CORONAVIRUS AND THE STOCK IS DOWN TODAY IN AN UP MARKET.
STUART: THE RETAILERS HAVE TAKEN
IT ABOUT AS BADLY AS SOME OF THE
TRAVEL AND LEISURE COMPANIES.
RETAILERS HAVE BEEN SHUT DOWN
JUST ABOUT AROUND THE COUNTRY.
GERALD STORCH IS WITH US, OUR
RETAIL GUY.
RETAIL GUY. GERALD, AM I RIGHT IN SAYING
THAT YOU THINK THAT JC PENNEY,
MACY’S, BED, BATH & BEYOND,
NEIMAN MARCUS, ARE GONE?
BY THE TIME THIS IS OVER,
THEY’RE GONE?
THEY’RE GONE? REALLY?
REALLY? >> WHAT WE SAW WAS THE CONSUMER
WAS ON FIRE WHEN THIS VIRUS HIT.
WHAT’S HAPPENED, THOUGH, IS
PEOPLE WHO ARE WINNING ARE
WINNING EVEN MORE.
WALMART, TARGET, COSTCO, AMAZON.
INTERNET PLAYERS.
INTERNET PLAYERS. BUT THE PEOPLE WHO WERE LOSING
HAPPEN TO BE LOSING EVEN WORSE.
THOSE ARE YOUR DEPARTMENT
STORES, LIKE SOME NAMES YOU JUST
MENTIONED.
MENTIONED. THE APPAREL RETAILERS.
TERRIBLE.
TERRIBLE. STORES ARE SHUTTERED.
PEOPLE AREN’T THINKING ABOUT
BUYING CLOTHES RIGHT NOW.
EVEN IF THEY BOUGHT THEM, WHERE
WOULD THEY WEAR THEM.
WE SEE A TERRIBLE TIME FOR THESE
COMPANIES.
COMPANIES. FOR A LONG TIME TO COME, BECAUSE
THEY ARE NOT SELLING WHAT
CUSTOMERS NEED RIGHT NOW.
STUART: THE RETAIL LANDSCAPE
WILL LOOK COMPLETELY DIFFERENT
WHEN THIS IS OVER.
ESPECIALLY APPAREL AND FOOTWEAR,
THEY’RE NOT GOING TO COME BACK.
THINGS WILL LOOK AND FEEL
RADICALLY DIFFERENT.
RADICALLY DIFFERENT. >> LOOK, WE WANT TO SAVE ALL
COMPANIES DURING THIS PERIOD.
I THINK ANY STIMULUS IS GOOD
RIGHT NOW.
RIGHT NOW. BUT RETAIL IS A SPECIAL CASE.
WE HAD AN ARMAGEDDON GOING ON IN
RETAIL BEFORE THE VIRUS HIT,
WHERE SOME COMPANIES SIMPLY WERE
OPERATING WITH ANTIQUATED
MODELS, THEY DIDN’T HAVE A
STRONG ENOUGH E-COMMERCE ARM,
THE MALLS WERE DOING VERY
POORLY, DEPARTMENT STORE APPAREL
WAS DOING POORLY.
THE REAL QUESTION IS, SHOULD WE
THROW GOOD MONEY AFTER BAD IN
TRYING TO SAVE THESE COMPANIES
THAT WERE HEADED TOWARDS
EXTINCTION ANYWAY?
EXTINCTION ANYWAY? I THINK IN MANY CASES
EVENTUALLY, THEY HAVE DRAWN DOWN
THE REVOLVERS AND WILL GET
THROUGH THE NEXT COUPLE MONTHS
BUT WHEN THE DOORS REOPEN, I
DON’T THINK THEY WILL SEE THE
KIND OF TRAFFIC THEY EVEN HAD
BEFORE.
BEFORE. THIS IS NOT WHERE THE CONSUMER
MINDSET WILL BE.
THESE COMPANIES WILL BE DOING
EVEN WORSE.
EVEN WORSE. I THINK WE ARE LOOKING AT AN
ACCELERATION OF WHAT WAS ALREADY
HAPPENING IN THE SECTOR.
STUART: MOODY’S, THEIR RETAIL
PEOPLE SAY RETAIL SALES IN 2020
WILL BE DOWN 3% TO 5%.
THAT IS A SIGNIFICANT DECLINE.
ARE YOU IN LINE WITH THAT,
RETAIL SALES DOWN THAT MUCH IN
2020?
2020? >> ABSOLUTELY.
>> ABSOLUTELY. FOR THE YEAR AS A WHOLE.
I DID MY OWN ANALYSIS, SECTOR
BISECT ORBY
BISECT ORBY SECTOR, I HAD 4% DOWN.
WE HAVE NO IDEA HOW LONG THIS
LOCKDOWN WILL CONTINUE SO HI TO
MAKE AN ASSUMPTION ABOUT THIS,
AS MOODY’S DID.
THE ISSUE ISN’T THE PERCENTAGE
DOWN.
DOWN. WHAT YOU HAVE IS A SECOND
QUARTER WHICH IS WAY DOWN.
RIGHT?
RIGHT? THEN YOU HAVE A THIRD QUARTER
AND FOURTH QUARTER WHERE IT’S
COMING BACK.
COMING BACK. THAT’S WHAT IT’S GOING TO LOOK
LIKE.
LIKE. I THINK PEOPLE WILL FORGIVE WHAT
HAPPENED DURING THIS QUARTER.
THE REAL ISSUE IS THERE’S A
MASSIVE CHANGE AWAY FROM WHAT WE
USED TO BUY TOWARDS WHAT WE ARE
GOING TO BUY NOW.
I HEARD THE TALK ABOUT TARGET
BEFORE.
BEFORE. I THINK IT WAS SPOT-ON.
WITH TARGET, THEY WITHDREW THEIR
GUIDANCE.
GUIDANCE. WHY?
WHY? IT’S NOT BECAUSE THEY AREN’T
GOING TO SEE THE SALES.
THEY ARE.
THEY ARE. I’M NOT WORRIED ABOUT THEM.
IT’S BECAUSE THERE IS A MASSIVE
CHANGE WITHIN THE STORE AWAY
FROM HIGH MARGIN CATEGORIES LIKE
APPAREL AND TOWARDS LOWER MARGIN
CATEGORIES LIKE FOOD AND
CONSUMABLES.
CONSUMABLES. THAT’S HAPPENING ECONOMY-WIDE.
SO THE TOTAL SALES FOR THE YEAR
MIGHT BE DOWN IN THAT 3% TO 5%
RANGE, MOODY’S ESTIMATE, MY
ESTIMATE WAS 4%, SO I THINK WE
ARE SPOT-ON, BUT THE MIX IS
GOING TO BE DRAMATICALLY
DIFFERENT AND I DON’T THINK
THAT’S GOING TO CHANGE.
I THINK THE FUTURE IS GOING TO
LOOK A LOT MORE LIKE WHAT WE ARE
SEEING NOW THAN WHAT WE USED TO
SEE, BECAUSE CONSUMER PATTERNS,
THE INTERNET, THE INTERNET IS
DOUBLING DURING THIS PERIOD,
DOUBLING ITS SHARE OF WHAT’S
GOING ON.
GOING ON. WHY IS THAT?
BECAUSE LOOK, OTHER THAN FOOD,
CONSUMABLES, THE INTERNET IS THE
ONLY PLACE ANYONE IS GOING TO
GO.
GO. YOU DON’T GO TO THE SHOPPING
MALL TO BUY A DRESS.
STORES ARE CLOSED ANYWAY.
EVEN THE MOST ARDENT FASHIONISTA
ISN’T GOING TO GO.
THE QUESTION IS HOW MUCH IS
GOING TO KEEP.
I THINK A LOT OF IT.
STUART: GOT IT.