Latest / Bloomberg Intelligence / Goldman’s Top Leaders Set to Score More Than $500 Million With Special Bonus

Transcript

Goldman’s Top Leaders Set to Score More Than $500 Million With Special Bonus · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios.
• 0:04
  Speaker 2: Podcasts.
• 0:05
  Speaker 3: Radio.
• 0:06
  Speaker 4: News.
• 0:09
  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 0:13
  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 0:16
  Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
• 0:19
  Speaker 5: you get your podcasts or watch us live on YouTube.
• 0:24
  Speaker 6: You ready to talk, Goldman Sachs?
• 0:25
  Speaker 7: Let's get into it.
• 0:26
  Speaker 8: Yeah, all right.
• 0:26
  Speaker 2: We got a big story here.
• 0:28
  Speaker 6: Headline on the Bloomberg, Goldman's special bonus for top brass
• 0:31
  Speaker 6: set to exceed $ 500 million. CEO David Solomon could see
• 0:35
  Speaker 6: more than $ 100 million. And joining us now, Chief Wall
• 0:39
  Speaker 6: Street Correspondent Sree Natarajan.
• 0:42
  Speaker 7: Sree, welcome.
• 0:43
  Speaker 6: Those are big numbers. How many people are in the
• 0:45
  Speaker 6: pool and how many ways is this going to be
• 0:48
  Speaker 6: divvied up?
• 0:48
  Speaker 2: Charlie, it's most certainly a big number.
• 0:50
  Speaker 4: This is about 20 folks who will be in line
• 0:53
  Speaker 4: to receive these payouts that will be finalized at the
• 0:56
  Speaker 4: end of the month. So you still have two weeks
• 0:58
  Speaker 4: to go. There's still a lot of room for the
• 0:59
  Speaker 4: stock to move either way. If it goes up, the
• 1:02
  Speaker 4: reward size will obviously go up. But if it doesn't,
• 1:03
  Speaker 4: it's going to be a big deal. moves the wrong direction,
• 1:05
  Speaker 4: the total price could come down. But what is interesting
• 1:08
  Speaker 4: about this is just the breadth of this award. We
• 1:11
  Speaker 4: have seen the biggest financial firms, the private equity firms
• 1:14
  Speaker 4: and everyone else dole out long-term incentive packages for their
• 1:18
  Speaker 4: top executive, for their top two or three executives. And
• 1:22
  Speaker 4: that was how it was supposed to play out at
• 1:24
  Speaker 4: Goldman Sachs as well when these awards were first announced
• 1:27
  Speaker 4: in 2021. It was only supposed to be for its CEO,
• 1:30
  Speaker 4: David Solomon, and his deputy, President John Waldron. But at
• 1:34
  Speaker 4: that time, there was some level of pushback from shareholders.
• 1:39
  Speaker 4: Employees were annoyed as to why only those two executives
• 1:43
  Speaker 4: were getting that award, especially considering that it was coming
• 1:47
  Speaker 4: months after that same Goldman Sachs board had docked the
• 1:51
  Speaker 4: CEO's pay over the bank's role in the loot of
• 1:54
  Speaker 4: the Malaysian investment fund, 1MDB. What resulted from that pushback
• 1:59
  Speaker 4: was the board agreed to broaden it, rope in more executives,
• 2:02
  Speaker 4: expand the awards to the management committee. And suddenly you
• 2:05
  Speaker 4: had roughly 20, 25 people who got these awards. And
• 2:09
  Speaker 4: five years later, with about 20 of them still at
• 2:11
  Speaker 4: the bank, the total payout is going to be one
• 2:14
  Speaker 4: pretty number.
• 2:16
  Speaker 7: That is definitely one pretty number.
• 2:18
  Speaker 9: And even split between 20, 25 people, incredibly sizable. Does
• 2:21
  Speaker 9: this put then more pressure on expanding that group even further,
• 2:25
  Speaker 9: rewarding the next tier of talent?
• 2:28
  Speaker 2: That's going to be very interesting.
• 2:30
  Speaker 4: Again, remember, after the 2008 financial crisis, we haven't even
• 2:33
  Speaker 4: heard of these long-term incentive packages at banks for many
• 2:36
  Speaker 4: years after the crisis. The idea that you would have
• 2:38
  Speaker 4: the temerity to go to the board and say, we
• 2:41
  Speaker 4: deserve long-term incentive packages, that was a complete no-no.
• 2:44
  Speaker 6: It was.
• 2:46
  Speaker 2: There was no chance that was happening.
• 2:47
  Speaker 4: It wasn't until 2020, 2021, the floodgates really started opening
• 2:52
  Speaker 4: at that time after a bull run for the private
• 2:54
  Speaker 4: equity industry. And you could see the kind of numbers
• 2:57
  Speaker 4: that the private equity titans were raking, the hundreds and
• 3:00
  Speaker 4: hundreds of millions of dollars that you could feel some
• 3:03
  Speaker 4: of the big bank bosses feeling left behind and their
• 3:07
  Speaker 4: desire and their hope. want to see some of these
• 3:10
  Speaker 4: packages or as was a famous phrase back then the
• 3:13
  Speaker 4: war for talent would mean that they would go on
• 3:15
  Speaker 4: to greener pastures it wasn't going to be your banking
• 3:19
  Speaker 4: seat anymore you would much rather go to a hedge
• 3:21
  Speaker 4: fund or a private equity firm anywhere else where you
• 3:24
  Speaker 4: will be paid a lot more if not even if
• 3:26
  Speaker 4: you don't have the same prestige of say a Goldman
• 3:29
  Speaker 4: Sachs CEO. That started changing in 2021. We saw some packages.
• 3:32
  Speaker 4: Then in 2024, again, we saw the banks dole out
• 3:35
  Speaker 4: some packages for some of these senior executives. Again, those
• 3:38
  Speaker 4: are some good numbers there. David Solomon has one more
• 3:43
  Speaker 4: on standby on top of this package that we're talking about.
• 3:46
  Speaker 4: That incentive award is roughly $ 80 million. No threshold need
• 3:49
  Speaker 4: to be met. He just has to be at the,
• 3:50
  Speaker 4: you know, tied to Goldman Sachs for another five years
• 3:53
  Speaker 4: and he will get that reward.
• 3:54
  Speaker 2: So the mood has certainly shifted.
• 3:56
  Speaker 3: Yeah.
• 3:57
  Speaker 4: The banks have been in the driving seat and it's
• 3:59
  Speaker 4: also clearly visible in their performance. The last five years
• 4:03
  Speaker 4: have been a terrific run for the banks and especially
• 4:06
  Speaker 4: for one like Goldman Sachs. When you've seen the activity
• 4:09
  Speaker 4: in capital markets, the deal making, the trading bonanza, they're
• 4:12
  Speaker 4: in a sweet spot.
• 4:13
  Speaker 6: All right. You mentioned the last five years. I want
• 4:14
  Speaker 6: to focus on the last 12 months, actually the last
• 4:16
  Speaker 6: 10 months. Year to date, how have shares of Goldman
• 4:21
  Speaker 6: Sachs performed? One of your jobs as CEO certainly is
• 4:24
  Speaker 6: to keep an eye on what's going on with the
• 4:26
  Speaker 6: share price. But how have Goldman Sachs shares performed this
• 4:30
  Speaker 6: year compared to the S & P 500 index?
• 4:33
  Speaker 2: Short answer, not great. Long answer, not great.
• 4:36
  Speaker 4: I mean, this year you could see it's not just
• 4:38
  Speaker 4: Goldman Sachs across the banking sector. The big banks have
• 4:41
  Speaker 4: significantly underperformed the broader indices, the S & P 500
• 4:44
  Speaker 4: or any other major index that you want to pick.
• 4:46
  Speaker 4: And that's in line with what we've seen across the space, right?
• 4:49
  Speaker 4: When we talk about the strength in the equity market,
• 4:51
  Speaker 4: we're really talking about it being held up on the
• 4:54
  Speaker 4: shoulders of, say, the Mach 7, some of the big
• 4:56
  Speaker 4: hyperscalers and some of the big technology names. There hasn't
• 4:59
  Speaker 4: been this broadening trade. So you could play both sides
• 5:01
  Speaker 4: of the trade. You could actually say the future outlook
• 5:05
  Speaker 4: might not be that good. The next five years might
• 5:08
  Speaker 4: not be that good for a bank like Goldman Sachs
• 5:10
  Speaker 4: as the last five years have been for them.
• 5:12
  Speaker 2: Or if you're in the.
• 5:13
  Speaker 4: Other camp, and you expect a broadening of this rally,
• 5:17
  Speaker 4: and you expect to see this growth backdrop that hasn't
• 5:21
  Speaker 4: really weakened, and you expect to see that continue, then
• 5:25
  Speaker 4: there is an argument to be made that some of
• 5:26
  Speaker 4: these bank stocks may have been oversold and there might
• 5:29
  Speaker 4: be room to run.
• 5:30
  Speaker 9: Very quickly, Shree, walk us through how we arrived at
• 5:33
  Speaker 9: this payout figure.
• 5:36
  Speaker 4: So there were really two key thresholds for the bank
• 5:38
  Speaker 4: to meet, to make sure that they got them, they
• 5:41
  Speaker 4: hit all the maximum triggers on the award. One was
• 5:43
  Speaker 4: just absolute return. They had certain benchmarks. The stock had
• 5:46
  Speaker 4: to perform really well to hit the maximum levels there.
• 5:49
  Speaker 4: And the stock did do really well. When these awards
• 5:51
  Speaker 4: were put in place, the stock was around $ 400. Now
• 5:54
  Speaker 4: it's around $ 900 a share. So that was an easy
• 5:56
  Speaker 4: one to meet. The other one was the relative benchmark.
• 5:59
  Speaker 4: Goldman identified a group of six peers and And it
• 6:02
  Speaker 4: had to be at the 80th percentile or above relative
• 6:05
  Speaker 4: to its peers to hit the maximum threshold on that
• 6:08
  Speaker 4: part of the grant. Even there, the bank has done
• 6:10
  Speaker 4: really well. Last five years, the returns have been about
• 6:12
  Speaker 4: 150 percent. The only one name in their peer group
• 6:15
  Speaker 4: that has done better is Bank of New York Mellon,
• 6:18
  Speaker 4: which is at 175 percent.
• 6:20
  Speaker 6: Very, very, very briefly, 10 seconds or less. Is this
• 6:23
  Speaker 6: going to be a topic of conversation on the earnings
• 6:25
  Speaker 6: call next week?
• 6:26
  Speaker 4: I think the topic of conversation on the earnings call
• 6:29
  Speaker 4: will certainly be the next year and the next two
• 6:31
  Speaker 4: years and not the last five years, so perhaps not.
• 6:34
  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
• 6:41
  Speaker 5: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 6:44
  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 6:48
  Speaker 5: Auto with the Bloomberg Business app. Listen on demand wherever
• 6:51
  Speaker 5: you get your podcasts or watch us live on YouTube.
• 6:55
  Speaker 1: Let's talk about PepsiCo.
• 6:57
  Speaker 3: The snack and soda company reported quarterly results this morning.
• 7:01
  Speaker 3: Ken Shea is our go-to guy on snacks and soda.
• 7:04
  Speaker 3: He is our senior consumer goods analyst for Bloomberg Intelligence.
• 7:08
  Speaker 3: And Ken, the takeaway here from Pepsi's latest results is
• 7:11
  Speaker 3: that the company has sounded the alarm over its North
• 7:14
  Speaker 3: American soda business, but this is a situation where its
• 7:18
  Speaker 3: snack sales have not been doing great either. So this
• 7:22
  Speaker 3: doesn't sound good for PepsiCo.
• 7:26
  Speaker 8: Hi, Scarlett. Well, today's results, as you mentioned, it may
• 7:30
  Speaker 8: be good and bad. It was good and bad. On
• 7:32
  Speaker 8: a positive note, and one of the shares are probably
• 7:34
  Speaker 8: up today, is that they beat on the top line
• 7:36
  Speaker 8: and bottom line by a little bit. The concern, though,
• 7:40
  Speaker 8: is that the success was skewed very much towards international. International,
• 7:46
  Speaker 8: they've been investing heavily over the years to build scale
• 7:49
  Speaker 8: in emerging markets and many markets around the world. It's
• 7:53
  Speaker 8: now 45% of their business. I don't think a lot
• 7:55
  Speaker 8: of people realize how big it is, and it's doing
• 7:56
  Speaker 8: really well. Organic sales grew 8%. The problem with the
• 8:00
  Speaker 8: company right now is North America. As you alluded to,
• 8:03
  Speaker 8: both beverages and food grew a little more slowly than
• 8:06
  Speaker 8: they would like. On the food side, about a third
• 8:09
  Speaker 8: of their business, margins were down pretty significantly. They're noting
• 8:13
  Speaker 8: continued upward trends in input costs. And I think some
• 8:17
  Speaker 8: of the concerns among investors is that they're citing that
• 8:20
  Speaker 8: a lot of these hedges to a And so they
• 8:26
  Speaker 8: lowered guidance today, mindful of that, mostly from a margin perspective.
• 8:31
  Speaker 8: And so that was kind of a mixed bag today
• 8:34
  Speaker 8: with PepsiCo.
• 8:35
  Speaker 1: I'm just going to jump in because we have a
• 8:36
  Speaker 1: red head, a hot head.
• 8:38
  Speaker 3: That means important breaking news happening. And across the Bloomberg terminal,
• 8:42
  Speaker 3: there's a headline here that the U.S. is suspending an
• 8:44
  Speaker 3: immigration program for multiple tech firms. It is suspending an
• 8:48
  Speaker 3: immigration program for more IT companies for Cognizant, Infosys, and Tata.
• 8:54
  Speaker 3: These are the Indian infotech companies. There's a lot of
• 8:57
  Speaker 3: outsourcing taking place there. There was a lot of allegations
• 9:00
  Speaker 3: that perhaps they were gaming the lottery system for H-1B visas.
• 9:04
  Speaker 3: So we'll keep you posted on further developments. But again,
• 9:07
  Speaker 3: the headline here is that the U.S. is suspending an
• 9:10
  Speaker 3: immigration program.
• 9:12
  Speaker 1: For multiple tech firms. Let's go back to Ken Shea
• 9:15
  Speaker 1: to talk more about PepsiCo.
• 9:17
  Speaker 10: Emma?
• 9:17
  Speaker 9: Ken, so tell us a little bit about what's going
• 9:20
  Speaker 9: on with the snack situation. Why are people not as
• 9:23
  Speaker 9: into salty snacks?
• 9:26
  Speaker 8: Yeah, I am. Well, since earlier this year, PepsiCo said
• 9:29
  Speaker 8: they wanted to revamp its snack business that you're alluding
• 9:32
  Speaker 8: to here. And that is take a lot of the
• 9:34
  Speaker 8: artificial colors and flavors out of Lay's and Doritos. with
• 9:38
  Speaker 8: an overlay of things that are appealing to consumers today,
• 9:42
  Speaker 8: like more protein and more fiber and things like that.
• 9:44
  Speaker 8: And they're doing that. I guess the problem is, though,
• 9:47
  Speaker 8: since then, there's a lot of international events here that
• 9:52
  Speaker 8: are raising prices on gasoline and interest rates and everything else,
• 9:57
  Speaker 8: and consumers feel a little pinched. And so while these
• 9:59
  Speaker 8: are pretty products and fit a lot of their needs, nevertheless,
• 10:03
  Speaker 8: there is some economizing going out. So those are the
• 10:07
  Speaker 8: cross currents right now where Pesco is in a situation
• 10:10
  Speaker 8: where costs are rising and they don't want to raise prices,
• 10:14
  Speaker 8: but they feel they may have to going forward.
• 10:17
  Speaker 1: Didn't they just cut prices on a bunch of products
• 10:20
  Speaker 1: not so long ago?
• 10:22
  Speaker 8: They did. And they attributed that program to balance the
• 10:27
  Speaker 8: volumes with the pricing. You know, since the pandemic, Scarlett,
• 10:31
  Speaker 8: the company has been relying heavily on effective price increases
• 10:36
  Speaker 8: to grow its top line at the expense of volumes.
• 10:39
  Speaker 8: Only a year ago, volumes were trending negatively. So today,
• 10:43
  Speaker 8: the food, today's quarter, the Pepsi Food North America's volumes
• 10:47
  Speaker 8: are up 0.5 percent. Nothing to write home about, but nevertheless,
• 10:50
  Speaker 8: still an improvement. And they've attributed some of that to
• 10:53
  Speaker 8: the lower prices. But as I mentioned, with costs continuing
• 10:57
  Speaker 8: to rise, it's really going to put them in a box.
• 10:59
  Speaker 8: You know, what do they do going forward?
• 11:02
  Speaker 9: The company's been struggling with various freight and logistics issues.
• 11:06
  Speaker 9: Do we have a sense of how they might think
• 11:08
  Speaker 9: to tackle that moving forward?
• 11:11
  Speaker 8: I'm sorry, did you say logistic costs?
• 11:12
  Speaker 7: Logistics and freights, yeah.
• 11:15
  Speaker 8: Yeah, logistics. I mean, the company has got a big
• 11:17
  Speaker 8: direct store delivery routing system. It's one of their strongest
• 11:21
  Speaker 8: competitive advantages. But in periods where diesel gas prices are rising,
• 11:26
  Speaker 8: that's going to put a big pressure on their margins.
• 11:31
  Speaker 8: And so, you know, that's going to weigh on them.
• 11:33
  Speaker 8: A question was raised during the call about to what
• 11:36
  Speaker 8: extent do you want to, you know, re-franchise some of
• 11:39
  Speaker 8: the business to make it a little more asset light,
• 11:42
  Speaker 8: to be less exposed to some of these commodities? And
• 11:45
  Speaker 8: they just said, you know, you know, we're looking at
• 11:47
  Speaker 8: all areas for reducing costs. So we'll see how they
• 11:51
  Speaker 8: address that going forward.
• 11:53
  Speaker 3: Ken, is PepsiCo a company that's vulnerable to tariffs? Nathan Dean,
• 11:57
  Speaker 3: our senior U.S. policy analyst at Bloomberg Intelligence, was saying
• 12:00
  Speaker 3: that next year will be the year of tariffs in
• 12:04
  Speaker 3: 2027 because President Trump, as a lame duck leader, will
• 12:07
  Speaker 3: really be pushing forward on that, especially because a lot
• 12:10
  Speaker 3: of those investigations were begun this year.
• 12:13
  Speaker 8: Well, they certainly would be exposed. We saw that, you know,
• 12:17
  Speaker 8: earlier in the year. when the tariffs were working against them.
• 12:21
  Speaker 8: Since then, as you know, they've been deemed illegal or whatever.
• 12:25
  Speaker 8: And they've booked some refunds, even in this third quarter,
• 12:28
  Speaker 8: which helped their costs a little bit. Those are running off.
• 12:32
  Speaker 8: And so in a period without new tariffs, that's great.
• 12:38
  Speaker 8: But you're right. If they were to be reinstated, PepsiCo,
• 12:41
  Speaker 8: like many other consumer product companies, would definitely feel a pinch.
• 12:46
  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
• 12:52
  Speaker 5: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 12:56
  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 12:59
  Speaker 5: Auto with the Bloomberg Business app. Listen on demand wherever
• 13:03
  Speaker 5: you get your podcasts or watch us live on YouTube.
• 13:07
  Speaker 1: We are in earnings season.
• 13:08
  Speaker 3: We haven't really hit the thick of it because that
• 13:10
  Speaker 3: begins in earnest next Tuesday, Hema, when the big banks
• 13:13
  Speaker 3: really report. I think four banks report all at once,
• 13:15
  Speaker 3: but we're getting bits and pieces along the way right now.
• 13:18
  Speaker 8: Yes.
• 13:19
  Speaker 9: A lot of more data coming along as we expect.
• 13:22
  Speaker 6: Yeah.
• 13:22
  Speaker 3: And of course, a lot of questions over what the
• 13:24
  Speaker 3: economy really looks like from the vantage point of companies.
• 13:28
  Speaker 7: So speaking of companies, let's dig into Levi Strauss.
• 13:31
  Speaker 9: We're joined by Lily Meyer, Bloomberg's Retail reporter Levi Stries
• 13:35
  Speaker 9: posted the slowest growth in this direct-to-consumer channel since late 2022,
• 13:40
  Speaker 9: in part because of marketing.
• 13:43
  Speaker 7: Lily, tell us what's going on.
• 13:44
  Speaker 10: Yeah, so direct-to-consumer has been a big push for Levi's CEO,
• 13:49
  Speaker 10: Michelle Goss. And so it's notable that that channel struggled
• 13:53
  Speaker 10: this quarter. But one thing that really stood out to
• 13:56
  Speaker 10: me that was interesting was she had said that Part
• 13:59
  Speaker 10: of the reason was this back-to-school campaign. So in the campaign,
• 14:03
  Speaker 10: they really focused on loose jeans and missed the mark
• 14:06
  Speaker 10: on low-rise jeans, which are more popular with consumers right now.
• 14:10
  Speaker 3: Are both 90s trends or is one more 90s trend
• 14:13
  Speaker 3: than the other? Because they're really riding this 90s nostalgia wave,
• 14:17
  Speaker 3: aren't they?
• 14:17
  Speaker 6: Yeah.
• 14:18
  Speaker 10: I mean, I would say low rise is like iconic 90s.
• 14:21
  Speaker 10: Like Britney Spears era, right?
• 14:23
  Speaker 7: Exactly.
• 14:24
  Speaker 8: Exactly.
• 14:24
  Speaker 10: So that misstep in kind of not reading the trends
• 14:28
  Speaker 10: right did hurt them this quarter. But they did mention
• 14:31
  Speaker 10: that they're reorienting their marketing. They re-merchandise products. part of
• 14:36
  Speaker 10: the store to really kind of focus on on that
• 14:38
  Speaker 10: low-rise trend.
• 14:39
  Speaker 9: Were they not paying attention to the right consumer or
• 14:41
  Speaker 9: the right age demographic how does one miss a trend
• 14:45
  Speaker 9: like that when the focus of the whole company is
• 14:47
  Speaker 9: frankly young people into their jeans.
• 14:49
  Speaker 10: Yeah i mean it's a it's a really good question
• 14:51
  Speaker 10: i think i know they were selling low-rise jeans but
• 14:54
  Speaker 10: i think in the marketing, they just kind of miss
• 14:57
  Speaker 10: that moment. Okay.
• 14:58
  Speaker 3: Speaking of missing the moment, you also cover Lululemon and
• 15:03
  Speaker 3: the company has missed the moment for a number of
• 15:04
  Speaker 3: years now. And of course they had to change their leadership.
• 15:09
  Speaker 3: There's a new CEO at the firm, Heidi O'Neill, who
• 15:12
  Speaker 3: came over from Nike. And the hope is that she
• 15:16
  Speaker 3: will steer Lululemon in the right direction. Athleisure is kind
• 15:19
  Speaker 3: of out right now, you know, More dressy clothing is fashionable,
• 15:23
  Speaker 3: low-rise jeans, as you put it.
• 15:25
  Speaker 1: What are we seeing her do so far?
• 15:27
  Speaker 10: Yeah, so in addition to the Levi news last night,
• 15:30
  Speaker 10: Lulu announced their first kind of big move under Heidi,
• 15:35
  Speaker 10: which was an appointment of two new executives with two
• 15:38
  Speaker 10: executives leaving.
• 15:39
  Speaker 1: So before Heidi.
• 15:40
  Speaker 10: Came in, there was a lot of reshuffling of several
• 15:43
  Speaker 10: executives left.
• 15:44
  Speaker 1: And so now we're getting.
• 15:46
  Speaker 10: Some new ones joining, including Maggie Gauger, who was the
• 15:49
  Speaker 10: CEO of Athleta and before that worked with Heidi for
• 15:52
  Speaker 10: decades at Nike.
• 15:54
  Speaker 9: What are the key things they're going to have to
• 15:56
  Speaker 9: focus on fixing in order to take on the competition?
• 15:59
  Speaker 9: Because there are so many of these new brands that
• 16:00
  Speaker 9: are stepping into athleisure, athleisure.
• 16:05
  Speaker 1: Aloe, vori.
• 16:07
  Speaker 7: What do what is Lulu not doing that they should
• 16:09
  Speaker 7: be doing?
• 16:10
  Speaker 10: Yeah, so I think product is a big area for
• 16:12
  Speaker 10: Lulu to focus on. This past year, they had a
• 16:14
  Speaker 10: big product mishap. They had to pull back some of their,
• 16:18
  Speaker 10: some of the new line online for a little while
• 16:20
  Speaker 10: while they fixed a sheerness issue.
• 16:22
  Speaker 1: So I think product will be a big piece for Lulu.
• 16:26
  Speaker 10: You know, repositioning themselves, getting the trends right. And then,
• 16:29
  Speaker 10: you know, I'm curious to see how they win over
• 16:32
  Speaker 10: new consumers and especially given the competition in this space,
• 16:35
  Speaker 10: how they get consumers to choose them over the newer
• 16:39
  Speaker 10: brands brands that you just mentioned.
• 16:41
  Speaker 3: How patient are investors going to be with this new CEO?
• 16:44
  Speaker 3: Because what you just described sounds like a pretty big
• 16:47
  Speaker 3: lift and it's not going to happen immediately.
• 16:51
  Speaker 1: It might take a couple of quarters. Yeah, I think
• 16:53
  Speaker 1: that's an interesting thing to watch.
• 16:55
  Speaker 10: The market, when Lulu named Heidi, was not overjoyed by that.
• 17:01
  Speaker 1: So I think the pressure is on for her.
• 17:03
  Speaker 10: One Spot that should be helpful for her is that Lulu,
• 17:07
  Speaker 10: right before she joined, settled with their really outspoken founder,
• 17:11
  Speaker 10: Chip Wilson. And so that will be an interesting area
• 17:14
  Speaker 10: to watch to see, you know, if that settlement holds
• 17:17
  Speaker 10: through the full period. But I think that will be
• 17:20
  Speaker 10: one less obstacle for Heidi to face, at least for now.
• 17:23
  Speaker 7: And they have a long way to go.
• 17:25
  Speaker 9: The stock price is, what, down 50% so far this year?
• 17:27
  Speaker 6: Yeah.
• 17:29
  Speaker 1: Yeah, I mean, the.
• 17:30
  Speaker 10: Market had been really accustomed to rapid growth at Lulu.
• 17:33
  Speaker 10: I mean, they were posting like quarter after quarter of
• 17:36
  Speaker 10: this really high growth and that slowed down. So that
• 17:41
  Speaker 10: will be another area to watch if they can return
• 17:43
  Speaker 10: to it.
• 17:44
  Speaker 3: So I talk a lot about the fact that I
• 17:45
  Speaker 3: have this American Express Platinum card, which I got for
• 17:48
  Speaker 3: the rewards and everything.
• 17:49
  Speaker 1: And one of the rewards or.
• 17:50
  Speaker 3: The perks is that you get $ 75 a quarter at Lululemon.
• 17:54
  Speaker 3: And it's kind of hard to find something to buy sometimes.
• 17:57
  Speaker 3: I go in there and like, you want to look
• 17:58
  Speaker 3: for something at $ 75?
• 18:00
  Speaker 1: That's hard.
• 18:01
  Speaker 3: And then even if I'm willing to spend more, I
• 18:03
  Speaker 3: can't really... find something to buy, even with $ 75 of
• 18:07
  Speaker 3: it given to me.
• 18:08
  Speaker 10: Yeah, I mean, they've been criticized for some of their
• 18:11
  Speaker 10: recent product. People have said, you know, they had this
• 18:14
  Speaker 10: Disney collection that didn't do super well.
• 18:16
  Speaker 1: That's a weird one.
• 18:16
  Speaker 10: They leaned a lot into heavily logoed products, which is
• 18:20
  Speaker 10: really a departure from their product in the past, which
• 18:23
  Speaker 10: had that tiny logo in the back of leggings. So
• 18:25
  Speaker 10: it'll be interesting to see how that product... Changes especially
• 18:29
  Speaker 10: under Maggie Gallagher, who just got brought in to lead
• 18:32
  Speaker 10: their product org.
• 18:33
  Speaker 7: And they're known for that fabric, right? That really comfortable,
• 18:36
  Speaker 7: cozy fabric.
• 18:38
  Speaker 1: Unless it happens to be see-through, in which case, that's
• 18:40
  Speaker 1: no good.
• 18:42
  Speaker 7: Have they managed to resolve that problem, the see-through leggings?
• 18:45
  Speaker 9: I feel like it happened, then it came back again. Yeah,
• 18:48
  Speaker 9: so with that product, their Get.
• 18:50
  Speaker 10: Low line that had the see-through issue earlier this year,
• 18:54
  Speaker 10: they put the product back online, but with the disclaimer
• 18:57
  Speaker 10: that people needed to size up.
• 18:59
  Speaker 1: And wear sheer underwear because of the.
• 19:01
  Speaker 9: I feel like the person who's working out should not
• 19:04
  Speaker 9: have to... They should wear whatever they're wearing to work out.
• 19:08
  Speaker 9: They should be able to trust that their leggings.
• 19:10
  Speaker 1: Do the job. Listener, Lily Meyer is nodding her head.
• 19:13
  Speaker 10: LAUGHTER Yeah, I mean, I think they really have to
• 19:17
  Speaker 10: kind of build back some of the trust. But I
• 19:20
  Speaker 10: do think customers, especially customers who love the black leggings,
• 19:24
  Speaker 10: really do trust them for that.
• 19:27
  Speaker 5: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
• 19:32
  Speaker 5: and anywhere else you get your podcasts. Listen live each weekday,
• 19:36
  Speaker 5: 10 a.m. to noon Eastern, on Bloomberg.com, the iHeartRadio app, TuneIn,
• 19:41
  Speaker 5: and the Bloomberg Business app. You can also watch us
• 19:45
  Speaker 5: live every weekday on YouTube and always on the Bloomberg Terminal.