KELLY, GREAT SEEING YOU ALL THIS WEEK.
KELLY O’GRADY ON ALL OF THAT.
>>> GERALD STORCH WITH US, BIG
CHEESE AT TOYS "R" US.
NOW A RETAIL SVENGALI.
GERALD, YOU HEARD WHAT KELLY WAS
OUTLINING, A BIG NAMES WITH BIG
SALES.
SEEMS TO ME EARLIER, AND
EARLIER, GERALD.
HOW DO YOU SEE THE SEASON GOING?
>> NEIL, I’M AN OPTIMIST JUST
LIKE YOU ARE.
I ALWAYS BELIEVE IN THE AMERICAN
CONSUMER THAT THEY WILL SPEND
EVERYTHING THAT IS IN THEIR
POCKETS AND CERTAINLY WHEN IT
COMES TO CHRISTMAS.
THE PROBLEM IS, THERE WILL NOT
BE AS MUCH IN THEIR POCKETS.
SO WITH RISING INFLATION,
PARTICULARLY IN FOOD COSTS, MORE
OF OUR MONEY GOING TO
NECESSITIES.
YOU SEE THE BIGGEST GROWTH OF
RETAIL IS IN GROCERY SALES FOR
USE AT HOME SO THAT IS GOING TO
BE THE TREND AS WE GET TO THE
HOLIDAYS.
AS YOU KNOW MANY RETAILERS HAD A
VERY TOUGH SPRING.
WE’LL GET EARLY.
BE VERY PROMOTIONAL.
THAT SOUNDS LIKE THAT WILL BE
GOOD NEWS.
IT WILL NOT REALLY BE.
COULD BE SOMETHING OF A RETAIL
BLOODBATH, IF YOU WILL, AS
EVERYONE TRIES TO CLEAR OUT
EXCESS INVENTORY WHICH IS SIMPLY
A HUGE PROBLEM AMONG MANY
RETAILERS RIGHT NOW,
PARTICULARLY APPAREL RETAILERS
AND HOME RETAILERS.
I THINK IT WILL BE ONE OF THE
TOUGHEST CHRISTMAS WE’VE HAD IN
A LONG TIME, NEIL.
I YOU CAN TALKED TO EVERY
CHRISTMAS SEASON 15 YEARS.
NEIL: YOU AND I TALKED ABOUT THE FIRST CHRISTMAS, YOU SAID THE
FIRST CHRISTMAS, YOU SAID THE
FRANKINCENSE AND MYRR MARKET WAS
AWFUL.
WHEN ALL ELSE ON THE LINE
PARENTS WILL SHOP FOR THEIR
KIDS.
TO ME IT DEPENDS ON THE DAY WITH
THE KID BUT I GET WHAT YOU’RE
SAYING.
SOUNDS LIKE THE NUMBERS YOU’RE
OUTLINING COULD BE PRETTY BAD.
SORT OF HANDICAP WHAT LOOKS
GOOD, WHAT DOESN’T LOOK GOOD,
WHAT ITEMS LOOK PROMISING
BECAUSE SOMETIMES THEY DON’T
FOLLOW WHAT YOU WOULD THINK.
APPLE IS SELLING OUT OF
1000-DOLLAR PLUS iPHONE 14
MODELS AND EXPENSIVE WATCHES.
SO IT DEPENDS I GUESS, BUT PLAY
IT OUT FOR ME.
>> LOOK I THINK ANYTHING TRENDY
LIKE A NEW iPHONE IS GOING TO
CONTINUE SELLING BUT, APPAREL IS
JUST TERRIBLE.
CLOTHING IS TERRIBLE.
IT HAS BEEN BAD FOR A LONG TIME.
HAD A LITTLE UP TICK AFTER THE
PANDEMIC.
THAT IS OVER RIGHT NOW.
IT IS CRASHING AGAIN.
YOU SAW MACY’S AND KOHL’S TODAY
HIT THEIR 52-WEEK LOWS.
IT IS A TERRIBLE TIME TO BE IN
THAT BUSINESS.
I THINK THERE ARE MAJOR
STRUCTURAL PROBLEMS WITH THE
ECONOMY AS A WHOLE.
WE KIND OF HAVE THE FED PUSHING
THE BRAKE WHILE THE GOVERNMENT
IS PUSHING THE ACCELERATOR AT
THE SAME TIME WITH THE SAME
CART.
DRAGGING TWO FEET.
NEIL: GOOD POINT.
>> I DON’T THINK WE’LL SEE
THINGS GET BETTER VERY QUICKLY.
TOYS, I ALWAYS FELT ARE SOMEWHAT
RECESSION-PROOF BUT WHAT PARENTS
DO THEY WILL BUY ONE LESS TOY OR
SOMETHING LESS EXPENSIVE WHEN
TIMES ARE VERY TOUGH.
AGAIN THIS ISN’T THE WORST IT
HAS EVER BEEN IN HISTORY.
WE’RE NOT BACK IN THE GREAT
DEPRESSION, ANYTHING LIKE THAT,
BUT IT IS SIMPLY NOT GOING TO
WORK WHAT IS GOING ON WITH THE
ECONOMY AS A WHOLE.
INFLATION WILL NOT GO AWAY UNTIL
THE FED KILLS THE CONSUMER THAT
IS THE ONLY TOOL THEY HAVE.
STRUCTURAL PROBLEMS WITH
EMPLOYMENT, ENERGY,
MANUFACTURING, SUPPLY CHAINS,
WITH GOVERNMENT SPENDING.
WE SAY WE WILL SOLVE BY RAISING
INTEREST RATES.
ALL THAT DOES IS TWIST THINGS
AROUND SO PEOPLE RUN OUT OF CASH
IN THEIR CREDIT CARD RATES GO
WAY UP AND MORTGAGE GOES WAY UP.
THEY SIMPLY RUN OUT OF MONEY.
WHAT DO YOU DO THEN?
YOU BUY FOOD.
FOOD WILL KEEP LOOKING GOOD.
IF I BUY ONE STOCK IT IS ALWAYS
BE COSTCO.
ONE OF THE LARGEST GROCERS IN
THE COUNTRY.
THEY OFFER GREAT VALUE EVERY DAY
AND VALUE BECOME AS WATCHWORD AS
YOU HAVE A TOUGH TIME.
NEIL: THAT MAKES PERFECT SENSE.
THE OTHER ISSUE YOU GOT INTO
LAST TIME WECHATTED GERALD, IF
YOU’RE WILLING TO PAY THE HIGHER
PRICES GOOD LUCK GETTING WHAT
YOU WANT WITH SUPPLY CHAIN
PROBLEMS.
WE HOPE THE RAIL STRIKE IS
RESOLVED.
LOOKS LIKE IT IS NOT A DONE-DONE
DEAL.
LEAVING THAT ASIDE, FORGET ABOUT
CARS, GETTING A LOT OF
ELECTRONIC ITEMS, PC MARKET IS
AFFECTED BY THIS THAT COULD BE A
PROBLEM IF YOU’RE WILLING TO
ABSORB THE HIGHER PRICES, GOOD
LUCK FINDING 9 ITEM, RIGHT?
>> I THINK YOU’RE RIGHT.
SHORTAGES ARE PART OF PROBLEM
RIGHT NOW.
SOME OF THAT IS CAUSE THE BY
COVID OF COURSE.
WHAT HAS HAPPENED IN CHINA AS
THEY SHUT DOWN PLANTS AND ALL
THE REST OF THE WORLD HERE BUT A
LOT IS CAUSED BY THE GOVERNMENT.
THIS IS, THIS IS ECONOMICS 101.
YOU CAN’T SPEND AS JAMIE DIMON
SAID YOU CAN’T SPEND $6 TRILLION
NOT EXPECT INFLATION.
YOU CAN’T OVERREGULATE THE
ECONOMY AND HAVE THINGS WORK
SMOOTHLY.
SHORTAGES, RISING INFLATION,
THESE ARE ALL HALLMARKS OF WHAT
HAPPENS WHEN THE GOVERNMENT GETS
TOO INVOLVED WITH THE ECONOMY.
STARTED WITH GOOD INTENTIONS AS
MANY THINGS DO WITH COVID.
NOW THEY HAVE TO LET IT GO, LET,
CORPORATE AMERICA DO WHAT WE
KNOW HOW TO DO.
NEIL: YEAH.
YOU KNOW HOW TO DO IT VERY WELL,
GERALD.
THANK YOU VERY, VERY MUCH.
GOOD SEEING YOU, GERALD STORCH,