker 7: that's what they admitted on finding values, and that's why
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  Speaker 7: they say that their margins this year, you know, are
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  Speaker 7: going to be hard pressed because they need to get
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  Speaker 7: the sales lift right. They've done such a great job
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  Speaker 7: on managing expenses and they'll continue to do so, but
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  Speaker 7: until they get the sales moving in the right direction,
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  Speaker 7: they're not really going to see that margin improved. Because
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  Speaker 7: they do have to be more promotional, have sharper values,
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  Speaker 7: and so that's going to impact margin to a certain extent.
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  Speaker 7: But it's important so that they can be competitive because
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  Speaker 7: we saw strong results in off price. As you note.
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  Speaker 4: You could hear me early this morning going ouch as
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  Speaker 4: I filled up the car. Was when did I say
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  Speaker 4: three sixty a gallon? Did that come up in the
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  Speaker 4: call with the executives?
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  Speaker 6: Good question.
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  Speaker 4: I mean, it's probably the last thing they need for
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  Speaker 4: their customers to be paying lots more for other stuff.
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  Speaker 7: John, You're absolutely right, and this customer is really going
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  Speaker 7: paycheck to paycheck, and so when you do have gas
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  Speaker 7: prices going up, that's going to impact their discretionary income.
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  Speaker 7: And that's the importance that they really have those those
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  Speaker 7: sharp values in the store. So that's what they're hoping
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  Speaker 7: to achieve. They're really leaning into their private brand and
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  Speaker 7: they've got a campaign buy Coals, which features their brands
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  Speaker 7: like so for juniors, and that actually did well because
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  Speaker 7: they really featured that heavily in the stores. We observed
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  Speaker 7: it yesterday and so you know, I think and that
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  Speaker 7: also helps on the margin side to a certain extent.
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  Speaker 7: But again, you know, they really need overall sales to rise,
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  Speaker 7: to really get margins to move in the right direction.
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  Speaker 2: This is a company, as you pointed out, has been
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  Speaker 2: struggling for about four years with same store sales, you know,
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  Speaker 2: not performing very well. You just look at the sales
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  Speaker 2: growth over the last couple of years and it's a
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  Speaker 2: bunch of negative numbers starting from twenty twenty three on.
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  Speaker 2: What is needed here to really change the trajectory of Coals?
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  Speaker 2: I mean, how much longer can it go in this
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  Speaker 2: same direction before it becomes a candidate for takeover by
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  Speaker 2: another company or by private equity, or I mean something
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  Speaker 2: needs to change perhaps, But yeah, you raise.
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  Speaker 7: A valid point because when you think about it, they
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  Speaker 7: do have a juicy real estate portfolio said that might
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  Speaker 7: be attractive to some strategic buyers potentially, so there could
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  Speaker 7: be some interest here. We also think that with over
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  Speaker 7: eleven hundred stores, do they really need to be operating
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  Speaker 7: that many stores. They did say on the call that
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  Speaker 7: they have no plans to close or open any stores. Really.
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  Speaker 7: They might have a replacement store here or there, but
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  Speaker 7: their objective is really to get this box more productive
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  Speaker 7: and also raise digital sales. They really want to take
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  Speaker 7: advantage and grow digital sales too, So it's really about
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  Speaker 7: reaching a point of stability on the top line. And
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  Speaker 7: so there are, like I said, leaning into private brands
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  Speaker 7: and they have a number of initiatives, but it's going
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  Speaker 7: to take time. So they're already guiding toward comparable sales
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  Speaker 7: declines of about one to three percent in the first quarter.
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  Speaker 7: And when you look at this stacked four year comp
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  Speaker 7: decline they're going against or cycling, that's a seventeen percent decline.
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  Speaker 7: So that shows you the magnitude of the decline. And
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  Speaker 7: that's even after gaining a two billion dollar revenue business
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  Speaker 7: with Sofa. So that means that when you look at
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  Speaker 7: the declines and the rest of the business, it's much
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  Speaker 7: steeper than the seventeen percent, and so that's a critical
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  Speaker 7: thing to note. And when you think about Sofa, their
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  Speaker 7: comp sales were flat in the quarter previously, we are
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  Speaker 7: seeing increases, so that business is really matured at this
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  Speaker 7: point and that's why they've got a number of initiatives there,
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  Speaker 7: bringing in more brands to really ignite and try to
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  Speaker 7: grow that business.
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  Speaker 6: Stay with us more from Bloomberg Intelligence coming up after this.
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• 13:03
  Speaker 2: You know, when we look at all the volatility in
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  Speaker 2: the markets, it's kind of striking how much investors have
• 13:08
  Speaker 2: to juggle in terms of the different factors out there,
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  Speaker 2: and you know, the narratives that they need to contend with.
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  Speaker 4: What do we call it the confluence?
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  Speaker 2: Confluence, that's a great word. Matt Griffin knows the confluence
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  Speaker 2: very well. Matthew Griffin is our Bloomberg Equities reporter and
• 13:22
  Speaker 2: he's one of the authors of today's Big Take story,
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  Speaker 2: which is about how market cracks are widening as war,
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  Speaker 2: AI and credit fears are colliding all at once.
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  Speaker 6: Matthew, great to see.
• 13:32
  Speaker 5: You, Scarlett, great to be on Thanks for having me so.
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  Speaker 2: The war and Iran just introduces a new shock into
• 13:38
  Speaker 2: the global economy, one that already has investors feeling kind
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  Speaker 2: of nervous, kind of confused, certainly, very uncertain about all
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  Speaker 2: the different things that are taking place, whether it's inflation,
• 13:48
  Speaker 2: whether it is the jobs market, whether it's AI or
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  Speaker 2: private credit.
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  Speaker 8: Yes, and what I would say about this is that
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  Speaker 8: it really means two things for market right now. One is,
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  Speaker 8: even if the war ends tomorrow, even if oil prices
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  Speaker 8: go back down into the sixties per barrel, it's not
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  Speaker 8: all clear for investors in the way that maybe you
• 14:11
  Speaker 8: think about last spring Trump paused the tariffs, you have
• 14:15
  Speaker 8: the best day for the S and P five hundred
• 14:17
  Speaker 8: since two thousand and eight because a lot of the
• 14:19
  Speaker 8: headwinds facing markets just vanish. That's not true now when
• 14:23
  Speaker 8: you have private credit concerns, when you have fears of
• 14:25
  Speaker 8: AI disruption. And then another thing is that the war
• 14:29
  Speaker 8: also heightens some of those other risks. It makes it
• 14:33
  Speaker 8: harder to refinance loans, private credit loans that aren't working.
• 14:38
  Speaker 8: If central banks can't cut rates, it puts more pressure
• 14:41
  Speaker 8: on consumers. So it all just adds up to a
• 14:44
  Speaker 8: really tough spot for Wall Street right now.
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  Speaker 4: So what's the playbook.
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  Speaker 8: Well, what the head of US rates at Ameravet told
• 14:53
  Speaker 8: us is the playbook is out the door. And I
• 14:58
  Speaker 8: know that maybe isn't a definite answer, but I think
• 15:01
  Speaker 8: everyone is scrambling to figure out what to do here.
• 15:08
  Speaker 8: You know one thing that I you know, heard from
• 15:11
  Speaker 8: an investor myself is diversification is really important because there's
• 15:15
  Speaker 8: just a lot that isn't working right now, so you
• 15:18
  Speaker 8: want to make sure you you know, have some exposure
• 15:21
  Speaker 8: to things that do. But I don't think there is
• 15:23
  Speaker 8: a right answer.
• 15:24
  Speaker 2: One of the final quotes you have in the story
• 15:27
  Speaker 2: is pretty telling. It's for Matt Maley, who talks about
• 15:29
  Speaker 2: how a lot of people are not so so concerned
• 15:31
  Speaker 2: because they say, yeah, okay, oil is spiking, but it's
• 15:34
  Speaker 2: not as bad as it was in the nineteen seventies.
• 15:36
  Speaker 2: You know, Okay, there might be a bit of some
• 15:39
  Speaker 2: lofty valuations in tech, but it's nothing like two thousand.
• 15:42
  Speaker 2: All these comparisons to previous context kind of give give
• 15:48
  Speaker 2: us a false sense of complacency, doesn't it.
• 15:51
  Speaker 8: Yes, And it comes back to the idea of the story.
• 15:54
  Speaker 8: So Matt Malee's a strategist at Miller Tabic. What he
• 15:57
  Speaker 8: says is you can look at each of these risks
• 16:01
  Speaker 8: on its own because the you know, the problems together
• 16:07
  Speaker 8: can add up to create you know, issues for risk assets.
• 16:10
  Speaker 8: And also that the stock market is really expensive today,
• 16:14
  Speaker 8: so that maybe creates more downside risk even if the
• 16:20
  Speaker 8: initial you know issues are smaller.
• 16:24
  Speaker 4: So if a headline crossed and said the do wars over?
• 16:28
  Speaker 4: Is it all back to normal?
• 16:30
  Speaker 8: I think that's what we've been hearing is not necessarily
• 16:34
  Speaker 8: you know, I have talked to investors and strategists for
• 16:38
  Speaker 8: a different story last week that was about this question
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  Speaker 8: of will Trump and can Trump step in to rescue
• 16:43
  Speaker 8: the markets in the way that he did last spring?
• 16:46
  Speaker 6: And Trump put?
• 16:47
  Speaker 5: Is that?
• 16:47
  Speaker 6: Trump put yes?
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  Speaker 8: And what a lot of people told me is they
• 16:52
  Speaker 8: really weren't holding their breath for two reasons. One, the
• 16:55
  Speaker 8: market hasn't been shaken as badly as it has been
• 16:58
  Speaker 8: last spring, so the administration and may not be at
• 17:01
  Speaker 8: that point yet. Although you did see Trump, you know,
• 17:03
  Speaker 8: making some comments yesterday signaling the word will end. But
• 17:07
  Speaker 8: the more profound issue is that a war is not
• 17:09
  Speaker 8: as simple to change as a list of tariff rates
• 17:13
  Speaker 8: on a poster board.
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