Latest / Bloomberg Intelligence / SRG's Flickinger on Walmart: Best Leadership in 20 Years(Audio)

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SRG's Flickinger on Walmart: Best Leadership in 20 Years(Audio) · Bloomberg Intelligence

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  Speaker 1: Bred business Flash. You're listening to Taking Stock with Kathleen
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  Speaker 1: and Pim Fox on Bloomberg Radio. Walmart good news for shareholders,
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  Speaker 1: for company managers and all employees. I assume increasing in
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  Speaker 1: saniel earnings forecast after second quarter results topped analyst estimates.
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  Speaker 1: Is this assigned the world's largest retailer is pulling business
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  Speaker 1: away from rivals like a target where we want to
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  Speaker 1: talk about this and so much more. Walmart acquiring Jet
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  Speaker 1: dot Com. It's attempt to compete with Amazon even more
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  Speaker 1: aggressively when it comes to online shopping. Walmart shares up
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  Speaker 1: a dollar thirty six cents at seventy four dollars and
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  Speaker 1: twenty nine cents. Bert Flickinger joins this managing director Strategic
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  Speaker 1: Resource Group. He's back in our New York studio with
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  Speaker 1: us today. Bert, welcome, Thank you so Walmart. How good
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  Speaker 1: is the good news? It's good news because Walmart has
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  Speaker 1: good leadership for the first time in nearly twenty years. Kathleen, So,
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  Speaker 1: with good leadership, it's taking a long time to turn
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  Speaker 1: the company around, but with eighth straight quarters of positive
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  Speaker 1: same store sales, as you and Pim references I heard
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  Speaker 1: driving up from Philadelphia, Walmart's gain is Targets pain the
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  Speaker 1: offering at Walmart has it changed. I was looking at
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  Speaker 1: things like organic food groceries. They seem to be doing
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  Speaker 1: much better in terms of providing those kinds of products
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  Speaker 1: to customers than Target. That's what we're looking at PIM
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  Speaker 1: is organic local farmers, looking at hydroponic bringing in the
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  Speaker 1: destination demand daily, particularly for millennials, young adults that are
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  Speaker 1: focused on fresh. The other thing that the leadership really
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  Speaker 1: deserves a lot of credit for is being the first
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  Speaker 1: team at Walmart after fifty years of failure in basic
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  Speaker 1: fashion to finally fix basic fashion, especially for young girls,
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  Speaker 1: young boys. And Targets had some failings in fashion again,
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  Speaker 1: Walmart's game Walmart. You know, but you've been on the show,
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  Speaker 1: Uh even on her Big Friend of radio and TV
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  Speaker 1: here at Bloomberg. Where is Walmart now? He said, for
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  Speaker 1: the best management they've had in years, So we can
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  Speaker 1: understand better Jet dot Com that acquisition. But you know,
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  Speaker 1: so recently it's it's holiday shopping, it's Christmas Eve, and
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  Speaker 1: the shocks, the stocks aren't the shelves aren't stocked. We've
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  Speaker 1: we've seen that as as part of Walmart. We've seen
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  Speaker 1: them built. These new stores are supposed to appeal more
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  Speaker 1: for shoppers and they don't. Necessarily, what else do they
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  Speaker 1: have to do? Let's let's besides build up Jet dot
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  Speaker 1: Com and compete with Amazon Kathleen. As you and PIM
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  Speaker 1: have always said, leadership makes a difference in retail, and
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  Speaker 1: you and PIM and Bloomberg have been uniquely successful in
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  Speaker 1: making individual and institutional investors a lot of money. And
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  Speaker 1: when there is a major leadership change Frank Blake replacing
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  Speaker 1: bobner Delhi at Home Depot for example, um Richard Baker
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  Speaker 1: and his team coming in at Hudson Bay taking over
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  Speaker 1: Sex Fifth Avenue, Lord and Taylor's, etcetera expanding out Sex
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  Speaker 1: Off five. When when you have better leadership like Doug
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  Speaker 1: McMillan and Greg farrand at Walmart. Target has good leadership
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  Speaker 1: in Brian Cornell, but Brian's cleaning up the problems of
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  Speaker 1: Hien passed along by his two predecessor and bad boards
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  Speaker 1: for fifteen years. Uh So with so with Walmart, what
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  Speaker 1: what you have is is what you and Pen reference
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  Speaker 1: from UH fresh food to fashion. UH they're winning for
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  Speaker 1: the first time. And what Walmart does with the new
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  Speaker 1: team they look at investing in fresh, they look at
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  Speaker 1: investing in stocking the shelves issue reference, they look at
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  Speaker 1: investing in fashion. They don't look at that as an expense.
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  Speaker 1: Targets still outsourcing. Looking at everything, it's an expense. Walmart's
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  Speaker 1: investing in people for the first time literally since Sam
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  Speaker 1: Walton started the company, and that investment is paying off
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  Speaker 1: because there's no expense mentality and there isn't as much
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  Speaker 1: of an expense mentality back in bent Bentville at the
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  Speaker 1: home office. These days, UM two point seven billion dollars
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  Speaker 1: spent on training and wages for the Walmart sales force.
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  Speaker 1: What drives traffic into stores? It doesn't have to be
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  Speaker 1: just Walmart. But I'm curious, because you're an expert in this,
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  Speaker 1: what gets people to go into the store, because traffic
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  Speaker 1: and Walmart much better than traffic and Target. It's it's
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  Speaker 1: what your referenced in the brake pain it's local. So
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  Speaker 1: for example, we'll be going through Mississippi and we'll see
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  Speaker 1: UM Walmart separated, so they'll have the licensed merchandise for
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  Speaker 1: Mississippi State, Southern Mississippi versus Old miss some l s
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  Speaker 1: U on one border some Alabama and Auburn on the
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  Speaker 1: other border across merchandise between apparel, licensed food and Target
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  Speaker 1: had been great at it, but as we talked at
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  Speaker 1: the turn of the year, uh, Target really forgot to
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  Speaker 1: market and merchandise Christmas this year and their stores they
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  Speaker 1: had more tires than Christmas trees and honekah lights and
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  Speaker 1: in some of their ads, and Walmart's getting back to
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  Speaker 1: that rhythm of retail and understanding the detail of retailing.
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  Speaker 1: At Kathleen's point, they actually have product in the stores
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  Speaker 1: between Friday and Sunday when they do sixties seventy percent
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  Speaker 1: of their business. That's the first since really the turn
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  Speaker 1: the turn of the century, going back to about two thousand. Well,
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  Speaker 1: you know, I just want to ask you about something
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  Speaker 1: that Brian Sazzi was writing about yesterday, suggesting that even
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  Speaker 1: though t J Max just had another sexy quarter, especially
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  Speaker 1: relative to its struggling department store arrivals like Me Season Coals,
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  Speaker 1: this could be a good time for investors to head
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  Speaker 1: for the exit doors. Yeah. T J acts a lot
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  Speaker 1: of respect for Ben Camarado, the founder of Start right
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  Speaker 1: next to Spags and Worcester Carol Meyer Woods has done
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  Speaker 1: an exceptional job Brian's correct. It's it's it's building out
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  Speaker 1: towards scale. The better investment is the ones that are
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  Speaker 1: still going more from multi regional and national national. Burlington's
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  Speaker 1: Center had a really good run. Ross is trying to
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  Speaker 1: trying to run off off Price. Really is where all
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  Speaker 1: the action is. Luxury and prestige really struggling. Uh, nationally
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  Speaker 1: and internationally. UH. Brian, to his credit also, UH was
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  Speaker 1: one of the first, along with the three of us
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  Speaker 1: to call the turn on J. C. Penny too. So
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  Speaker 1: H with with what Penny is doing and expanding Sephora,
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  Speaker 1: with the exclusivity and what Penny is doing with the
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  Speaker 1: Disney Co exclusives. Uh, that's one of the few bright
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  Speaker 1: spots in department store retail today too. How about it
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  Speaker 1: characterize urban outfitters, UH, lover ran outfitters, American Eagle, good leadership,
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  Speaker 1: good merchants, UH. People people from Great Lakes Great Lakes
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  Speaker 1: region to really get after retail, understand understand the trends. UH.
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  Speaker 1: If they're going at an Ali's bargain basement to see
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  Speaker 1: what Ali's is selling, they're seeing what Mark Lassman selling
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  Speaker 1: in the Marks off Price store. Some of the highest
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  Speaker 1: volume stores unique primarily to the greater Cleveland area. They
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  Speaker 1: follow everything in existence and rarely understand teens. Teens want
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  Speaker 1: want to be forward in unique in terms in terms
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  Speaker 1: of fashion, and they don't want to have that chiseld
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  Speaker 1: cultured look of Abercrombie and Abercrombie's sister company, Solistera, etcetera.
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  Speaker 1: So do you agree with Pim Fox, who I think
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  Speaker 1: believes that brick and mortar is going to be completely
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  Speaker 1: giving way to e commerce that no one, you know,
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  Speaker 1: especially the younger generation. They get their brown boxes and
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  Speaker 1: they're happy and they don't mind sending stuff back. And
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  Speaker 1: as as the time passes and the generations you know shift,
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  Speaker 1: that there won't be brick and mortar left. As as
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  Speaker 1: as we've talked to in the last year, there's this
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  Speaker 1: accelerating retail ice age pen identifier with the Shaving Club,
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  Speaker 1: and there's a real ticking time bomb as uh you
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  Speaker 1: talked about earlier in your show with a JP Morgan report.
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  Speaker 1: They're one point two million fewer people working at bricks
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  Speaker 1: based retail. They're not spending the money in the stores,
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  Speaker 1: Customer counts as Target reported yesterday, really cratering. There's gonna
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  Speaker 1: be a real crisis in terms of sales tax revenue
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  Speaker 1: as well as property tax revenue and public sector budgets
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  Speaker 1: are are going to be going through a lot of pain.
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  Speaker 1: And pim Pim's correct. The B and C malls Uh,
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  Speaker 1: The C malls will be ghost towns. Uh. The B
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  Speaker 1: malls will have high vacancy rates. And retailer is we
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  Speaker 1: knew it in the twentieth century won't really be there
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  Speaker 1: ten years from now, probably five years from now. Amazon
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  Speaker 1: growing twenty five billion a year. That's the size of
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  Speaker 1: Macy's and Bloomingdale's combined in total. L Brands, the parent
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  Speaker 1: company of Victoria Secrets, streamlining their offerings active where, sleepwear,
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  Speaker 1: and so on, but also promotional strategy. The shares of
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  Speaker 1: L Brands up almost five percent today. What do you
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  Speaker 1: think of Leslie Westerns L Brands? Leslie's always been able
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  Speaker 1: to rebound. He's one of the last really brilliant merchants
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  Speaker 1: working today that's been successful every every decade acrosses operating
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  Speaker 1: companies from quote unquote the Limited to VSS or Victoria's Secret.
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  Speaker 1: So L Brands has a lot of room to run
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  Speaker 1: as well. Just did a nutshell strong enough consumer? Is
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  Speaker 1: there enough paycheck growth. Is there enough everything to keep
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  Speaker 1: consumer growing, because this is certainly one of the biggest
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  Speaker 1: factors for no matter how smart you as a retailer,
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  Speaker 1: people gotta be shopping. Not enough paycheck growth. In the
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  Speaker 1: ten monthly consumers spending categories, consumers are spending more and
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  Speaker 1: nine and the ten everything from rent to health, healthcare tuitions,
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  Speaker 1: loan's credit, et cetera. So as otto goes down, retails
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  Speaker 1: going down, consumers getting crushed, consumers getting crushed. Well, we'll
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  Speaker 1: just have to leave it there for now. There's a
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  Speaker 1: lot of shopping though, right, I need retail therapy. Is
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  Speaker 1: this depressing? I'm gonna buy something him? All right, you
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  Speaker 1: helped the economy. Bert Flickinger, Managing director, Strategic Resource Group,
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  Speaker 1: thank you very much. He can be followed on Twitter
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  Speaker 1: at Bert Underscore Flickinger. Take you through to the clothes.
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  Speaker 1: This is Bloomberg