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Morgan Stanley Cuts Jobs Across All of Its Business Lines · Bloomberg Intelligence

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
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Speaker 2: One of the top read stories on the Bloomberg Criminal
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Speaker 2: is about Morgan stanleing and cutting about three percent of
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Speaker 2: its workforce pretty much across all of its business lines.
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Speaker 2: And one question I have, I think a lot of
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Speaker 2: folks have, is this something specific to Morgan Stanley. There's
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Speaker 2: a signal weakness in the biz, but words it just
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Speaker 2: kind of the annual culling of people. So let's just
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Speaker 2: see what's happening here. Herman Chan, senior analyst for US
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Speaker 2: Banks Joints US here in our Bloomberg Interactive Broker Studio.
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Speaker 2: So what do you make of the news heerman come
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Speaker 2: out of Morgan Stanley bet laying off about three percent
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Speaker 2: of its workforce.
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Speaker 3: Yeah, that's right, three percent of its workforce, about twenty
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Speaker 3: five hundred workers. I would say that it is of
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Speaker 3: an annual culling. They did a similar workforce reduction last year.
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Speaker 3: I would also point to the fact that head count
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Speaker 3: across the big banks was pretty stable for banks like
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Speaker 3: JP Morgan, Bank of America City, whereas Morgan standly grew
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Speaker 3: their headcount three percent last year, So now they're sort
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Speaker 3: of back in the pack with this workforce reduction.
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Speaker 4: So we noticed that the cuts hit investment banking, trading
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Speaker 4: and the wealth management. You mentioned that it's annual culling,
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Speaker 4: but should we read into whether the signals a broader
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Speaker 4: shift for the bank.
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Speaker 3: Yeah, it's interesting because last year when they did a
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Speaker 3: two percent reduction, they didn't really touch their financial advisor force,
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Speaker 3: whereas this year it seems like it's more broad in scope.
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Speaker 3: So I think there's just maybe some some changes in
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Speaker 3: where they think that their advisors are and maybe just
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Speaker 3: shifting geographically as well.
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Speaker 2: You know, what are the investment banks saying about AI
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Speaker 2: and as a way to make the more efficient and
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Speaker 2: maybe with less headcoun Because I think about the first
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Speaker 2: three years of my investment banking career, pretty much everything
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Speaker 2: I did, running earnings models, LBO models, pitch books, pretty
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Speaker 2: much all of my life could have been done by
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Speaker 2: any right price myself out of a job back then.
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Speaker 5: But what are they saying these days.
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Speaker 3: Yeah, so AI is a big story. We just heard
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Speaker 3: JPM Morgan at the investor Day talk about the benefits
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Speaker 3: of AI in terms of personalization, pinpointing which customers would
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Speaker 3: be open to different products, and using AI to better
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Speaker 3: use their marketing dollars for that. On the other hand,
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Speaker 3: they've also talked about improving customer satisfaction with the call
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Speaker 3: centers and the like, where there's less people in the
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Speaker 3: call centers, which is expense saving for banks like jping
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Speaker 3: Morgan and b of A, but they're also improving customer satisfaction.
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Speaker 3: You can see that improving over time, so there's a
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Speaker 3: double benefit on that front.
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Speaker 4: AI accelerating structural change when it comes to these banks,
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Speaker 4: because we've heard a lot of banks and fintech firms
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Speaker 4: like Block actually citing AI as a reason why they're calling.
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Speaker 3: Yes, I wouldn't say we're going to see forty percent
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Speaker 3: job cuts from from JP Morgan and BAA at this point,
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Speaker 3: but I would say that AI is definitely reducing the
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Speaker 3: need for headcounts, and we've seen that given the fact
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Speaker 3: that JP Morgan's headcount numbers are flat year over year,
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Speaker 3: and really they've been reducing their their workforce within the
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Speaker 3: consumer bank, which which speaks to what I was just
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Speaker 3: saying before with the call center.
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Speaker 2: Yeah, you know, we were just talking earlier that twenty
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Speaker 2: six could wind up being a monster year from IPOs.
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Speaker 2: We're just talking about anthropic open AI SpaceX. What are
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Speaker 2: the banks saying about the prospects for IPOs in twenty
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Speaker 2: twenty six.
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Speaker 3: Yeah, that that is something that that heading into the year,
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Speaker 3: a lot of the investment banks were really we're really
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Speaker 3: in enthusiastic about to pick up in capital markets issue
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Speaker 3: once and activity specifically with IPOs and equity capital markets,
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Speaker 3: and also in M and A you talked about some
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Speaker 3: of the three headline IPOs that could potentially hit this year.
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Speaker 3: That being said, there's been some volatility in turbulence in
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Speaker 3: the market today, so maybe that pushes things back to
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Speaker 3: a little bit, but overall there is some general enthusiasm
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Speaker 3: and JP Morgan mentioned capital markets would be up fourteen
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Speaker 3: about mid teens for the first quarter, so there's hopes
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Speaker 3: that that could continue going forward.
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Speaker 4: Do you think that these layoffs will affect Morgan Stanley
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Speaker 4: and competing with top talent, because to PulsePoint, it's going
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Speaker 4: to be such a busy year or is this par
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Speaker 4: for the core in most banks.
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Speaker 6: Yeah.
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Speaker 3: I would say Morgan Stanley is one of the top
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Speaker 3: investment banks, particularly in technology TMT, and they're going to
4:51
Speaker 3: get their fair share of deals and win a lot
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Speaker 3: of mandates just given the fact that they have really
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Speaker 3: strong banking presence within that industry. We'd expect to do
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Speaker 3: really well in twenty twenty six.
5:02
Speaker 2: You know, when President Trump took was elected took over
5:06
Speaker 2: an early last year, one of the industries that was
5:09
Speaker 2: really thought to benefit would be the financial services industry.
5:13
Speaker 2: Much less regulation, that's rolling back some of the regulations
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Speaker 2: that came out of the Great Financial Crisis.
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Speaker 5: Have we seen that we have?
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Speaker 3: So, we've seen that directly with m and A, With
5:23
Speaker 3: Bank m and A. There's been more deal making but
5:26
Speaker 3: also less red tape in terms of getting deals approved
5:29
Speaker 3: by the regulators. We've seen a few deals that just
5:32
Speaker 3: get approved with less than one hundred days from announcement
5:36
Speaker 3: to close, whereas during the Biden administration it took three
5:39
Speaker 3: hundred and four hundred days for that to happen. So
5:42
Speaker 3: much more streamlined. And you're also seeing, on the other hand,
5:45
Speaker 3: for the big banks, less onerous capital rules, So that
5:50
Speaker 3: means they can plow more of their capital into the
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Speaker 3: trading businesses and lending, So that's going to be an
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Speaker 3: ongoing benefit for the big banks.
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Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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6:21
Speaker 2: Broadcom the chip maker, Broadcom reported some pretty good numbers,
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Speaker 2: better than expected numbers, some good revenue guidance. CEO's talking
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Speaker 2: about one hundred billion dollars in revenue next year. They
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Speaker 2: had about sixty eight billion dollars last year, so that's
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Speaker 2: a mega jump. Let's check in with Ku John Sobani.
6:37
Speaker 2: He's a senior ANAOS covering the semiconductors for Bloomberg Intelligence.
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Speaker 2: He spased out there in San Francisco. Kunjohn, seems like
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Speaker 2: a good number to me. What did what did you
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Speaker 2: guys and what did the street take away?
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Speaker 6: Yeah?
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Speaker 7: It was.
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Speaker 6: It was one of the most strongest showings when it
6:51
Speaker 6: comes to AI chip names in our sector. You know,
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Speaker 6: just for context, most of the AI chip names, despite
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Speaker 6: them giving strong numbers next day have seen their stock
7:01
Speaker 6: down sort of met single digit. Here you're seeing the
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Speaker 6: opposite very well justified. Few things that really stood out
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Speaker 6: to investors. That one was the one hundred billion plus
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Speaker 6: line of sight of AI chip revenues in twenty twenty seven,
7:16
Speaker 6: and to add the point that they see growth in
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Speaker 6: twenty twenty eight. Again, this is the first company calling
7:21
Speaker 6: out growth two years out so far in our sector,
7:25
Speaker 6: so that should ease the concerns around hyper scale spending.
7:29
Speaker 6: There were a lot of other good points here. The
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Speaker 6: networking side of their business, which we believe continues to
7:34
Speaker 6: be underappreciated, has been running much faster than people expect.
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Speaker 6: The gross margins, which you would think should be seeing
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Speaker 6: headwinds because of these ramp of their AI chips, are
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Speaker 6: actually going to stay stable, which in itself is a
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Speaker 6: very positive sign, which implies that a they have significantly
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Speaker 6: strong pricing power, they're not eating the rising input cost,
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Speaker 6: and that they have supply chain really optimized to get
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Speaker 6: the best feels.
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Speaker 4: They did say that AI sales chips could top one
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Speaker 4: hundred billion by twenty twenty seven. Quo Jan, how credible
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Speaker 4: is that target? I mean aar revenue more than doubled
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Speaker 4: last quarter. But is this gross sustainable?
8:17
Speaker 6: I mean, look, what Hawkden says in our sector is
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Speaker 6: not taken lightly. It's sort of a line in the stone.
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Speaker 6: So I wouldn't think they would be throwing out numbers
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Speaker 6: will nearly if they didn't have to. Also, there was
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Speaker 6: there is no need for them to throw out that
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Speaker 6: long outward number. So you know, most of the street
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Speaker 6: and the south side does give a lot of credence
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Speaker 6: to that number now that it's coming out from hawk
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Speaker 6: AND's mouth. And look when we look at the gigaboard
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Speaker 6: and the unit volume projections which are there on the
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Speaker 6: street even before that hundred billion number came out, it
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Speaker 6: doesn't seem drastically aggressive or ambitious. I mean, we have
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Speaker 6: heard Google's higher capex, the entropic dealer and the open
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Speaker 6: Ai deal layout, the timing and toropic. Again to remind everyone,
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Speaker 6: is will be on the all the TPUs that Broadcom
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Speaker 6: creates through Google. So when you add up most of
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Speaker 6: the unit volume which is expected, this does seem reasonable
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Speaker 6: that they can easily achieve that hundred billion target.
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Speaker 2: Kun John, where does Broadcom fit into the world of
9:20
Speaker 2: the semiconductor chip makers. I'm thinking, you know, versus the
9:23
Speaker 2: NVIDIAs of the world, the a m ds of the world,
9:25
Speaker 2: what does Broadcom kind of fit in there?
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Speaker 6: Yeah, so, you know, the AMDs and and media sell
9:31
Speaker 6: what we call GPUs. Think of them as AI accelerator
9:35
Speaker 6: chips use for everything AI. But that is something that
9:39
Speaker 6: off the shelf chips. Anyone can go by the GPU
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Speaker 6: and use it the way, use it the way it's
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Speaker 6: supposed to use. Broadcom sells a similar chip that is
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Speaker 6: used for the same AI training, AI influence AGENTIC AI
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Speaker 6: use cases, but are a six. What it just means
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Speaker 6: is big companies like Google, Meta Amazons and Microsoft go
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Speaker 6: and sort of design their own aigpus if I may
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Speaker 6: working with a company like Broadcom, because they want to modify,
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Speaker 6: they want to customize, they want to optimize it to
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Speaker 6: their own needs. So essentially you have the NVIDIAs, the AMDs,
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Speaker 6: the Broadcom, and the Marvels all selling AI excelator chips.
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Speaker 6: Is just the end use cases the same as just
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Speaker 6: the mode of execution is slightly bit different.
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Speaker 4: Broadcom also announced a ten billion dollars buyback. What does
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Speaker 4: that signal to investors right now?
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Speaker 6: In your opinion, It's definitely a positive signal. I mean,
10:31
Speaker 6: any buyback is a positive signal, but it is not
10:34
Speaker 6: that huge enough to really raise eyebrows. Broadcom historically has
10:39
Speaker 6: been a great dividend pair. They have sustained records of
10:43
Speaker 6: growing their dividends, so that is what their sort of
10:46
Speaker 6: long term capital return shareholders really care about, which they
10:50
Speaker 6: continue to still do. This is just a cherry on
10:52
Speaker 6: the top.
10:54
Speaker 2: So in Vidia, they have an investor Day coming up,
10:58
Speaker 2: I believe on Saint Patrick's Day.
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Speaker 5: What do you expect to see there that that could
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Speaker 5: be a big data point.
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Speaker 6: Yeah, that usually is a huge data point for them.
11:08
Speaker 6: It is the three day conference. Look, we expect a
11:12
Speaker 6: couple of things here. We expect the new sort of
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Speaker 6: a lot more details when it comes to the VERA
11:18
Speaker 6: rubin which is supposed to come in second half of
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Speaker 6: twenty six, and more than that, we expect a lot
11:23
Speaker 6: more details on that twenty twenty seven road map. All
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Speaker 6: eyeser from investor perspective now that what we have heard
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Speaker 6: from Nvidia Broadcome in every hyperscale is really to figure
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Speaker 6: out the twenty seven numbers. So the focus really will
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Speaker 6: be the chips that are coming out in twenty twenty seven.
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Speaker 6: The new innovation that they will be doing. What will
11:39
Speaker 6: be the memory, whether it will have silicon photonics CPO.
11:43
Speaker 6: I know I'm rambling some technical terms, but this is
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Speaker 6: what will really help investors to shape twenty twenty seven.
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Speaker 6: Will twenty twenty seven be an up year for chip makers?
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Speaker 6: And does that mean the hyperscales will still keep spending
11:56
Speaker 6: more in twenty seven than they are spending in twenty
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Speaker 6: twenty six, which would be impressive feed So that is
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Speaker 6: what really the focus will be. From NY Media's.
12:04
Speaker 2: GDC couljoh thirty seconds left here. How often do I
12:07
Speaker 2: have to replace a chip? Is that something that I
12:10
Speaker 2: have to do every year? Every time they update?
12:12
Speaker 5: How's that work?
12:14
Speaker 6: Yeah? These are fairly new chips. So when you think
12:16
Speaker 6: of we have not seen a full life cycle of
12:18
Speaker 6: these new GPUs in Essex, right, we really started seeing
12:21
Speaker 6: them deploying in volume in twenty twenty three. Now, based
12:24
Speaker 6: on the deprecious schedules right now that are put in place,
12:28
Speaker 6: we're talking about five to six years before you really
12:30
Speaker 6: have to crank out a chip and put a new
12:32
Speaker 6: one in its place, So we are not there yet. However,
12:37
Speaker 6: there's another business case where you have a limited power,
12:40
Speaker 6: you have limited data center footprint, so if a new
12:42
Speaker 6: or more efficient chips comes in, there might be a
12:45
Speaker 6: business case to justify ripping out an old chip even
12:48
Speaker 6: though it's working correctly, so that you are running on
12:50
Speaker 6: the latest and greatest chip.
12:52
Speaker 5: Stay with us more from Bloomberg Intelligence coming up after.
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Speaker 1: This to the Bloomberg Intelligence Podcast. Catch us live weekdays
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Speaker 1: your podcasts, or watch us live on YouTube.
13:13
Speaker 2: One of the themes, or one of the storylines around
13:16
Speaker 2: AI has been the use in the government, particularly the
13:19
Speaker 2: Department of Defense.
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Speaker 5: A lot of these AI.
13:23
Speaker 2: Folks are having discussions with the Department of Defense about
13:25
Speaker 2: how the technology will be used. One of those as
13:27
Speaker 2: anthropic and anthropic the news today at of Bloomberg News
13:31
Speaker 2: has resumed discussions with the Pentagon about the use of
13:34
Speaker 2: AI models in the US military. It's checking with Man
13:38
Speaker 2: Deep seeing here he runs a tech research for Bloomberg Intelligence.
13:40
Speaker 2: Joins us live here in our Bloomberg arrective broker studio.
13:43
Speaker 2: So anthropic back into discussions with the government.
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Speaker 5: How is this going to play out.
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Speaker 2: Do you think with these AI agents and the level
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Speaker 2: of control they may or may not have about how
13:54
Speaker 2: their technology is used by their customers in this case
13:57
Speaker 2: of the US government.
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Speaker 7: Yeah, I mean I was very surprising is that they
14:02
Speaker 7: didn't come to an agreement before, and you know, they
14:04
Speaker 7: were designated as a supply chain risk, which is a
14:07
Speaker 7: big deal for any entity, any company preating here in
14:12
Speaker 7: the US. So from that perspective, it's good that you know,
14:15
Speaker 7: they are back to negotiating with the government and trying
14:20
Speaker 7: to figure out a solution so that they don't end
14:23
Speaker 7: up losing any business. I mean, Anthropic just doubled their
14:27
Speaker 7: revenue in the past three months, so they ended the
14:30
Speaker 7: year at ten billion. Now they are at twenty billion
14:33
Speaker 7: dollar rund rate within three months. So this is one
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Speaker 7: of the fastest growing US companies ever and they've been
14:41
Speaker 7: designated as a supply chain risk, so clearly, you know,
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Speaker 7: they have a lot to lose in terms of momentum
14:47
Speaker 7: if this carries on for a long time. And from
14:50
Speaker 7: that perspective, I do think, you know, the management, especially
14:54
Speaker 7: the CEO, has been on various podcasts talking about, you know,
15:00
Speaker 7: the whole guardrails and the points of disagreements. I do
15:04
Speaker 7: think that they'll find a solution and that should somewhat
15:09
Speaker 7: insulate them from losing any business.
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Speaker 4: So Anthropic reportedly wants limit on surveillance and autonomous weapons.
15:15
Speaker 4: Do those guardrails become the industry standard or if they
15:18
Speaker 4: keep pushing for that, will they be at a competitive
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Speaker 4: disadvantage because to your point, they have a lot to lose,
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Speaker 4: and not only them, possibly most of the companies who
15:26
Speaker 4: are wanting to deal with the US government.
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Speaker 7: Well opening I stepped in right away as soon as
15:31
Speaker 7: they had a fallout, So I don't know if you know,
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Speaker 7: other companies believe in the same philosophy here, and Anthropic
15:39
Speaker 7: has you know, being a big promo proponent of guardrails
15:43
Speaker 7: and you know, safety more so than the other frontier
15:47
Speaker 7: model players. So from that perspective that has helped them,
15:51
Speaker 7: you know with enterprise adoption. But in this case it's
15:54
Speaker 7: the US government and you know, you go back in
15:56
Speaker 7: the history of software companies. I mean Apple has had
16:00
Speaker 7: some disagreements with the government where they were asked to
16:03
Speaker 7: open the platform. Same thing with Microsoft when it comes
16:07
Speaker 7: to a national security and they've found a way to
16:10
Speaker 7: you know, just make sure that the government has a
16:14
Speaker 7: good workaround. So in this case, that's what they have
16:16
Speaker 7: to compromise or you know, come up with a workaround.
16:20
Speaker 7: It doesn't mean you have to open your platform, but
16:24
Speaker 7: just kind of make sure that you know, the government
16:27
Speaker 7: doesn't label you as a supply to address.
16:29
Speaker 2: Yeah, Anthropic Open AI. Are these companies going to come public?
16:34
Speaker 2: Do you think at some point?
16:36
Speaker 7: I mean they are getting ready. In fact, I won't
16:38
Speaker 7: be surprised if it's not this year. Like really everything
16:43
Speaker 7: points to them going public in the second half, given
16:47
Speaker 7: you know how focused they are on that ramp up
16:50
Speaker 7: and what they are doing in terms of just the
16:53
Speaker 7: cost structure side, because one of the criticisms is how
16:57
Speaker 7: much cash they're burning and the training. It also require
17:00
Speaker 7: a lot of upfront cash. But in this case, now
17:04
Speaker 7: that they have doubled their revenue in the past three
17:06
Speaker 7: months and they are I can sell that and so
17:10
Speaker 7: that's where I think it's a perfect set to.
17:11
Speaker 2: Your twenty six may have open AI and SpaceX.
17:16
Speaker 4: Yeah, it's going to be an exciting.
17:18
Speaker 7: I mean, yeah, that could be an extraordinary some of
17:21
Speaker 7: the biggest IPOs. I mean, these are not early stage
17:24
Speaker 7: companies anymore. You know, so think of how much money
17:27
Speaker 7: they may end up raising in the public markets.
17:31
Speaker 5: Stay with us. More from Bloomberg Intelligence coming up there for.
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Speaker 2: We got an artings coming out some of the retailers.
17:53
Speaker 2: As you know, they kind of report towards the end
17:55
Speaker 2: of the season. Given the holiday, they like to push
17:58
Speaker 2: the reportings back a month versus most other companies. Uh, Kroger,
18:02
Speaker 2: we had some numbers out BJ's wholesale warehouse. Jen Bartashee
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Speaker 2: covers this part of the retail space. Jen, let's start
18:09
Speaker 2: with Kroger is the biggest supermarket chain other than Walmart.
18:14
Speaker 5: How do they do?
18:16
Speaker 7: You know?
18:16
Speaker 8: Kruger had a pretty solid quarter, you know, and I
18:18
Speaker 8: think investors are very encouraged by the early signs of
18:22
Speaker 8: what their new CEO, Greg Forren, is bringing to bear.
18:25
Speaker 8: The last year, Kruger's really focused on streamlining the business.
18:28
Speaker 8: They've dispersed, they've they've gotten rid of some assets, they've
18:32
Speaker 8: streamlined their e commerce operations and now they seem to
18:35
Speaker 8: be better positioned for growth. And one of the things
18:38
Speaker 8: he's known for is execution, and so there's some some
18:42
Speaker 8: optimism with regards to how Kroger you could perform this year.
18:47
Speaker 4: We're also seeing shoppers trade down to private label and
18:50
Speaker 4: hunt for discounts. Is this trend accelerating across the space
18:53
Speaker 4: or is this specific to Kroger's.
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Speaker 8: No, it's it's accelerating across the space. And when we
18:58
Speaker 8: look at a US all goods that are sold private
19:03
Speaker 8: label sales are still growing at a faster rate than
19:06
Speaker 8: national brands. The pace of that growth is a little
19:08
Speaker 8: bit slower than it had been, but it's still edging
19:11
Speaker 8: out national brands. And so when you have retailers like
19:14
Speaker 8: Kroger who have a long standing program around private label,
19:18
Speaker 8: that really bodes well for them with regards to their
19:21
Speaker 8: product mix and their ability to offer value as well
19:24
Speaker 8: as innovation to their customers.
19:27
Speaker 2: So tell to us just broadly, how the trends have
19:29
Speaker 2: been with some of these private labels visa vi the
19:32
Speaker 2: established brands. Just maybe like in shelf placement, it used
19:35
Speaker 2: to be the private labels would be on the you know,
19:38
Speaker 2: the bottom rung of the shelf near the floor. Are
19:41
Speaker 2: they getting better positioning, because I know that's important when
19:43
Speaker 2: you're walking down the aisle, it is.
19:45
Speaker 8: It's a great point, Paul. And what you're finding is
19:48
Speaker 8: that for some retailers that private label is front and center.
19:52
Speaker 8: And part of that is due to the fact that
19:55
Speaker 8: in old days, the resellers were more reliant on alec
20:00
Speaker 8: hation funds from the CpG companies that dictated where goods
20:04
Speaker 8: were placed. But in a new age of advertising and
20:07
Speaker 8: digital assets, the need for that in store placement is
20:11
Speaker 8: not as big as it used to be historically, so
20:14
Speaker 8: they've got more leeway to put the items where people
20:17
Speaker 8: see them, you know. And at the same time, you know,
20:20
Speaker 8: from a private label perspective, there's just greater acceptance. If
20:23
Speaker 8: you think about you know, chains like Aldi or Legal,
20:27
Speaker 8: you know, these chains that are almost all private label brands,
20:30
Speaker 8: and people have really started to embrace that. And so
20:34
Speaker 8: private label in and of itself is no longer, you know,
20:37
Speaker 8: sort of more of a taboo category, and people are
20:40
Speaker 8: considered themselves smart when they're buying private label because they're
20:43
Speaker 8: saving money.
20:44
Speaker 2: I've been seeing like a I live in down the
20:46
Speaker 2: Jersey Shore a ton more of these al d and
20:48
Speaker 2: legal stores.
20:49
Speaker 5: I'm like, who are these people?
20:50
Speaker 4: Really?
20:51
Speaker 7: No?
20:51
Speaker 2: I know, okay, because I mean they're not the shop
20:53
Speaker 2: right of in Bee, So I don't know.
20:55
Speaker 4: Let's go to BJ's. They delivered on earning speat this quarter.
20:58
Speaker 4: Our warehouse clubs canntinuing to take share from traditional supermarkets.
21:03
Speaker 4: Is that the trend we're seeing?
21:05
Speaker 8: It is definitely a trend. I think what happens is consumers,
21:09
Speaker 8: once they lock into a membership, they really look to
21:11
Speaker 8: maximize that membership. And they've understood that that warehouse clubs
21:16
Speaker 8: as a type of store are actually better positioned than
21:21
Speaker 8: grocery stores or even the mass merchants to make quick
21:25
Speaker 8: changes to their inventory. And what that means is that
21:28
Speaker 8: they can always pivot to things that are the best
21:31
Speaker 8: value for their customers. So even though they may not
21:34
Speaker 8: have the exact same item every time you go in
21:36
Speaker 8: the club, you know, they encourage that to be looked
21:40
Speaker 8: at as a treasure hunt experience, but they can also
21:43
Speaker 8: offer really really good value. And so we're seeing the
21:46
Speaker 8: membership base grow and it is eking you know, sales
21:51
Speaker 8: away from some of those more traditional formats.
21:53
Speaker 5: So what is the story.
21:55
Speaker 2: What is the story for Bej's Wholesale? How do you
21:58
Speaker 2: position it? How does the street position this story.
22:02
Speaker 8: So BJS has done a really good job in the
22:04
Speaker 8: last two or three years of reienting to growth. They've
22:08
Speaker 8: accelerated their historic openings, so they're entering new markets as well.
22:12
Speaker 8: They're entering the Dallas Fort Worth area later this year,
22:16
Speaker 8: for example, And that kind of growth and targeting high
22:20
Speaker 8: growth markets is really a good plan because historically they've
22:24
Speaker 8: been really constrained to the northeast, and so I think
22:27
Speaker 8: people are looking at bjays and they've really been able
22:30
Speaker 8: to show that those new clubs are executing well. They're
22:32
Speaker 8: very very productive stores, and they're able to sustain a
22:36
Speaker 8: pace of faster openings. So all of those things together
22:39
Speaker 8: really point to a long runway for growth and a
22:43
Speaker 8: lot of weight space to enter for new markets and
22:46
Speaker 8: to gain share.
22:47
Speaker 4: So, with inflation easing but consumers still cautious, what are
22:50
Speaker 4: you on the lookout for when it comes to to
22:52
Speaker 4: grocery earnings this year?
22:55
Speaker 8: Yeah, it's a great question. You know, there are a
22:57
Speaker 8: couple of things that we're really watching and when it
23:00
Speaker 8: you know, when you're talking about food retail, price sensitivity
23:04
Speaker 8: is there, but it's going to shift more this year
23:07
Speaker 8: to are these retailers able to sell greater volumes of
23:12
Speaker 8: goods and if they're achieving that through price cuts or
23:16
Speaker 8: through promotions, and then how that then translates back to
23:20
Speaker 8: like the food manufacturing companies. It's been multiple years since
23:25
Speaker 8: we've seen retailers have positive volume in the majority of
23:29
Speaker 8: the store, and so that really is the focus for
23:33
Speaker 8: this year, especially because inflation has become less of a
23:36
Speaker 8: pressure for them to have to manage.
23:39
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