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Salesforce Jumps Most Since 2020 on Outlook, Anthropic Deal · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 2: Podcasts.
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  Speaker 3: Radio.
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  Speaker 2: News.
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  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
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  Speaker 4: you get your podcasts or watch us live on YouTube.
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  Speaker 5: Remember earlier this year when the software stocks and particularly
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  Speaker 5: software as a service stocks were just dumped? I'm talking
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  Speaker 5: down 30, 40, 50 percent for some of these names
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  Speaker 5: like CrowdStrike and some of these other names have just
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  Speaker 5: rock solid for a long time. Well, they're bouncing back
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  Speaker 5: here today. One of them is Salesforce. It's up about 17,
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  Speaker 5: 18 percent today. This company gave an outlook for strong
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  Speaker 5: revenue expansion today. And they reported they're deepening their partnership
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  Speaker 5: with Anthropic PBC. That's all it took for this stock
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  Speaker 5: to bounce back as I thought it would. Anurag Rana,
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  Speaker 5: Senior Technology Analyst for Bloomberg Intelligence, joins us here. So, Anurag,
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  Speaker 5: we're having Salesforce. I'm looking at CrowdStrike as well. A
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  Speaker 5: couple of these names that are up sharply today. Let's
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  Speaker 5: talk about Salesforce. What did they report?
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  Speaker 6: So one of the things that we have talked about
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  Speaker 6: almost for, I mean, 18 months or so is that
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  Speaker 6: there is a bifurcation in enterprise tech spending with software
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  Speaker 6: and services being the casualty of it and servers, hardware,
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  Speaker 6: and AI infrastructure is where all the funding is going.
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  Speaker 6: And that was going on for Salesforce for the longest
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  Speaker 6: period of time. Their bookings data or the forward-looking data
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  Speaker 6: was on the downward trajectory. For the first time yesterday,
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  Speaker 6: we saw organically there was a slight uptick in that.
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  Speaker 7: And that was only by one percentage point.
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  Speaker 6: So think about it that organically they were supposed to
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  Speaker 6: grow roughly around 9% or so, you know, they grew
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  Speaker 6: 10 and they guided for 11. I think that's what
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  Speaker 6: it took for the first time to see that U-turn
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  Speaker 6: and that's, you know, drove the stock. The anthropic deal
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  Speaker 6: is another discussion, but frankly speaking, I think that's a
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  Speaker 6: little bit more marketing than reality, you know, but it's
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  Speaker 6: the organic core growth is what I think is the
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  Speaker 6: most important factor to think to focus on.
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  Speaker 5: So what's kind of, the market's discounting mechanism now, Anurag,
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  Speaker 5: as it relates to software and which software companies are
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  Speaker 5: maybe more vulnerable to AI than others? How has that
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  Speaker 5: thinking evolved?
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  Speaker 6: Yeah, so I would say for the longest period of time,
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  Speaker 6: I would say that all of this year and maybe
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  Speaker 6: the last few months of last year, there is only
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  Speaker 6: one trade in the market. buy semis, short software, or
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  Speaker 6: buy memory and short software. And to be very honest,
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  Speaker 6: over the last one month or so, we are seeing
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  Speaker 6: a bit of a reversal in that. And today also is,
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  Speaker 6: you know, today is probably one of the unique days
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  Speaker 6: where both Nvidia is up and software is up.
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  Speaker 7: Usually you don't see that there.
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  Speaker 6: But a lot of people have been caught off guard
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  Speaker 6: on that, you know, short software trade, which is why
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  Speaker 6: the rebound, the scale of the rebound is so high.
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  Speaker 6: But when you look at the overall software space, what
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  Speaker 6: we have been saying for a while is, there are
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  Speaker 6: a few large enterprise software companies that are critical systems
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  Speaker 6: of record. You know, somebody like an SAP, somebody like
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  Speaker 6: a Salesforce, somebody like a ServiceNow or a Workday, where
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  Speaker 6: you really need to store a lot of what the
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  Speaker 6: critical data is. So I think those are the ones
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  Speaker 6: that have a better positioning in the market compared to
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  Speaker 6: some of the smaller vendors that are only selling it
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  Speaker 6: to small and medium business market where the software itself
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  Speaker 6: is not that complicated. And perhaps somebody, you know, you
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  Speaker 6: can get more competition in that market.
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  Speaker 5: So is Salesforce with this Anthropic deal? Are they trying
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  Speaker 5: to pitch it to the marketplace that, you know, AI
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  Speaker 5: is not a threat. In fact, we're partnering with Anthropic
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  Speaker 5: to make our service even more valuable.
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  Speaker 2: Is that the pitch?
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  Speaker 6: Yeah, and another company called Figma showed this in their
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  Speaker 6: day-to-day operation. What it showed people was you open your
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  Speaker 6: cloud app and you start working in it directly. And
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  Speaker 6: if you need to create something, you will do it
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  Speaker 6: right there. This is what Salesforce is saying to people
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  Speaker 6: that if you are a salesperson and you have your
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  Speaker 6: cloud app, you can run your Salesforce app through it
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  Speaker 6: rather than opening another Salesforce app on the side. Which
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  Speaker 6: means that Salesforce, think about it, will be more about
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  Speaker 6: the back end, the data, the security, the business rules.
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  Speaker 6: And people will still use it to store the data
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  Speaker 6: or the logic, but you will use Cloud for the
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  Speaker 6: interface of it.
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  Speaker 5: And is that what's, in fact, happening out there? Are
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  Speaker 5: we seeing evidence that that's actually happening?
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  Speaker 6: They just announced the deal, so it's going to take
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  Speaker 6: some time for all this integration to happen. But one
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  Speaker 6: of the things that we have said is every company
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  Speaker 6: will have a different system of engagement. You and I
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  Speaker 6: will engage through these consumer apps to do whatever we
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  Speaker 6: are doing. I can see down the road if I'm driving,
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  Speaker 6: I can ask Siri to make some changes and it
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  Speaker 6: will happen. But for large enterprises, they will create their
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  Speaker 6: own app, you know, like what Bloomberg has with AskBee.
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  Speaker 7: And that app will drive everything.
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  Speaker 6: But the background is still going to be some of
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  Speaker 6: these apps that store that critical system of record data.
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  Speaker 2: All right.
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  Speaker 5: Let's just before we let you go, I just want
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  Speaker 5: to get your latest thinking on Microsoft here. It's up
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  Speaker 5: about 3% year to date. It was down 25% year
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  Speaker 5: to date just several months ago. So it's had a
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  Speaker 5: nice rebound here. What's the current thinking on Microsoft?
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  Speaker 7: So the rebound, I think, is dictated by two things.
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  Speaker 6: By them saying, we'll be free cash flow positive next year,
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  Speaker 6: and the CapEx is not going to be, I would say,
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  Speaker 6: as crazy as it had been. However, the other thing
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  Speaker 6: is they're also making good progress on their custom chips.
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  Speaker 6: I think number one factor for every cloud provider now
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  Speaker 6: is what are they doing with their own chips? Amazon's
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  Speaker 6: done a very good job with it. Google's clearly the
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  Speaker 6: leader in that space. And I think if Amazon can,
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  Speaker 6: and if Microsoft can figure out their chip strategy, they'll
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  Speaker 6: be able to recognize their cloud backlog much faster. At
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  Speaker 6: the same time, spend less on R & D or
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  Speaker 6: chip development, or basically spending with Nvidia, I mean.
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  Speaker 5: And is that, 30 seconds left, how much of a
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  Speaker 5: threat is that to Nvidia?
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  Speaker 6: Well, right now, the demand is so much, it won't matter.
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  Speaker 6: You could say near term, for the next three years,
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  Speaker 6: it's not an issue. After that, NVIDIA will have to
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  Speaker 6: figure out a way to create a bigger ecosystem, what
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  Speaker 6: they have.
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  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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• 6:21
  Speaker 4: you get your podcasts or watch us live on YouTube.
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  Speaker 5: NVIDIA gave us a bullish sales outlook for fiscal 2028,
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  Speaker 5: easing concerns that AI spending is not poised to lose
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  Speaker 5: any momentum. There's very strong growth. During the post-earnings conference call,
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  Speaker 5: Chief Financial Officer Chris said they expect growth revenue to
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  Speaker 5: surge in fiscal 2028. Stick with us.
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  Speaker 8: The surge in AI demand is driving a global infrastructure build-out,
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  Speaker 8: supported by an expanding and diverse set of growth opportunities,
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  Speaker 8: spanning hyperscalers, AI labs, AI natives, enterprises, and sovereign customers.
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  Speaker 8: We expect to grow revenue by approximately 70 percent in
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  Speaker 8: fiscal 2028.
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  Speaker 5: That was Colette Cress, the CFO of the NVIDIA. And
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  Speaker 5: they had a very bullish call last night.
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  Speaker 2: Again, 70 percent.
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  Speaker 5: Revenue growth. And folks, just to put that in context,
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  Speaker 5: the trailing revenue for this company is like $ 300 billion.
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  Speaker 5: Growing that number by 70%.
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  Speaker 2: I know.
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  Speaker 9: These numbers are so massive, it's kind of hard to
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  Speaker 9: wrap your head around.
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  Speaker 5: Yeah, it's just extraordinary. Let's break down the details of
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  Speaker 5: the NVIDIA print. Kujan Salvani joins us, senior analyst. He
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  Speaker 5: covers all the semiconductor companies for Bloomberg Intelligence. Kujan, thanks
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  Speaker 5: so much for joining us here. 70%, where does that
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  Speaker 5: number come from?
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  Speaker 10: Yeah, I mean, look, that's almost 100 billion above what
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  Speaker 10: the street thought.
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  Speaker 2: And it really speaks to a couple of things.
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  Speaker 10: One, of course, like you mentioned, the AI demand is
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  Speaker 10: there's no signs of stopping. But what was really surprising
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  Speaker 10: is like, how are they going to get the supply?
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  Speaker 10: Because what we hear everywhere is their supply constraint. And
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  Speaker 10: I think this speak this validates that theory when, you know,
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  Speaker 10: for the last 12 months, they have been significantly increasing
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  Speaker 10: their purchase commitments to the level of now 250 billion dollars,
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  Speaker 10: which was sort of a risk factor for a lot
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  Speaker 10: of people. There were concerns that they are putting into
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  Speaker 10: too much into supply chain. But this is the result
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  Speaker 10: you get right when you almost like have a stake
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  Speaker 10: in every partner, a supply chain partner, you can lock
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  Speaker 10: in capacity, you can get priority. Frankly, you can get
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  Speaker 10: a much more discounted price than what you would get
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  Speaker 10: as a new customer today, whether it's for memory and wafer.
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  Speaker 10: So this really validates that the investment they have been doing,
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  Speaker 10: which were seen as risks, are finally paying dividends now
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  Speaker 10: where you can come and beat with such a high
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  Speaker 10: number in a supply-constrained environment.
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  Speaker 9: What did we learn from NVIDIA's results and the commentary
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  Speaker 9: from executives about NVIDIA's willingness to continue investing in other
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  Speaker 9: companies in its ecosystem?
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  Speaker 10: Yeah, so this is for the first time, which they
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  Speaker 10: have not done in the past many quarters. They gave
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  Speaker 10: a lot more disclosures around the investments they're making, the
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  Speaker 10: different types of investments making. One thing it does, it
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  Speaker 10: sort of eases a little bit with the circular financing concerns.
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  Speaker 10: And what I mean is gives investors a little bit
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  Speaker 10: more transparency. Now, it's not completely takes away the risk, right?
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  Speaker 10: The fears or the risk of what happens in a downturn,
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  Speaker 10: but at least gives us a lot more transparency. The
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  Speaker 10: way they are going about investing in these companies, they're
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  Speaker 10: using sort of four different approaches. One is backstopping the
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  Speaker 10: conglomerate of banks to the degree of $ 500 billion that
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  Speaker 10: they're going to support the frontier labs to do their build-out.
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  Speaker 10: They're approaching a new business model with the AI clouds, again,
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  Speaker 10: helping them build out.
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  Speaker 2: And what this does is accelerate the build-out of these companies.
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  Speaker 10: Private or non-investment-grade public companies who are reallocated by land, power, shell,
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  Speaker 10: and available balance sheet.
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  Speaker 5: So one of the competitive threats that seems reasonable to
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  Speaker 5: me is some of NVIDIA's key customers, whether it's Microsoft
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  Speaker 5: or I don't know who it is, developing their own chips.
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  Speaker 5: Flesh that risk out for us.
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  Speaker 2: Yeah, look, that's a definite risk.
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  Speaker 10: You know, again, when we just started with 100% market
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  Speaker 10: share of this market, right? I mean, there's only one
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  Speaker 10: way to go from 100.
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  Speaker 2: You just go down. There's nothing above. So there is
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  Speaker 2: a definite risk.
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  Speaker 10: Again, where we are in the demand environment and the
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  Speaker 10: constraints and NVIDIA has shown like, look, they have locked
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  Speaker 10: in such great supply capacity. So we don't think this
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  Speaker 10: will hurt their ability to grow their own revenues. We
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  Speaker 10: definitely believe ASICs are going to take unit share away.
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  Speaker 10: But at this point, we think all of their customers
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  Speaker 10: are still going to have a multi-vendor solution where NVIDIA
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  Speaker 10: still will be a big part of a customer. AWS,
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  Speaker 10: in fact, extended their deals with NVIDIA, which they had
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  Speaker 10: in the past. And AWS is also ramping up their
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  Speaker 10: own unit volume. So as long as the demand trend
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  Speaker 10: continues up, there's enough space for NVIDIA and its customers
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  Speaker 10: also to deploy their own chips.
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  Speaker 9: We know that NVIDIA has been trying to expand its
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  Speaker 9: customer base and not just relying on hyperscalers from Amazon
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  Speaker 9: to Google. How is it doing on that effort to
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  Speaker 9: become more dependent on a wider group of companies rather
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  Speaker 9: than just those tech giants?
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  Speaker 2: I think they are doing a great job.
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  Speaker 10: And this is something we have been calling out for
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  Speaker 10: a while in our research that everyone is just focused
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  Speaker 10: on the top four or five hyperscaler spending.
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  Speaker 2: But the result just showed you.
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  Speaker 10: So if you look at their fiscal 28, the 70%
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  Speaker 10: growth they've said, they are actually going to grow faster
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  Speaker 10: than the top five hyperscale CapEx growth. which suggests a
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  Speaker 10: couple of things. One, they're not totally dependent on these
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  Speaker 10: top five spending. And even if the top five sort
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  Speaker 10: of slow the spending, they have other avenues in other
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  Speaker 10: customer bases, other geographies where they can really offset.
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  Speaker 2: And continue going faster than the market.
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  Speaker 10: Second, with the new segmentation that they have done, which
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  Speaker 10: is the ACE segment, which includes the AI clouds, which
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  Speaker 10: includes sovereign, which includes enterprises and industries. The company has
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  Speaker 10: started to give us a lot more color now, which
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  Speaker 10: they did last night as well, which shows that this
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  Speaker 10: bucket is actually growing faster, but expected to go faster than.
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  Speaker 2: Just the top five. So this really speaks to the
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  Speaker 2: strength of diversification.
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  Speaker 5: Kunjan, talk to us about some of their competitors in
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  Speaker 5: the chip business, advanced micro devices, the broad comms of
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  Speaker 5: the world. How are the competitors kind of responding to
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  Speaker 5: Nvidia and seems to be continuing to set the bar
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  Speaker 5: higher and higher.
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  Speaker 10: Yeah, I mean, look, for the competitors, like, it's the
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  Speaker 10: tide that's lifting all boats. So everyone is really enjoying
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  Speaker 10: the stakes, even though all of its competitors continue to
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  Speaker 10: beat and raise and keep raising the benchmark. But with
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  Speaker 10: this significant race for the next year, I think in
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  Speaker 10: terms of the share, NVIDIA might be actually increasing their
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  Speaker 10: share than what we had thought. But again, everyone wants
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  Speaker 10: a multi-vendor strategy. So the competitors are also enjoying where,
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  Speaker 10: you know, if you are a 1% share taker of
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  Speaker 10: the market and you go to 1% to 2%, you'd
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  Speaker 10: significantly doubling your revenue.
• 13:15
  Speaker 9: Still stay with us more from bloomberg intelligence coming up
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  Speaker 9: after this.
• 13:23
  Speaker 4: You're listening to the bloomberg intelligence podcast catch us live
• 13:27
  Speaker 4: weekdays at 10 a.m eastern on apple carplay and android
• 13:30
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• 13:34
  Speaker 4: you get your podcasts or watch us live on youtube.
• 13:38
  Speaker 5: Getting back to the market here, specifically to Meta Platforms,
• 13:41
  Speaker 5: we're learning more and more about their agreement with the
• 13:44
  Speaker 5: state's attorney general. Meta's teen safeguards on Facebook and Instagram
• 13:49
  Speaker 5: apply only to the U.S. That was something new, I think,
• 13:52
  Speaker 5: for the marketplace. Matt Schuttenholm joins us here at Bloomberg.
• 13:55
  Speaker 5: Intelligence Media Litigation Analyst. Matt, you've now gotten, I'm guessing,
• 13:59
  Speaker 5: through most of this settlement agreement here. Let's start with
• 14:04
  Speaker 5: that U.S.
• 14:05
  Speaker 2: Issue.
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  Speaker 5: Is that surprising? How do you get this to be
• 14:09
  Speaker 5: more of a global type situation? What's your read?
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  Speaker 3: Yeah, I mean, so the elephant in the room of
• 14:15
  Speaker 3: this whole story, Paul, is that Congress has never been
• 14:19
  Speaker 3: able to act with respect to regulating social media companies.
• 14:24
  Speaker 3: Europe has taken a different approach and has been more
• 14:29
  Speaker 3: aggressive in some respects. And so I do think you
• 14:35
  Speaker 3: will see, you know, some movement potentially here. Still hard
• 14:40
  Speaker 3: to say that Congress is going to move significantly on this.
• 14:45
  Speaker 3: But I do think you'll see individual states and you'll
• 14:47
  Speaker 3: see countries in the EU make sure that at least
• 14:51
  Speaker 3: some of these terms in this settlement, some of these
• 14:54
  Speaker 3: limits on how meta works, serves teens are adopted there
• 15:00
  Speaker 3: as well. Generally, though, in the EU, the approach has
• 15:02
  Speaker 3: been different. They don't have the same limitations of the
• 15:06
  Speaker 3: First Amendment and the Section 230 liability shield that really
• 15:09
  Speaker 3: protect the social media companies there.
• 15:11
  Speaker 2: So generally, the EU companies have been much more aggressive.
• 15:14
  Speaker 3: They've been pursuing bans on allowing teens to use the
• 15:18
  Speaker 3: service generally. And so it's sort of apples and oranges
• 15:22
  Speaker 3: in terms of one directly applying to the other.
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  Speaker 9: And the settlement, up to $ 17 billion, you and other
• 15:30
  Speaker 9: analysts have noted this is something META can easily absorb,
• 15:32
  Speaker 9: especially since it'll be termed out over 10 years. However,
• 15:36
  Speaker 9: META still faces legal liabilities, right? I mean, there are
• 15:39
  Speaker 9: still suits from school districts and individuals who claim harm.
• 15:44
  Speaker 9: Could those potentially be more damaging?
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  Speaker 3: That's right, Scarlett. So in my view, this was the
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  Speaker 3: big ticket item in this. You know, the state AGs
• 15:53
  Speaker 3: had a direct path to a recovery. And it's a
• 15:57
  Speaker 3: bread and butter legal case that the company said one thing,
• 16:01
  Speaker 3: but it was doing another. And it had a direct
• 16:03
  Speaker 3: path to civil penalties. The school districts and the individual
• 16:08
  Speaker 3: plaintiffs have a more difficult legal case in both respects.
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  Speaker 3: Individual teenagers suing have a hard time because it's hard
• 16:16
  Speaker 3: to file a class action for individual damages. It's hard
• 16:20
  Speaker 3: to say that everyone across the United States was harmed
• 16:24
  Speaker 3: in the same way. So judges generally won't do a
• 16:26
  Speaker 3: class action for damages. School districts also are indirectly harmed.
• 16:33
  Speaker 3: They're saying their students are harmed, so we should recover
• 16:36
  Speaker 3: for this. They're bringing claims mostly on a negligence theory
• 16:40
  Speaker 3: or a public nuisance theory or a product liability theory.
• 16:44
  Speaker 3: These are all novel in the media space. These are
• 16:47
  Speaker 3: harder cases to win. They're worth taking seriously. And because
• 16:51
  Speaker 3: of their scale, there are over 1,200 school districts across
• 16:55
  Speaker 3: the United States. They're meaningful because they represent a number
• 16:58
  Speaker 3: of teens, but they're difficult cases to win. Mehta's settlement
• 17:02
  Speaker 3: yesterday was the big threat in this case.
• 17:07
  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
• 17:14
  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 17:17
  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 17:20
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• 17:24
  Speaker 4: you get your podcasts or watch us live on YouTube.
• 17:28
  Speaker 1: All right, let's move on to more earnings.
• 17:30
  Speaker 9: We ended with some earnings there from Bailey, but we've
• 17:33
  Speaker 9: also been getting a read on the consumer and the
• 17:35
  Speaker 9: economy from the dollar chains. And what they're telling us
• 17:38
  Speaker 9: seems to kind of cover a wide range. Red Brown
• 17:42
  Speaker 9: is our Bloomberg Consumer Reporter, and he joins us now. So, Red,
• 17:45
  Speaker 9: what have we learned? I guess what we've.
• 17:48
  Speaker 11: Learned is kind of more of the same with a
• 17:50
  Speaker 11: lot of these consumer reports we've been getting through the
• 17:53
  Speaker 11: earnings season. I think one thing that stood out to
• 17:56
  Speaker 11: me was during the Dollar General call, CEO mentioned that
• 17:59
  Speaker 11: they are seeing higher trade-in from middle and high-income people,
• 18:04
  Speaker 11: which I thought just sort of jumped out to me.
• 18:06
  Speaker 11: I think that's a question we often have in these
• 18:08
  Speaker 11: sort of economic... moments like we're having. If people are
• 18:11
  Speaker 11: feeling pressure, where are they going? And it seems like
• 18:14
  Speaker 11: Dollar General is one of those places now. So I
• 18:16
  Speaker 11: think that that's kind of an important thing to kind
• 18:18
  Speaker 11: of continue to watch. I don't know what it kind
• 18:20
  Speaker 11: of means, what letter shape the economy becomes if people
• 18:25
  Speaker 11: from the top part of the K economy are also
• 18:27
  Speaker 11: trading down as well. But definitely something that we're going
• 18:29
  Speaker 11: to be keeping an eye on as reports sort of
• 18:32
  Speaker 11: continue to roll in.
• 18:34
  Speaker 5: Are Dollar Tree, Dollar General.
• 18:37
  Speaker 1: Five Below, Dollarama.
• 18:39
  Speaker 5: Do they differentiate within the marketplace at all, or are
• 18:41
  Speaker 5: they just, we're all just out there for low price?
• 18:44
  Speaker 11: Yeah, I mean, obviously, there's a lot of overlap, I think,
• 18:46
  Speaker 11: with these companies, but they're different companies and have kind
• 18:49
  Speaker 11: of different strategies. One common thread, I think, across a
• 18:53
  Speaker 11: lot of them, though, is they have been trying to
• 18:54
  Speaker 11: introduce some higher cost items, probably more from a margin
• 18:58
  Speaker 11: perspective for these companies, right? Like, if you're selling a dollar,
• 19:02
  Speaker 11: only a dollar price thing forever, but inflation in the
• 19:05
  Speaker 11: supply chain has been going up, you know, yada, yada.
• 19:07
  Speaker 11: It becomes a little more difficult. So, they've all been
• 19:09
  Speaker 11: introducing higher-priced items. But when it comes to Dollar General, 80%
• 19:14
  Speaker 11: of their business, of their revenue actually comes from, more
• 19:16
  Speaker 11: than 80% comes from consumables. So, it's food and things
• 19:18
  Speaker 11: like that. And so, that's also a really important part.
• 19:21
  Speaker 11: And I think that also kind of explains a little
• 19:23
  Speaker 11: bit of the difference between the results today. Dollar General
• 19:25
  Speaker 11: did a little bit better than Dollar Tree, which is
• 19:26
  Speaker 11: around 50% of those consumables.
• 19:28
  Speaker 1: So people are going to these stores because they need things, right?
• 19:33
  Speaker 11: So if we're talking about middle and higher income people,
• 19:36
  Speaker 11: they're not going to buy the trinket as much anymore.
• 19:39
  Speaker 11: They're very much going to make sure that they can
• 19:41
  Speaker 11: put food on the table. I think Dollar General's CEO
• 19:44
  Speaker 11: also kind of talked a little bit about how lower
• 19:45
  Speaker 11: income people are really stretching, maybe visiting stores. a little
• 19:50
  Speaker 11: bit more frequently, but doing it in sort of a
• 19:52
  Speaker 11: lower check oftentimes. So the businesses are very different, but
• 19:56
  Speaker 11: obviously there are a lot of similar... Sorry, long answer
• 19:58
  Speaker 11: to your simple question.
• 20:00
  Speaker 9: So for Dollar General, the dollar stores, even Five Below,
• 20:04
  Speaker 9: they need to make sure that their supply chain is
• 20:07
  Speaker 9: intact so that they can continue offering value to their customers,
• 20:10
  Speaker 9: which means a lot of stuff is imported. And that
• 20:13
  Speaker 9: means they're affected by tariffs. Have we learned anything new
• 20:15
  Speaker 9: from them when it comes to the impact of tariffs?
• 20:18
  Speaker 11: Not necessarily on the impact of tariffs per se, but
• 20:20
  Speaker 11: they both did raise their earnings guidance because they got
• 20:24
  Speaker 11: a tariff relief.
• 20:24
  Speaker 1: But that's a one-time thing, isn't it? Sure, yeah.
• 20:27
  Speaker 11: I think, obviously, the supply chain issue that it feels
• 20:30
  Speaker 11: like a lot of us have forgotten from a few
• 20:32
  Speaker 11: years ago has made a lot of these companies reorganize
• 20:34
  Speaker 11: and re-evaluate how they hold inventories. So, both these companies
• 20:37
  Speaker 11: did talk about how they're keeping their inventories lighter and
• 20:40
  Speaker 11: more agile. So, I think that helps them in a
• 20:42
  Speaker 11: few different ways, I think, with the supply chain and
• 20:44
  Speaker 11: making sure that they can shift their where they're getting
• 20:47
  Speaker 11: and sourcing things from very quickly, but also allows them
• 20:52
  Speaker 11: to react when consumer needs are changing as well. If
• 20:56
  Speaker 11: we know that this is a very dynamic economic environment
• 20:59
  Speaker 11: for the consumer, they're shifting into consumables, need-based things, then
• 21:03
  Speaker 11: we want to make sure that our stores are very
• 21:04
  Speaker 11: able to quickly make sure they're stocked with those items
• 21:08
  Speaker 11: as well.
• 21:09
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• 21:18
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• 21:23
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• 21:26
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