# Moderna and Merck Revive mRNA Hopes With Melanoma Success

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 19 Aug 2026, 23 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/1f6949c8-33e4-4b20-b0e5-b4ab011529bb/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Judy Lagrou - Sam Fazeli, Bloomberg Intelligence, Director of Research for Global Industries and Senior Pharmaceuticals Analyst, discusses the latest in the biotech sector. A personalized vaccine developed by Moderna Inc. and Merck & Co. reduced the recurrence of melanoma in a large, late-stage trial, raising expectations for treating the deadliest form of skin cancer. The trial met its main goal as the vaccine, combined with Merck’s immune drug Keytruda, prevented the cancer’s return after it was surgically removed more often than the immunotherapy alone. -Deborah Aitken, Bloomberg Intelligence Luxury Goods Analyst, discusses Estee Lauder earnings. Estée Lauder Cos. shares jumped after its results beat estimates and ended a run of three straight declines in annual revenue. The company reported revenue of $3.6 billion in its fiscal fourth quarter and adjusted earnings per share of $0.39, which topped expectations. -Craig Trudell, Bloomberg Managing Editor of Global Business Coverage, discusses Target earnings. Target Corp. lifted its full-year guidance after results outpaced estimates in the latest quarter, suggesting the big-box retailer may be moving past a lengthy sales slump. The company now expects net sales to increase about 5% in the current fiscal year and raised its adjusted earnings target after second-quarter sales surpassed analyst estimates. -Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst, discusses Lowe’s earnings. Lowe’s Cos. cut its outlook for the full year after posting results that missed Wall Street estimates, showing how a stubbornly weak housing market is eroding the home-improvement retailer’s performance. The company now expects comparable sales to be flat this fiscal year, after previously forecasting as much as 2% growth. Comparable sales, which measure results at locations open at least a year, grew 0.2% in the second quarter, missing the average of estimates compiled by Bloomberg. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: When we were in the early early days of the
[0:26] Speaker 2: pandemic and we were just it was like early twenty
[0:28] Speaker 2: twenty one in this we're starting to get some vaccine
[0:31] Speaker 2: discussions and this mRNA technology came to the fore. Sam
[0:35] Speaker 2: Fizzelli had to explain it to us like a million
[0:37] Speaker 2: times because we didn't really get it, but he was
[0:39] Speaker 2: saying it's going to be really helpful in delivering a
[0:43] Speaker 2: coronavirus vaccine. He was right, and he said, don't sleep
[0:46] Speaker 2: on this scene because you can use the same technology
[0:49] Speaker 2: for different therapies, for different parts and different things. And
[0:53] Speaker 2: and here you go today with this news with hooking
[0:57] Speaker 2: up with merk on a cancer drug starts up one
[1:00] Speaker 2: hundred and thirty percent. I mean, this isn't an overcounter
[1:03] Speaker 2: pink sheep any stock. This is a twenty five billion
[1:05] Speaker 2: market cap. That's not fifty billion market cap in one day.
[1:08] Speaker 2: Sam Pazzelli joins is here. He is the chief go
[1:11] Speaker 2: to research channels Bloomberg Intelligence for all things healthcare. Sam
[1:14] Speaker 2: talk to us about this, what Modera and Merk are
[1:17] Speaker 2: doing today, what's kind of the science behind it?
[1:21] Speaker 3: Yeah, I mean, Paul, just to say, these are the
[1:23] Speaker 3: days that I lived for.
[1:25] Speaker 4: Right when something goes right, even though I was really
[1:28] Speaker 4: worried about this trial reading out, which is what this
[1:31] Speaker 4: trial is taking. Some mutations identify mutations in the tumors
[1:38] Speaker 4: of patients who've had them removed. So you have melanoma,
[1:41] Speaker 4: you're lucky enough to have been caught early. You do surgery,
[1:44] Speaker 4: You debulk the tumor. You use that in their labs
[1:47] Speaker 4: and their AI systems, et cetera, to identify what they
[1:51] Speaker 4: call neo antigs, things that are more prominent in the
[1:54] Speaker 4: tumor cells than not. Put that in a vaccine MRN
[1:58] Speaker 4: a vaccine, give that back to the pay and at
[2:00] Speaker 4: the same time administer the Murk immuno oncology drug that
[2:05] Speaker 4: unleashes t cells if they find those mutations.
[2:10] Speaker 3: So why was we were we worried?
[2:12] Speaker 4: It's a new technique. It's really hard. This is a
[2:15] Speaker 4: disease where you get a lot of good response, even
[2:18] Speaker 4: as it is with therapy, with the removal of the tumor,
[2:21] Speaker 4: with kytrude itself. This is a head against kytrudae alone,
[2:24] Speaker 4: right that the therapy. So and they say, although we
[2:28] Speaker 4: haven't seen any numbers that is worked out here. So
[2:31] Speaker 4: I think what's going on with MODERNA I'm going to
[2:34] Speaker 4: speculate here, right, is that there is some major short covering.
[2:37] Speaker 4: That squeeze is quite massive, right, one hundred and thirty
[2:40] Speaker 4: five percent last time I looked, you.
[2:42] Speaker 3: Seeing it jump in.
[2:43] Speaker 4: Other RNA names are tourists, BioNTech up twenty three and
[2:48] Speaker 4: a bit percent, because they're all trying to do the
[2:50] Speaker 4: same thing.
[2:52] Speaker 3: The question really is what how good is this data?
[2:54] Speaker 3: We'll find that in the next few months.
[2:56] Speaker 4: I'm pretty sure, And then can you say it's got
[2:59] Speaker 4: to work in other tumors? And I think that's a
[3:02] Speaker 4: bit of a leap of faith.
[3:05] Speaker 3: It's going to take some of the Melano way is
[3:07] Speaker 3: the easiest step forward. So but still, let's celebrate today.
[3:11] Speaker 5: Sam, I'm so curious about the share movement of Maderna.
[3:15] Speaker 5: Can you tell me a little bit about whether or
[3:17] Speaker 5: not you feel like the share move justifies this news
[3:21] Speaker 5: we're looking at Maderna reaching its best day on record.
[3:25] Speaker 5: Tell me a little bit more about how you see
[3:27] Speaker 5: this movie fitting it.
[3:29] Speaker 4: Just just to remember, though, in the heydays of the
[3:33] Speaker 4: COVID vaccine, this thing was traded at four hundred. I
[3:36] Speaker 4: think even I don't got the chart up here or
[3:38] Speaker 4: four hundred, but those were all funny days, weird days, right,
[3:42] Speaker 4: Nobody knew how to size this here. There is speculation,
[3:46] Speaker 4: a lot of conversation in our industry chat with investors
[3:52] Speaker 4: that there's shortcovering going on, and you might just see
[3:54] Speaker 4: actually the stocks taking a little bit of a step
[3:57] Speaker 4: back from the one hundred and thirty five percent up,
[3:59] Speaker 4: that there would be some short covering. I think the
[4:02] Speaker 4: better way to look at it and see the impact
[4:04] Speaker 4: that this is maybe looking at MERK but even there,
[4:06] Speaker 4: I think they could do some short covering and some
[4:08] Speaker 4: relief rally that actually maybe MRKA has got the ability
[4:11] Speaker 4: to get through this Truda pattern expiring that's coming up.
[4:15] Speaker 2: So availability, when do you think this, this new drug
[4:20] Speaker 2: or this new application can be approved and get onto
[4:24] Speaker 2: the marketplace.
[4:25] Speaker 4: I love the way that you struggled with that, Paul,
[4:27] Speaker 4: because this is not a drug. It is you go
[4:29] Speaker 4: in and you have to have it prepared for you.
[4:32] Speaker 4: It takes weeks. They take your tumor, you go home,
[4:36] Speaker 4: you get whatever therapy you get, and in the meantime
[4:39] Speaker 4: they're trying to identify what's different in your tumor to
[4:42] Speaker 4: develop this vaccine for you. So it's a personalized new
[4:46] Speaker 4: antigen therapy i NT so individualized invention therapy. So what
[4:51] Speaker 4: do we call this? So it's going to be funky manufacturing.
[4:55] Speaker 4: I'm pretty sure they'll fix it and figure it out.
[4:57] Speaker 4: This is merk we're dealing with, not just modern alone.
[5:01] Speaker 3: So that's how this works. And how will it be priced?
[5:05] Speaker 3: I don't know.
[5:05] Speaker 4: I'm pretty sure depending on the efficacy benefit of the
[5:08] Speaker 4: benefit magnitude, they'll price it accordingly.
[5:11] Speaker 3: I wouldn't be.
[5:12] Speaker 4: Surprised if it comes back at I don't know, three
[5:15] Speaker 4: four five hundred thousand dollars a year.
[5:18] Speaker 6: Three four five hundred thousand.
[5:20] Speaker 3: Yep, that's what these drugs are being launched that these days.
[5:23] Speaker 3: I can't tell you for a fashion because the company
[5:25] Speaker 3: has never talked about that.
[5:26] Speaker 2: So what I mean when you talk about a number
[5:29] Speaker 2: like that, how does insurance plan to that?
[5:31] Speaker 6: Don't you have to get insurance to buy off on
[5:33] Speaker 6: this too.
[5:34] Speaker 4: Yeah, it's very hard for insurance to insurance can start
[5:37] Speaker 4: and not paying up for your GLP one because the
[5:41] Speaker 4: benefit is so far away. But in cancer, they tend
[5:44] Speaker 4: to just accept it, right, And that is a conversation
[5:47] Speaker 4: that pharma.
[5:48] Speaker 3: Companies need to have.
[5:49] Speaker 4: At what point do you stop constantly raising the bar
[5:52] Speaker 4: on the price?
[5:54] Speaker 3: Right now, Let's be honest and fair.
[5:56] Speaker 4: Here they are making significant difference to people's ability to
[6:01] Speaker 4: live with cancer and live longer.
[6:03] Speaker 3: So here the question is I don't know.
[6:06] Speaker 4: And that's the price they're going to come out with,
[6:07] Speaker 4: But I wouldn't be surprised, especially given how complicated that
[6:10] Speaker 4: it is to produce this.
[6:12] Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
[6:19] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[6:22] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[6:25] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[6:29] Speaker 1: you get your podcasts, or watch us live on YouTube.
[6:33] Speaker 2: Get back to earnings here, luxury goods maker S day
[6:36] Speaker 2: Lauder put up some pretty good numbers. The stock is
[6:39] Speaker 2: up sixteen percent today, which is a good day. It's
[6:42] Speaker 2: still down about six percent year to day, but certainly
[6:45] Speaker 2: having a good day.
[6:46] Speaker 6: Today.
[6:47] Speaker 2: We check in with Debake and she covers all the
[6:49] Speaker 2: luxury companies for Bloomberg Intelligence. She's based in London. Here
[6:52] Speaker 2: what's going on with sday later? Deb, what'd you take
[6:55] Speaker 2: away from their quarterly report?
[7:00] Speaker 7: I think that this is the first time that we
[7:03] Speaker 7: get a clear indication and confidence that the profit recovery
[7:07] Speaker 7: growth program that they set about a couple of years
[7:10] Speaker 7: ago under the CEO Stephan Dela Fevary is really coming
[7:15] Speaker 7: to fruition. So in fiscal twenty six they have booked
[7:19] Speaker 7: the top end of the one point seven billion attributed
[7:23] Speaker 7: to the plan overall, and starting fiscal twenty seven they're
[7:27] Speaker 7: looking towards the top end of one point two billion.
[7:30] Speaker 7: It was one to one point two billion. They're looking
[7:32] Speaker 7: towards the top end in terms of that accumulating over
[7:35] Speaker 7: the coming year for savings.
[7:37] Speaker 3: Now that included things like.
[7:39] Speaker 7: Streamlining, general savings and ten thousand job cuts, and the
[7:44] Speaker 7: market is expecting and believing now that we can start
[7:47] Speaker 7: to see some of that coming through. We looked at
[7:50] Speaker 7: the four Q as clear acceleration. On the four Q
[7:54] Speaker 7: their constant currency came in a five couple of percent
[7:57] Speaker 7: ahead of the market. In particular, half of their business
[8:01] Speaker 7: is skincare and that achieved seven percent growth. But not
[8:04] Speaker 7: only that, we saw the op margin running from eight
[8:07] Speaker 7: point two towards nineteen percent, and so a big rise there,
[8:12] Speaker 7: and that's going to help them to deal with the
[8:15] Speaker 7: rest of businesses with fragrance and makeup and really get
[8:18] Speaker 7: those growth rates up to markets three to five percent.
[8:22] Speaker 7: So they're focusing twenty seven on three to five percent,
[8:26] Speaker 7: but we think they'll get towards the top end of that.
[8:28] Speaker 7: Consensus is on four they upgraded organic outlook sorry, operational
[8:35] Speaker 7: outlook for twenty twenty seven and the EPs was well ahead,
[8:40] Speaker 7: and I think when we look at twenty twenty seven
[8:42] Speaker 7: already we expect about five percent upgrade on EPs and
[8:45] Speaker 7: with some contribution running into twenty twenty eight as well.
[8:49] Speaker 5: Debor, we're seeing the fourth consecutive quarter of organic growth
[8:53] Speaker 5: for Esday Water. Could you break down a little bit
[8:55] Speaker 5: in terms of how much you perceive this beat to
[8:58] Speaker 5: be a true demand recovery versus the effects of restructuring.
[9:05] Speaker 7: So actually, if I look at the top line and
[9:08] Speaker 7: the organic growth and the way that that is made up,
[9:12] Speaker 7: they're getting you know, they're reporting market share growth by value,
[9:18] Speaker 7: so including volume plus price ability for their brands to
[9:22] Speaker 7: raise price in mainland China, in Korea, in Japan, and
[9:26] Speaker 7: Western Europe in the fourth quarter the rest over the
[9:30] Speaker 7: full year, and then also volume growth is positive in
[9:33] Speaker 7: the US, and I think with what they have planned,
[9:36] Speaker 7: the way they're focused and restructuring, that they'll get that
[9:38] Speaker 7: back to value growth too, so being able to command
[9:41] Speaker 7: pricing in the US. So it's them, but also if
[9:45] Speaker 7: we look at the US, one of the big things
[9:46] Speaker 7: we've talked about has been the drag across these luxury
[9:50] Speaker 7: goods type of companies, the beauty premium companies on travel retail,
[9:54] Speaker 7: and they're saying travel retail is clearly coming back in
[9:58] Speaker 7: mainland China and other areas across Asia. It's also moved
[10:01] Speaker 7: in to the East and to the West. So we're
[10:04] Speaker 7: seeing some of that travel retail also doing well coming
[10:08] Speaker 7: from the Americas into Europe, and that is helping to
[10:12] Speaker 7: absorb about one and a half to two percent of
[10:16] Speaker 7: growth being shaved from the top line from Middle East
[10:19] Speaker 7: for all of these companies. So it's some company contribution
[10:24] Speaker 7: and also some market synergies and contribution that are coming through.
[10:28] Speaker 6: Hey, dev about the thirty seconds left.
[10:30] Speaker 2: Are the Chinese consumers are they traveling or are they
[10:34] Speaker 2: buying mainly in China, maybe Japan a little bit.
[10:37] Speaker 6: Are they traveling to Europe and to the US.
[10:40] Speaker 7: We've certainly seen some of the movement to Europe, not
[10:44] Speaker 7: to what it was pre twenty nineteen, but certainly better
[10:48] Speaker 7: than last year, and we expect that to continue. There's
[10:51] Speaker 7: supposed to be some level of momentum in the second
[10:54] Speaker 7: half for the US less so some are starting to travel,
[10:59] Speaker 7: and there's ex actation that will pick up more in
[11:02] Speaker 7: twenty twenty seven.
[11:04] Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
[11:12] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live
[11:16] Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
[11:19] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[11:22] Speaker 1: you get your podcasts, or watch US live on YouTube.
[11:26] Speaker 2: Tarje reported some numbers. I guess they're pretty good. The
[11:29] Speaker 2: stocks up five percent today, But ma'am, I didn't. I
[11:32] Speaker 2: totally miss this.
[11:33] Speaker 6: Stocks up sixty four percent year to date. How did
[11:35] Speaker 6: I miss that? I mean target ripping it.
[11:38] Speaker 2: Craig Trudelle joins us, We're not talking about autos, despite
[11:41] Speaker 2: what the title says on my screen. We're going to
[11:43] Speaker 2: talk about just in general news here and target earnings.
[11:46] Speaker 2: Talk to us, Craig, what do you just what did
[11:48] Speaker 2: the company report here? And why is the street so
[11:49] Speaker 2: bullish on this name?
[11:51] Speaker 8: Yeah, I think this is a pretty clear story of
[11:53] Speaker 8: relatively new CEO, a company that has been really challenged
[11:57] Speaker 8: for a few years and has gone through some real
[12:00] Speaker 8: issues in terms of sales, having a clear strategy to
[12:03] Speaker 8: turn that around, and showing some traction putting up the
[12:06] Speaker 8: numbers to get Wall Street more comfortable with it. I
[12:08] Speaker 8: think you mentioned sort of Tarja and how you know,
[12:12] Speaker 8: this is a company that sort of built a reputation
[12:15] Speaker 8: for it's it's home goods and and you know, sort
[12:19] Speaker 8: of more discretionary items that may be lost out as
[12:23] Speaker 8: as the consumer you know, prioritized, you know, the the
[12:27] Speaker 8: items that were sort of musts, you know, groceries. So
[12:31] Speaker 8: to see the company sort of making it a more
[12:33] Speaker 8: concerted push in that in that department as of you know,
[12:37] Speaker 8: just in the last few months, even it seems to
[12:40] Speaker 8: be paying some dividends.
[12:41] Speaker 5: Here, great back to school shopping right, immediate test for
[12:46] Speaker 5: the second half of the year holiday even bigger what
[12:49] Speaker 5: would show you, what stat would show you that this
[12:52] Speaker 5: turnaround is complete versus in terms of like all of
[12:55] Speaker 5: these events that happened in the back half of the year.
[12:57] Speaker 8: Yeah, yeah, I mean, I do think it was interesting
[13:00] Speaker 8: for all the optimism about the results this morning, you know,
[13:03] Speaker 8: we are seeing a bit of a slowdown from one
[13:06] Speaker 8: quarter the next in terms of you know, sales increase,
[13:09] Speaker 8: so you know, the outlook for the full year, they
[13:12] Speaker 8: bump that up a percentage point to five percent. I
[13:15] Speaker 8: do think that this is still a story where, you know,
[13:18] Speaker 8: it remains to be seen, you know, just how sort
[13:21] Speaker 8: of established this turnaround is. But it is going to
[13:24] Speaker 8: be really important that the company keep this momentum up.
[13:28] Speaker 8: And it's not going to be easy, right, I mean,
[13:30] Speaker 8: we're we're hearing from other big box retailers this week.
[13:33] Speaker 8: Home Depot and Lows in particular come to mind. I
[13:36] Speaker 8: think Home Depot, of those of those two, you know,
[13:40] Speaker 8: had much better you know, results than than Low's did
[13:44] Speaker 8: this morning, and yet both of them had some real
[13:46] Speaker 8: consistent things to say about kind of the state of
[13:48] Speaker 8: the American consumer that you know, big home improvement projects,
[13:52] Speaker 8: for example, are things that the conditions of that, as
[13:55] Speaker 8: home depot put it, are just frozen. So you know,
[13:58] Speaker 8: the consumer may not have the sort of latitude to
[14:01] Speaker 8: to sort of splash out on back to school like
[14:03] Speaker 8: maybe they did years ago.
[14:05] Speaker 2: What I've learned just reading about retailers like a Target
[14:09] Speaker 2: or Walmart.
[14:10] Speaker 6: Is how important management is. I mean, man, I.
[14:14] Speaker 2: Mean, so talk to us about this new guy on
[14:15] Speaker 2: the new CEO, maybe what he is doing here.
[14:18] Speaker 8: Yeah, I mean, I do go back to this grocery store.
[14:21] Speaker 8: I think it's going to be interesting to see how
[14:23] Speaker 8: that plays out, in particular because you know, you don't
[14:26] Speaker 8: necessarily think of Target as being your sort of go
[14:28] Speaker 8: to grocer, and you know they're trying.
[14:31] Speaker 2: To I don't think about Walmart until Jen bartash Is
[14:34] Speaker 2: about ten years ago said.
[14:35] Speaker 6: No, the number one supermarket in this country is huge smart.
[14:38] Speaker 6: I know that absolutely.
[14:39] Speaker 2: Now you are we wouldn't know, yes, Yeah, And Walmart
[14:43] Speaker 2: and Costco.
[14:43] Speaker 8: You know that these are our two names that have
[14:45] Speaker 8: really sort of, you know, kind of taken over that space.
[14:48] Speaker 8: And it is interesting to me that Target is both
[14:52] Speaker 8: sort of leaning more into that segment of their business
[14:55] Speaker 8: and yet sort of taking kind of half steps. They're
[14:58] Speaker 8: not wanting to necessarily make the value play that you've
[15:01] Speaker 8: seen Walmart make and sort of you know, consistently made
[15:06] Speaker 8: over the years, whether or not they can sort of
[15:09] Speaker 8: walk this fine line of building that business but also
[15:13] Speaker 8: doing so profitably. That seems to be the play here
[15:15] Speaker 8: that Fidelki is making, and it's interesting to see the
[15:19] Speaker 8: street buy into it.
[15:22] Speaker 5: Has targeting your opinion, actually turned the corner on their
[15:24] Speaker 5: recovery or help or do we need a couple more quarters?
[15:27] Speaker 5: Do investors need a couple more quarters to really prove
[15:30] Speaker 5: that twnerund has happened?
[15:31] Speaker 8: Yeah, I think, you know, looking at just this year
[15:35] Speaker 8: and even just you know, this is a couple of
[15:39] Speaker 8: quarters now of real serious traction. I think the thing
[15:43] Speaker 8: that's that's of course going to be challenging is is
[15:46] Speaker 8: to kind of keep that going after what was a
[15:49] Speaker 8: very extended slump. Right, So this is a company that
[15:54] Speaker 8: it's not just coming out of of you know, just
[15:58] Speaker 8: a couple of bad quarters. This was a few years
[16:00] Speaker 8: and this wasn't just issues of of you know, product
[16:05] Speaker 8: fit or things like that. I think there was also
[16:07] Speaker 8: some some real questions about sort of overall brand damage right,
[16:10] Speaker 8: the handling of some of the sort of cultural like
[16:14] Speaker 8: moments of the last few years.
[16:16] Speaker 3: Uh.
[16:16] Speaker 8: Some people, you know, don't come back immediately to a
[16:19] Speaker 8: brand after that damage is done.
[16:22] Speaker 2: Seeing some reporting from the BBC that Target has revealed
[16:24] Speaker 2: it's received almost one billion dollars in tariff refunds. Wow,
[16:29] Speaker 2: A that's a big number. B Are other retaillers seeing
[16:32] Speaker 2: that too?
[16:33] Speaker 8: That is another uh sort of you know, the sort
[16:36] Speaker 8: of fly and I guess flying the ointment is is
[16:38] Speaker 8: a negative, but this is something that's very much in
[16:41] Speaker 8: the mix. And you know, even just last quarter I
[16:43] Speaker 8: think was we were starting to see some of this
[16:45] Speaker 8: flow through. Uh, and it is making a meaningful difference
[16:49] Speaker 8: for retailers. Uh, you know, and to see that this
[16:52] Speaker 8: sort of puts in takes across these companies in terms of,
[16:55] Speaker 8: you know, how they sort of account for this and
[16:58] Speaker 8: what their expectations are going forward. Are still having more
[17:01] Speaker 8: to come in terms of what they're able to wrap
[17:03] Speaker 8: in quickly.
[17:03] Speaker 2: I would have thought that it would have taken years
[17:05] Speaker 2: to get that money back, like it does for me
[17:07] Speaker 2: and anybody else who tries to get a refund.
[17:09] Speaker 8: Yeah. And it may be the case too that we
[17:11] Speaker 8: have sort of more refunds to speak of, right in
[17:15] Speaker 8: that there are more and more challenges to these various
[17:20] Speaker 8: elements of the Trump tariff attempts.
[17:23] Speaker 6: Here, stay with us. More from Bloomberg Intelligence coming up
[17:27] Speaker 6: after this.
[17:31] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[17:35] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[17:38] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[17:41] Speaker 1: you get your podcasts, or watch us live on YouTube.
[17:45] Speaker 6: Let's get back to the earnings here.
[17:46] Speaker 2: Lows they reported earning, Say cut its outlook for the
[17:49] Speaker 2: full year after posting results that missed Wall Street estimates,
[17:54] Speaker 2: showing how I stubbornly weak housing market is eroting the
[17:57] Speaker 2: home improvement retailers performance. Having not improved my home at all,
[18:02] Speaker 2: I would know a hammer from a screwdriver. I'm the
[18:04] Speaker 2: last person to talk to. That's why we turned to
[18:06] Speaker 2: the pros. Lindsay, Dutch consumer hardline senior analysts at Bloomberg Intelligence.
[18:11] Speaker 2: Lindsay talk to us about Low's What are we what
[18:13] Speaker 2: are they saying about their business and their.
[18:15] Speaker 9: Consumer Hi, Paul, thanks for having me. Yeah, Low's results
[18:20] Speaker 9: came in a little bit different than what we saw
[18:22] Speaker 9: from Home Depot yesterday, you know, we saw weaker than
[18:26] Speaker 9: expected sales and that was really on sort of a
[18:29] Speaker 9: weak DIY consumer people like you not looking to improve
[18:33] Speaker 9: their goals. Pro spending was solid, but you know, same
[18:38] Speaker 9: source of sales zero point two percent increase, you know,
[18:42] Speaker 9: you know, very very minimal, when when Low's was really
[18:44] Speaker 9: expecting sort of an acceleration in that second quarter from
[18:47] Speaker 9: first quarter and it didn't materialize.
[18:51] Speaker 5: In your opinion, right, So tell me a little bit
[18:53] Speaker 5: more about this vifurcation between Home Depot and Low's. Why
[18:58] Speaker 5: one petting better than expected sales? Why under pressure for
[19:03] Speaker 5: the other?
[19:04] Speaker 9: Yes, I actually think this is one of the most
[19:06] Speaker 9: interesting things that came out of getting more details on
[19:09] Speaker 9: the results from their earnings call this morning. So with
[19:12] Speaker 9: Home Depot, we saw a build in same store sales
[19:15] Speaker 9: throughout the quarter, June stronger than May, July stronger than June.
[19:20] Speaker 9: For Low's we saw a very weak July. And what
[19:25] Speaker 9: it seems to be was the case is, you know,
[19:27] Speaker 9: some of Low's's peers, probably including Home Depot though they
[19:31] Speaker 9: weren't named specifically, and other home centers, you know, they
[19:36] Speaker 9: got those tariff refunds in June. They redeployed them by
[19:40] Speaker 9: you know, cutting prices and really trying to draw consumers
[19:43] Speaker 9: in for those big July sales events, and Low's probably
[19:48] Speaker 9: lost share in the month of July. They saw decline
[19:52] Speaker 9: in same store sales with that customer choosing to shop
[19:55] Speaker 9: elsewhere for because of their focus on value interest rates.
[20:00] Speaker 2: It seems to be we're in a higher for longer environment.
[20:03] Speaker 2: How does that impact you know, some of these the
[20:05] Speaker 2: lows the home depots of the world. Presumably people aren't
[20:08] Speaker 2: going to be buying a lot of houses. How does
[20:10] Speaker 2: that impact their business?
[20:12] Speaker 9: Right, so, low housing turnover, you know, affordability, you know,
[20:16] Speaker 9: those are major factors for these businesses. You know, they're
[20:20] Speaker 9: they're awaiting a rebound in that market. We don't know
[20:23] Speaker 9: when it will come, but you know, these management teams
[20:26] Speaker 9: are telling us that there is strong pent up a
[20:29] Speaker 9: demand and so when that rebound found comes, you know,
[20:32] Speaker 9: they're they're both pretty well positioned to gain, you know,
[20:36] Speaker 9: a piece of that pie. I do think, you know,
[20:39] Speaker 9: like there is still some spending happening. You know that's
[20:42] Speaker 9: probably coming from higher income consumers. You know, they're doing
[20:46] Speaker 9: smaller renovation projects right now. It sounds like our sort
[20:49] Speaker 9: of maintenance and repair projects rather than like doing a
[20:52] Speaker 9: complete reno. So we're seeing some spending obviously muted that
[20:57] Speaker 9: that is causing low growth for both of these companies,
[21:02] Speaker 9: but they're both trying to make sure that they're investing today,
[21:06] Speaker 9: you know, for that ultimate rebound, so that they can
[21:09] Speaker 9: win share and gain spending in the long term.
[21:13] Speaker 5: Could you talk a little bit about how inflation concerns
[21:15] Speaker 5: and ge political uncertainty is really impacting the consumer as
[21:19] Speaker 5: it pertains too lows, What is the reasoning behind their
[21:25] Speaker 5: three Q outlook, How does that really work into all
[21:28] Speaker 5: of this?
[21:30] Speaker 9: Yeah, so, I think what we learned about the consumer,
[21:34] Speaker 9: you know, I don't know that there has been a
[21:35] Speaker 9: drastic step down, but the consumer is still very focused
[21:41] Speaker 9: on value, very selective with where they're spending. So there's
[21:46] Speaker 9: not necessarily a major pullback as a result of you
[21:49] Speaker 9: know what we've seen so far this year. But you know,
[21:52] Speaker 9: consumers are just increasingly becoming more focused and more selective
[21:56] Speaker 9: with their spending. You know, we've seen Walmart gaining share
[21:58] Speaker 9: with higher income consumers. I think home depots success with
[22:03] Speaker 9: their July sales is probably you know, someone who was
[22:07] Speaker 9: thinking about upgrading and then they saw a price that
[22:09] Speaker 9: they couldn't pass up on something like a grill. So
[22:12] Speaker 9: I think that's what we're just seeing is just continued selectivity,
[22:16] Speaker 9: maybe getting like slightly more selective, but no like drastic
[22:20] Speaker 9: change in that overall consumer picture.
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