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Nvidia-Google AI Chip Rivalry Escalates on Report of Meta Talks · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: or watch us live on YouTube.
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  Speaker 2: Meta platforms in talks to spend billions on Google's AI chip,
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  Speaker 2: suggesting that the search giant Google has made the case
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  Speaker 2: that it can rival in Vidia as a leader in
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  Speaker 2: artificial intelligence technology. Let's check in with an expert who's
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  Speaker 2: got an opinion there, Mandeep Singh, Senior tech analyst for
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  Speaker 2: Bloomberg Intelligence. Mandy, what are you making this news with
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  Speaker 2: Meta investing and spending money on Google's AI chips? What
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  Speaker 2: does that mean for the space and you know, Nvidia
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  Speaker 2: in particular, because we're seeing some big moves in the
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  Speaker 2: stock market today.
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  Speaker 3: Look, I mean, we know CAPEX numbers are going up,
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  Speaker 3: not just next year, probably through twenty twenty eight, because
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  Speaker 3: Meta has given some sort of a three year forecast.
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  Speaker 3: In fact, Mark Zuckerbert has mentioned that you know, they
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  Speaker 3: plan to spend up to six hundred billion dollars in
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  Speaker 3: capex through twenty twenty eight. So when you are spending
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  Speaker 3: such big sums, you don't want to be dependent on
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  Speaker 3: one supplier, and in this case, Nvidia still has the
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  Speaker 3: best chips. They probably have a virtual monopoly when it
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  Speaker 3: comes to the training. But on the infrincing side, I
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  Speaker 3: think everyone, especially among the hyperscalers who don't have their
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  Speaker 3: own chips, are looking to diversify. And I think I'm
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  Speaker 3: very surprised that Meta is looking to buy something from Google,
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  Speaker 3: given they compete, you know, so furiously on the digital
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  Speaker 3: ad side. But that's really a reflection of the changing
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  Speaker 3: tech stack and how these companies are evolving with AI.
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  Speaker 4: What is it about Alphabet and Google that we did
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  Speaker 4: not realize that they're making so much progress on their
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  Speaker 4: own chips, these TPUs tensor processing units. It does feel
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  Speaker 4: like it's kind of come from out of nowhere. I know,
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  Speaker 4: folks in the tech industry know that Google has been
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  Speaker 4: working on this for a while, but if you were
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  Speaker 4: just following along, it feels like Nvidia had this locked
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  Speaker 4: up and then all of a sudden it's a little
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  Speaker 4: bit more open.
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  Speaker 5: Yeah.
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  Speaker 3: I mean, Google is in the seventh generation of their TPUs,
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  Speaker 3: so clearly they have been working at this for a while,
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  Speaker 3: which is the reason why the TPU has been able
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  Speaker 3: to catch up to mvd's GPU in terms of performance.
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  Speaker 3: But to your point, look, the Gemini model was not
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  Speaker 3: comparable to open Ai and Entropics leadings models up until
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  Speaker 3: the last six months. So that is what has changed
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  Speaker 3: that Gemini as a standalone model has been able to
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  Speaker 3: match up to you know, open Ai, whether it's in
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  Speaker 3: terms of chat, doot functionality, image generation, video generation. They
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  Speaker 3: are a state of the art model. Maybe in terms
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  Speaker 3: of holding agents they still trail. Entropics and Thropic release
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  Speaker 3: a new version yesterday and they still claim that their
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  Speaker 3: models are better than Gemini. But if you are looking
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  Speaker 3: for a state of the art model and the lowest
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  Speaker 3: cost in terms of tokens, Gemini is your best better
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  Speaker 3: And which is what Meta is realizing that yes, they
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  Speaker 3: could use the low cost that Google has in terms
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  Speaker 3: of running their infrastructure and use it to their advantage
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  Speaker 3: in terms of how they are looking to deploy Jenni
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  Speaker 3: on their family of facts.
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  Speaker 2: So, Mandy, you can you give us a sense of
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  Speaker 2: the competitive landscape today for Nvidia. We know, I guess
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  Speaker 2: now we have a better appreciation for Google as a competitors.
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  Speaker 5: Laid out for us and how you think it might
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  Speaker 5: play out.
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  Speaker 3: I mean, the one metric that Nvidia shared on their
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  Speaker 3: latest earnings call was their content per gigawatt is going
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  Speaker 3: to grow over the next few years. And the reason
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  Speaker 3: they said is because they generate the most tokens for
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  Speaker 3: what now, for one gigawad, Jensen said they'll have up
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  Speaker 3: to thirty to thirty five billion dollars of Nvidia chips
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  Speaker 3: being purchased. Think about it. You know, if a one
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  Speaker 3: gigawat costs fifty billion, any company is spending thirty to
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  Speaker 3: thirty five billion. And all these companies like open Ai
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  Speaker 3: has talked about adding up to twenty six gigawatts in capacity.
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  Speaker 3: That really translates into huge revenue for Nvidia just from
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  Speaker 3: one hyper scaler. And that's what I think Meta if
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  Speaker 3: they plan to add ten gigawatts over the next five years,
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  Speaker 3: they don't want to be giving Nvidia, you know, three
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  Speaker 3: hundred billion dollars just for the chips. They want to
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  Speaker 3: diversify and really make sure they're running their infrastructure at
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  Speaker 3: the lowest cost, which is what Google is doing. Google
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  Speaker 3: spend ninety billion dollars in CAPEX this year and guess what.
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  Speaker 3: They have a cloud business. They have trained their new model,
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  Speaker 3: they're doing infrincing at scale. They're serving search and all
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  Speaker 3: their family of appso Genii functionality, so they are really
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  Speaker 3: it very efficiently. They don't They're not spending to thirty
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  Speaker 3: to thirty five billion dollars per gigawatt, and that's what
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  Speaker 3: everyone is seeing now in terms of efficiency.
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  Speaker 4: So you do a great job of explaining this from
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  Speaker 4: a technical point of view, from the technologies point of view,
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  Speaker 4: But for investors who really just understand in video as
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  Speaker 4: you know, AI personified or embodied, is this just an
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  Speaker 4: opportunity to diversify and not rely so much on Invidia
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  Speaker 4: and maybe chase another company whose stairs have not rallied
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  Speaker 4: as much.
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  Speaker 3: I think so. I mean, it's very hard to see
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  Speaker 3: multiple expansion in a company like Nvidia, which was close
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  Speaker 3: to you know, four trillion plus, and I think they're
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  Speaker 3: growing very nicely into earnings. They've given a forecast of
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  Speaker 3: up to three hundred and thirty billion dollars and revenue
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  Speaker 3: next year, so there is embedded growth in there. But
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  Speaker 3: everyone has that scarce from you know, the dot com
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  Speaker 3: bubble in terms of paying too much in terms of multiple,
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  Speaker 3: and that's where you're seeing people really beingservative in terms
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  Speaker 3: of what sort of multiple they pay for a stock.
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  Speaker 3: Like en video, Stay with us.
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  Speaker 5: More from Bloomberg Intelligence coming up after this.
• 6:12
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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• 6:26
  Speaker 5: Let's talk some retailers.
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  Speaker 2: We got some retailers bringing up the rear of earning
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  Speaker 2: season as they liked to do. We had Dick spoarding goods,
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  Speaker 2: and we had Best Buy. And let's break it all
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  Speaker 2: down with Lindsay, Dutch Consumer, Hardline Senior, and also Bloomberg
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  Speaker 2: Intelligence joining us from Princeton via that Zoom thing. Let's
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  Speaker 2: start with Dick Sporting Goods. They raised their outlook again,
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  Speaker 2: but I guess investors are focused on I guess some
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  Speaker 2: of the costs trying to turn around foot Locker.
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  Speaker 5: Talk to us about Dick spoorting goods at Lindsay.
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  Speaker 3: Yes, that's right.
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  Speaker 6: The legacy business remained very strong in the third quarter.
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  Speaker 6: Strong back to school, clear demand momentum heading into the
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  Speaker 6: fourth quarter. That's where the raised outlook came. It was
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  Speaker 6: really for the legacy business. But when we look at Footlocker,
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  Speaker 6: you know, the deal closed early September. The outlook for
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  Speaker 6: the fourth quarter is mid to high single digit same
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  Speaker 6: source sales decline. Dix is also looking to expedite the
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  Speaker 6: turnaround there, which means offloading old inventory steep markdowns in
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  Speaker 6: that fourth quarter, which is going to really hurt the
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  Speaker 6: margin as well. So foot Locker, you know, needs a
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  Speaker 6: lot of work. Fourth quarter is going to be weak,
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  Speaker 6: and investors are really looking to see how quickly they
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  Speaker 6: can turn that business around.
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  Speaker 4: Yeah, and probably they'll need to put some money into
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  Speaker 4: it as well to reorganize stores and freshen up the display.
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  Speaker 4: How much of this deal Dick's buying foot Locker was
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  Speaker 4: predicated on Nike and what it was doing with this
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  Speaker 4: shift back to its wholesale channels and away from solely
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  Speaker 4: relying on its direct to consumer offerings and its own stores.
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  Speaker 6: The full looker was, I would argue, over exposed to Nike.
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  Speaker 6: You know, several years ago they had been working that
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  Speaker 6: exposure down. I think Dix will remain focused on being diversified,
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  Speaker 6: just given that their own assortment where they're leaning into
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  Speaker 6: lots of other brands, new up and coming brands like
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  Speaker 6: Hoka and on. They did discuss though that foot Locker
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  Speaker 6: will sort of remain sort of a hub for basketball,
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  Speaker 6: and Nike does have a stronghold in the basketball market,
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  Speaker 6: so I expect Nike to be, you know, a strong
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  Speaker 6: vendor with foot Locker, but Dix is looking to make
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  Speaker 6: sure that they have that right assortment, the newest stuff,
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  Speaker 6: the hottest lines coming from Nike and others.
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  Speaker 5: What is Dick saying about tariffs in their business, so.
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  Speaker 6: You know, Tara, they are going to feel higher costs,
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  Speaker 6: you know, in this back half of the year and
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  Speaker 6: even into next year. Dix has since the pandemic, since
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  Speaker 6: they've been able to see sort of an increase in
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  Speaker 6: demand for their premium assortment. They're not really a huge
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  Speaker 6: discounter for the holiday. They like to sell their product
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  Speaker 6: fully through, so I don't expect them to sort of discount,
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  Speaker 6: and they have taken prices up selectively but certainly not
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  Speaker 6: across the board, and their higher income consumer is sort
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  Speaker 6: of accepting those increases. I think Footlocker is a little
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  Speaker 6: bit of a different story, and you might see that
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  Speaker 6: impact a little bit bigger on that business, just because
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  Speaker 6: they don't have those premium products and they're already going
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  Speaker 6: to need to offload older inventory with steep discounts. So
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  Speaker 6: you sort of have that turnaround compounded with these rising
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  Speaker 6: costs heading into the next year. Something for them to work.
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  Speaker 7: On, Lindsay, I also want to ask you about best Buy.
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  Speaker 4: The shares are up about four and a half percent
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  Speaker 4: right now, and of course this consumer electronics retailer how
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  Speaker 4: to beat and raise quarter. It looks pretty good, and
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  Speaker 4: it looks like it's on the usual string sales of
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  Speaker 4: mobile phones and sales of computer equipment.
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  Speaker 6: Yeah, so best Buy had a strong third quarter, better
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  Speaker 6: as better than expected, as you mentioned. I think, you know,
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  Speaker 6: the stock isn't getting a full bump because there is
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  Speaker 6: definitely some conservatism and a low guide for the fourth quarter,
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  Speaker 6: and investors are trying to figure out, you know, is
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  Speaker 6: it just conservatism, are they just worried about the consumer,
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  Speaker 6: or is there something really there that there's going to
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  Speaker 6: be a slowdown in that fourth quarter. But the business
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  Speaker 6: looks good. Demand looks strong, as you mentioned, computing, phones,
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  Speaker 6: gaming all looking solid, and they're also seeing an improvement
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  Speaker 6: in home theater, which is really big because that has
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  Speaker 6: been a weaker category for the last couple of years.
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  Speaker 6: So if that comes to fruition, I definitely think there
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  Speaker 6: will be strength in the fourth quarter.
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  Speaker 2: So you think about a best Buy, I mean some
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  Speaker 2: of those are big ticket items here, and that would
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  Speaker 2: suggest that they're confident. I think they go to a
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  Speaker 2: part of the K shaped economy, may me that that
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  Speaker 2: is doing better.
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  Speaker 5: Is that a typical best Buy customer?
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  Speaker 6: So best Buy definitely promotions are going to be a
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  Speaker 6: big piece of the fourth quarter. They're sort of leaning
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  Speaker 6: into those promotional events. That's what worked last year, and
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  Speaker 6: I think they're trying to lean into the things that
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  Speaker 6: worked last year for this year. And I do think
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  Speaker 6: the consumer backshop is quite similar when we do that compare.
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  Speaker 6: I also they also recently launched a marketplace, and they
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  Speaker 6: seem to have a stronger focus on marketing and advertising,
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  Speaker 6: and so they're really trying to meet the consumer where
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  Speaker 6: they are and make sure that best Buy is top
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  Speaker 6: of mind when you're shopping for a wide array of things,
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  Speaker 6: not just those big ticket items like TVs or appliances.
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  Speaker 6: So they're trying to have a bigger wallet share with
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  Speaker 6: consumers across the board, and they're leaning on that marketplace
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  Speaker 6: and advertising to do it and then hopefully get you
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  Speaker 6: into the store, and that's where they can bring their
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  Speaker 6: customer service and experience as well.
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  Speaker 4: Did they say anything or give an a indication on
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  Speaker 4: how they're preparing for Black Friday and for the holiday
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  Speaker 4: shopping season.
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  Speaker 6: It sounds like very similar to last year. So they
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  Speaker 6: started their deals about a week ago. They roll out
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  Speaker 6: new deals each week. They are leaning into their paid
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  Speaker 6: membership program, so paid members get access to certain deals
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  Speaker 6: over the regular shopper. But the playbook looks very very similar,
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  Speaker 6: but the demand picture looks better. So hopefully those promo
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  Speaker 6: events can really draw that shopper in, especially since everyone's
• 12:34
  Speaker 6: already looking for those items.
• 12:36
  Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
• 12:43
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 12:46
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 12:50
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 12:53
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 12:57
  Speaker 7: Let's dig into.
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  Speaker 4: Some of the individual companies a little bit more here
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  Speaker 4: with Mary Ross Gilbert. She's a senior Equity and that's
• 13:03
  Speaker 4: covering the sector for Bloomberg Intelligence. And Mary, let me
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  Speaker 4: start off with Coles because we talk about companies that
• 13:08
  Speaker 4: are gaining market share. Coles lost a lot of market
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  Speaker 4: share over the past five six years and it's.
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  Speaker 7: Coming back a bit here. What is its strategy?
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  Speaker 4: Is it just that it's kind of simplified its business model, Garlic.
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  Speaker 8: What's happening here is that they've kind of gone back
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  Speaker 8: to the basics. What's something something that Coles has always
• 13:29
  Speaker 8: been known for, So one is their private brand. So
• 13:32
  Speaker 8: if you think about some of the brands like so
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  Speaker 8: and Juniors, Lauren Conrad for women, and they brought those
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  Speaker 8: brands back because they actually sacrificed some of those brands
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  Speaker 8: under the prior leadership and replaced them with some more
• 13:50
  Speaker 8: name brands like Madden Girl, trying to really attract the
• 13:54
  Speaker 8: junior shopper there. And now that they've brought the private
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  Speaker 8: brands back, they brought back petite sizing, which was really
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  Speaker 8: important to their customer base. Now they're really starting to see,
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  Speaker 8: you know, a recovery. But they're not out of the
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  Speaker 8: woods yet, Scarlett, as you pointed out, I mean, they're
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  Speaker 8: really cycling three years of declines, but we are seeing
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  Speaker 8: encouraging results and given that they actually turned positive in
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  Speaker 8: the latest month, it looks like they could actually reach
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  Speaker 8: a break even in the fourth quarter, even though they're
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  Speaker 8: guiding to a one point seven percent comp sales decline.
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  Speaker 8: So it's very encouraging to see with Coohle's again not
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  Speaker 8: out of the woods. And when you look at what's
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  Speaker 8: going on with so for it's now a two billion
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  Speaker 8: dollar business and as you were sort of highlighting, that
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  Speaker 8: means they really lost you know, over the last four
• 14:43
  Speaker 8: years something like four to five billion in other categories,
• 14:47
  Speaker 8: so they have lost market share. We think they're losing
• 14:49
  Speaker 8: it to off price and some of the value players
• 14:53
  Speaker 8: in the specialty space such as Old Navy, you know,
• 14:56
  Speaker 8: a gap brand.
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  Speaker 2: Stock is up thirty three percent today alone to a
• 15:01
  Speaker 2: huge move up forty nine percent year to date.
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  Speaker 5: So it seems like the market likes what it heard here.
• 15:07
  Speaker 2: So from a competitive landscape, where does Coles kind of
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  Speaker 2: fit in out there? Mary?
• 15:15
  Speaker 8: So, Paul Coles is really a value player in the
• 15:17
  Speaker 8: department store space, so they're really a notch below Macy's.
• 15:21
  Speaker 8: And they're also located off the mall, which can be
• 15:25
  Speaker 8: an advantage and because they brought in so for as
• 15:28
  Speaker 8: a beauty authority, and beauty is a very big and
• 15:31
  Speaker 8: important and higher margin category for department stores. So that's sorry.
• 15:37
  Speaker 5: You have to invest in your face.
• 15:39
  Speaker 8: Somebody once told me, yes, you got to invest in
• 15:42
  Speaker 8: your face. That's exactly right. Well, the idea there is
• 15:45
  Speaker 8: that you're getting a repeat customer, they have to come
• 15:48
  Speaker 8: back and they have to replenish product. But we did
• 15:52
  Speaker 8: see a comp sales decline because that business is matured,
• 15:55
  Speaker 8: it's kind of tracking somewhat close to what the the
• 16:00
  Speaker 8: company is tracking in terms of comp sales. So we
• 16:02
  Speaker 8: did see a decline in the latest quarterer. So that's
• 16:06
  Speaker 8: they do have a number of initiatives to try to
• 16:08
  Speaker 8: bolster that because of course we're seeing gains with some
• 16:12
  Speaker 8: of their competitors, and we think we'll see that when
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  Speaker 8: Macy's goes to report next week.
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  Speaker 4: Right, and of course that's a big one, right in
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  Speaker 4: terms of department store chains. We'll be looking for that one,
• 16:19
  Speaker 4: and of course you'll help us break it down when
• 16:22
  Speaker 4: those cross.
• 16:23
  Speaker 5: Mary.
• 16:23
  Speaker 4: I also want to ask you about Abercommie Fitch. It
• 16:25
  Speaker 4: was the Darling two years ago because the new CEO
• 16:29
  Speaker 4: found a way to make the brand relevant to a
• 16:32
  Speaker 4: new audience. It was no longer targeting teenage boys, for instance,
• 16:35
  Speaker 4: and really targeting young working women.
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  Speaker 7: But it's had a brutal twenty twenty five.
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  Speaker 4: The shares have fallen, I believe more than fifty percent
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  Speaker 4: through Monday's Clothes. A lot of concerns about tariffs perhaps
• 16:47
  Speaker 4: and maybe even a lack of fresh ideas in terms
• 16:51
  Speaker 4: of its offerings. When you look at the stock today,
• 16:54
  Speaker 4: it is soaring up thirty percent on the latest earnings.
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  Speaker 4: What's the narrative with Abercommune Fitch right now?
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  Speaker 5: Yeah?
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  Speaker 8: Yeah, so Scarlett with Abercrombie and Fitch, their numbers came
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  Speaker 8: in better than expected. So the namesake brand, as you
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  Speaker 8: pointed out, I mean that had been double digit increases
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  Speaker 8: over the last three years. So they're cycling those increases
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  Speaker 8: and that's why their sales are coming in less than
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  Speaker 8: expected generally for the whole year and why the stock
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  Speaker 8: is down. But this quarter the comp sales declined. There
• 17:25
  Speaker 8: was about three point three percent, so that was better
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  Speaker 8: than expected. And when you look at Hollister, though, Hollister
• 17:33
  Speaker 8: has been coming in ahead of expectations and they've been
• 17:36
  Speaker 8: posting double digit increases. So as you were talking about
• 17:41
  Speaker 8: sort of the millennial women who really love and also
• 17:44
  Speaker 8: the men, but it does tend to favor more of
• 17:47
  Speaker 8: the women on the Abercrombie side on the Hollister side,
• 17:51
  Speaker 8: which really caters to jazz that has been on fire.
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  Speaker 8: And so that's what's helping to kind of over come
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  Speaker 8: the weakness that they're seeing at Abercrombie. But also it's
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  Speaker 8: looking like Abercrombie could turn positive in the fourth quarter
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  Speaker 8: with a number of the initiatives that they have in
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  Speaker 8: place going into the holiday quarter, even though they're cycling
• 18:12
  Speaker 8: some pretty strong gains in the prior year and the
• 18:15
  Speaker 8: year before that. So there's some encouragement there. And I
• 18:18
  Speaker 8: think and then of course you have some short interests,
• 18:20
  Speaker 8: both in that stock and massle in Cohal's, and that's
• 18:24
  Speaker 8: part of the big bounce back that you're seeing this morning,
• 18:27
  Speaker 8: is some of that short covering.
• 18:28
  Speaker 2: What we're not really talking about, Mary, is tariffs and
• 18:33
  Speaker 2: the impact on these retailers.
• 18:35
  Speaker 5: What's the story these days.
• 18:38
  Speaker 8: Yeah, So in the case of Paul, in the case
• 18:41
  Speaker 8: of tariffs with Abercrombie, they expect to have a sixty
• 18:43
  Speaker 8: million dollars hit in the fourth quarter, So they are
• 18:47
  Speaker 8: being hit by tariffs, but they're discounting less. Plus they
• 18:52
  Speaker 8: have lower freight expenses, and this is something we've been
• 18:54
  Speaker 8: hearing from most of the retailers, is that lower freight
• 18:58
  Speaker 8: costs are also helping to bolster margin. So they are
• 19:01
  Speaker 8: going to be impacted, but probably not as badly as before,
• 19:05
  Speaker 8: given that they've got an improvement in average price points,
• 19:09
  Speaker 8: less discounting and lower freight that's helping to offset some
• 19:13
  Speaker 8: of the tariffs. And remember that sixty million dollars hit
• 19:16
  Speaker 8: on tariffs for Avercrombie. That's after mitigation efforts, so there
• 19:22
  Speaker 8: is still going to be an impact. Cole's even brought
• 19:24
  Speaker 8: it up, which they hadn't really brought up tariffs in
• 19:26
  Speaker 8: their prior to calls, but they did say that going
• 19:29
  Speaker 8: into early twenty twenty six, there will be some impact
• 19:32
  Speaker 8: there for them. And the reason why their margins have
• 19:35
  Speaker 8: been holding up and coming in better than expected, and
• 19:39
  Speaker 8: their margins are low, but it's because of the fact
• 19:44
  Speaker 8: that their mix of business being more private label, which
• 19:48
  Speaker 8: is higher margin, is helping to bolster those margins.
• 19:53
  Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
• 20:00
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 20:04
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• 20:07
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• 20:10
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 20:14
  Speaker 2: JM Smucker Company s JM is the ticker symbol. They're
• 20:19
  Speaker 2: in Orville, Ohio. Stock is trading radion one hundred dollars
• 20:24
  Speaker 2: to share. It's down three percent today, down eight percent
• 20:26
  Speaker 2: year to date. It's got a market cap about eleven
• 20:28
  Speaker 2: billion dollars. Don't look at that company too often here,
• 20:31
  Speaker 2: but they reported numbers. They lowered the top end of
• 20:34
  Speaker 2: their four year guidance after the company opted to forego
• 20:38
  Speaker 2: a planned price increase on coffee in the wake of
• 20:41
  Speaker 2: tarafreleef from the Trump administration.
• 20:43
  Speaker 5: Let's get the latest on this name and on some
• 20:45
  Speaker 5: of the other food companies. Diana Roe set up.
• 20:47
  Speaker 2: Heying Yeah, consumer staples analysts for Bloomberg Intelligence journings live
• 20:51
  Speaker 2: here in our Bloomberg Interactive studio, all the way from.
• 20:54
  Speaker 5: The tenth floor.
• 20:55
  Speaker 2: From the tenth floor, boy, that's a long walk now,
• 20:57
  Speaker 2: because you guys used to be just one floor away.
• 20:58
  Speaker 2: We could just stop on the floor and you guys
• 21:00
  Speaker 2: come running up to help us out. Okay, talk to
• 21:03
  Speaker 2: us about Jim Smuckers. This is jelly, this is coffee
• 21:06
  Speaker 2: maker Smuckers. What's going on the.
• 21:08
  Speaker 5: Food as well?
• 21:09
  Speaker 9: You know, pet snacks and cat food. So basically, I
• 21:13
  Speaker 9: mean it was it was all right. There were some
• 21:15
  Speaker 9: pull some puts and takes for the quarter. There's some
• 21:19
  Speaker 9: signs of stabilization, but it doesn't seem that it's there yet.
• 21:23
  Speaker 9: It's it's similar to other package food companies that we
• 21:26
  Speaker 9: are seeing in the space. It's always a second half
• 21:30
  Speaker 9: or the next six month story when it's gonna get
• 21:34
  Speaker 9: you know, growth is gonna happen, and it really doesn't happen.
• 21:37
  Speaker 9: So you know, people are starting to lose patients on that.
• 21:39
  Speaker 2: So specifically as it relates to the tariffs, they, like
• 21:42
  Speaker 2: a lot of your companies, they're just telling you what
• 21:44
  Speaker 2: the number is.
• 21:45
  Speaker 5: So what's their their tariff cost? I guess for the period.
• 21:48
  Speaker 9: Yeah, so right now they're saying that for fiscal twenty
• 21:51
  Speaker 9: twenty six, it's gonna be about seventy five million dollars
• 21:55
  Speaker 9: even include you know, excluding that tariff relief that they
• 22:00
  Speaker 9: are experienced experience in which is you know the reason
• 22:04
  Speaker 9: why they're not going to increase prices for the third
• 22:07
  Speaker 9: time this year.
• 22:09
  Speaker 5: So they have been raising prices on coffee.
• 22:11
  Speaker 9: They have been raising prices on coffee. This is a
• 22:13
  Speaker 9: category that is very passed through category for Smucker. The
• 22:18
  Speaker 9: problem with that is that competitiveness is a little bit
• 22:22
  Speaker 9: you know, declining compared to private label, so they're trying
• 22:26
  Speaker 9: to you know, forego some of the margin you know,
• 22:30
  Speaker 9: recouped to be able to be more competitive.
• 22:33
  Speaker 2: Is that what most of the companies are doing, the
• 22:36
  Speaker 2: package goods companies are they trying to take as much
• 22:39
  Speaker 2: as they can in their margin and then pass the
• 22:41
  Speaker 2: rest along the consumers.
• 22:42
  Speaker 9: Well, it depends on the category. For coffee, this is
• 22:46
  Speaker 9: definitely normal for them. They tend to be also a
• 22:50
  Speaker 9: category leader, so it kind of you know, they're they're
• 22:53
  Speaker 9: you know, they tend to to to say what, you know,
• 22:56
  Speaker 9: what the prices are going to be. But some of
• 22:59
  Speaker 9: the other package food companies that we have seen, they
• 23:03
  Speaker 9: take some margin head they try to are not putting
• 23:07
  Speaker 9: that on the consumer because they have been increasing prices
• 23:09
  Speaker 9: for the past couple of years, so they already think
• 23:12
  Speaker 9: that lasticity is getting there.
• 23:14
  Speaker 5: Right, So what.
• 23:16
  Speaker 2: Are these companies like smockers. What are they saying about
• 23:19
  Speaker 2: the consumer out there? How is the consumer? Are they
• 23:22
  Speaker 2: switching down? Are they more price sensitive than usual and
• 23:25
  Speaker 2: maybe switching to store product store brands.
• 23:28
  Speaker 9: Yes, So we're seeing a private label to get some
• 23:33
  Speaker 9: market share in the past six to eight months, and
• 23:37
  Speaker 9: that obviously has been a headwind for packaged food companies.
• 23:43
  Speaker 9: They're becoming more competitive, not necessarily Smucker, but you know,
• 23:47
  Speaker 9: we're seeing others such as Campbell's and The Light saying
• 23:51
  Speaker 9: that they're going to be more price competitive in twenty
• 23:54
  Speaker 9: twenty six. So we should probably experience a little bit
• 23:57
  Speaker 9: more of you know, mut at sales growth and margin contraction.
• 24:01
  Speaker 2: So you also follow the post company, right, tell me,
• 24:06
  Speaker 2: just remind me about their products.
• 24:08
  Speaker 5: I mean, that's that's primarily Cereal.
• 24:10
  Speaker 9: That's Premier Cereal. They also bought their pet you know
• 24:15
  Speaker 9: category from Smucker that has not done so well.
• 24:19
  Speaker 7: And they also have.
• 24:20
  Speaker 9: Some of the you know, like eggs, eggs product side
• 24:24
  Speaker 9: dishes and the like, and that has been a little
• 24:27
  Speaker 9: bit on the on the upswing, because again that's another
• 24:31
  Speaker 9: commodity that they can pass through price increases and they
• 24:34
  Speaker 9: have experienced that and they have been able to upset
• 24:37
  Speaker 9: some of the declines from cereal and even pet food.
• 24:40
  Speaker 2: So if you're a if you're doing coffee or even cocoa,
• 24:43
  Speaker 2: that's just the commodity and those in commodity, those prices
• 24:46
  Speaker 2: have been going up because there's been droughts in some
• 24:48
  Speaker 2: of the coffee growing places and cocoa growing places around
• 24:51
  Speaker 2: the world. So if you're smuckers, you just pass it along, right,
• 24:55
  Speaker 2: I mean, it's just if your commodity costs are going
• 24:57
  Speaker 2: you just got to pass out along.
• 24:58
  Speaker 9: Yes, and that is obviously the exact.
• 25:00
  Speaker 5: When coffee comes down. Did they cut the prices?
• 25:03
  Speaker 9: Yes, they actually do, which is you know, they anticipate
• 25:08
  Speaker 9: or they hope that, you know, price increases stop so
• 25:11
  Speaker 9: they can actually become more competitive. But we'll see. It's again,
• 25:14
  Speaker 9: it's a second quarter, second half of the year story.
• 25:19
  Speaker 5: Now.
• 25:20
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