# Meta Says It Will Pay Up to $18 Billion Over Social Media Claims

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 26 Aug 2026, 25 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/458de1af-6c7d-4c74-bc01-b4b20110d0be/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 Scarlet Fu -Matthew Schettenhelm, Bloomberg Intelligence Media Litigation Analyst, discusses breaking news on Meta. Meta Platforms Inc. agreed to pay up to $18 billion in landmark settlements to resolve allegations that the company deliberately designed Facebook and Instagram to encourage compulsive use among young users. The agreement requires Meta to put new guardrails on its platforms, including restricting how much time youths can scroll and preventing them from switching off certain safety settings without parental consent. The settlement includes payments to resolve a variety of claims across multiple lawsuits, with some payments contingent upon other social media companies adopting similar platform changes and making their own payouts. -Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses earnings from Kohl’s and Abercrombie & Fitch. Kohl’s turnaround attempt showed some progress after the retailer raised its annual earnings outlook, but it still doesn’t see sales growth this year. Abercrombie & Fitch namesake brand is expected to post net sales growth of 4.7% in the second quarter, a reversal from a 5.3% decline in the same period a year earlier. -Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst, discusses earnings from Bath & Body Works and Williams-Sonoma. Bath & Body Works shares fell after the company forecast year-over-year net sales declines for the third quarter. Williams-Sonoma shares drop as much as 5.7%, the most intraday since February 23, even after the home furnishing retailer reported a beat-and-raise quarter. -- Diana Rosero Pena, Bloomberg Intelligence Consumer Staples Analyst, discusses earnings from J M Smucker. JM Smucker Co. raised its full-year outlook for sales and profit, bolstered by growth in its Uncrustables sandwiches and coffee brands. Smucker is riding the growth of its hit products to offset broader weakness in the packaged-food segment as consumers become increasingly selective in their spending. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts. Radio. News.
[0:09] Speaker 3: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[0:13] Speaker 3: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[0:16] Speaker 3: Auto with the Bloomberg Business App. Listen on demand wherever
[0:19] Speaker 3: you get your podcasts or watch us live on YouTube.
[0:24] Speaker 4: Paul, the big story of the morning, of the day,
[0:27] Speaker 4: certainly in Silicon Valley, is Meta agreeing to pay up
[0:31] Speaker 4: to $ 16. 7 billion to settle the social media case brought
[0:35] Speaker 4: on by 29 states.
[0:37] Speaker 5: Yeah, that number is big, but I'm reading some notes
[0:40] Speaker 5: from our next guest. There's some serious usage issues.
[0:44] Speaker 6: Changes coming.
[0:45] Speaker 1: Exactly.
[0:45] Speaker 4: All right, let's bring in Matthew Schettenhelm. He's our media
[0:48] Speaker 4: litigation analyst on this settlement. And Matt, Paul just mentioned
[0:53] Speaker 4: all these usage changes that META will or has agreed
[0:56] Speaker 4: to implement. Does that mean that it can't deny that
[1:01] Speaker 4: it was at fault? I mean, you know how most
[1:02] Speaker 4: settlements end with not admitting any kind of.
[1:06] Speaker 1: Not guilt.
[1:07] Speaker 7: What's the word?
[1:08] Speaker 1: Responsibility. Responsibility, I guess.
[1:11] Speaker 4: Not admitting to any kind of concessions, really, when it
[1:14] Speaker 4: comes to guilt for what happened.
[1:16] Speaker 1: Is that the case here, or the fact.
[1:17] Speaker 4: That it's agreed to use such changes means that it's
[1:20] Speaker 4: agreed that it was at fault?
[1:24] Speaker 2: This is certainly giving the states a part of what
[1:27] Speaker 2: they asked for. Now, I want to be careful because
[1:29] Speaker 2: this is a very detailed settlement agreement, and I haven't
[1:33] Speaker 2: read in depth exactly what the company's admitting to or not.
[1:37] Speaker 2: And I suspect it's still not admitting fault in any
[1:40] Speaker 2: sort of formal way. But in an informal way, you're
[1:43] Speaker 2: absolutely right. This is actual changes to how the service
[1:49] Speaker 2: operates for teams, right? And it risks, at least at
[1:53] Speaker 2: the edges, discouraging them from using it quite as often.
[1:58] Speaker 2: And so we're talking about two-hour time limits on usage
[2:03] Speaker 2: and other related terms, mandating that they take breaks from
[2:08] Speaker 2: time to time in sort of an effective way. It
[2:11] Speaker 2: was discussed in trial. Hey, no one actually uses that feature,
[2:16] Speaker 2: and most kids just ignore it. This is kind of
[2:19] Speaker 2: making those things work a little more aggressively. and more effectively.
[2:25] Speaker 2: And in theory, down the road, that could have an
[2:27] Speaker 2: impact on how many eyeballs are seeing ads on the service.
[2:31] Speaker 5: I mean, some of these behavioral remedies are major in
[2:35] Speaker 5: my mind. Two-hour daily limit, as you mentioned, nighttime lockout,
[2:39] Speaker 5: school hours, push notifications will be disabled, most of them,
[2:42] Speaker 5: mandatory breaks, age checks. I mean, these are significant behavioral changes.
[2:48] Speaker 5: I would think, what's the company, I would think this
[2:51] Speaker 5: would have a impact kind of the company's operations?
[2:55] Speaker 2: I think it's a longer-term impact because one thing that
[3:00] Speaker 2: was looked at in the case is what percentage of
[3:03] Speaker 2: the company's revenue actually comes from these teens and even
[3:08] Speaker 2: younger than teens, under 13. It was a relatively small
[3:12] Speaker 2: amounts in terms of right now, how much revenue are
[3:16] Speaker 2: we getting from them? Where this starts to impact is
[3:19] Speaker 2: longer term, because those young users become your adults that
[3:25] Speaker 2: are hooked on the service. And these changes risk denting that.
[3:30] Speaker 2: If when you're 17, you're not using your social media
[3:34] Speaker 2: as much, you're probably not using it as much when
[3:37] Speaker 2: you're 17 to 35.
[3:37] Speaker 5: Yeah.
[3:40] Speaker 1: No, that's a really important point.
[3:41] Speaker 4: I think about my son who's 20 and is always
[3:43] Speaker 4: scrolling on these social media services. And, you know, he's
[3:46] Speaker 4: not going to have to be subject to any of
[3:48] Speaker 4: these restrictions, but, you know, he's hooked in there like completely. So, Matt, question.
[3:54] Speaker 4: The changes that MetaGreed to make are good for 10 years.
[3:56] Speaker 4: Why is there this time limit?
[3:59] Speaker 2: Yeah, I think this was a negotiated settlement. And there's
[4:02] Speaker 2: a lot of details in this agreement that we need
[4:05] Speaker 2: to work through. I think some of these conditions are
[4:09] Speaker 2: contingent upon other industry players also adopting them. So you're
[4:17] Speaker 2: right to point out the time limit. But there's also
[4:20] Speaker 2: some of the strictest versions of this may not apply
[4:23] Speaker 2: if TikTok or other peers I see. Don't adopt them.
[4:28] Speaker 2: So there's a lot of close reading we need to
[4:30] Speaker 2: do on exactly how this works. And all of this,
[4:33] Speaker 2: of course, is in addition to the monetary terms and
[4:37] Speaker 2: the broader litigation. This is just one piece of a
[4:40] Speaker 2: multi-layered piece of litigation facing the company.
[4:44] Speaker 4: I find it interesting that we had heard that Mark
[4:47] Speaker 4: Zuckerberg was going to be testifying.
[4:49] Speaker 1: Lawyers had said that they would call him to testify.
[4:52] Speaker 4: So I'm guessing that this settlement means Mark Zuckerberg would
[4:55] Speaker 4: not need to testify?
[4:57] Speaker 2: That's what I would expect. So the parties filed this
[5:00] Speaker 2: consent judgment before the court this morning. I don't expect
[5:04] Speaker 2: her to stand in the way of them reaching into
[5:07] Speaker 2: this agreement. So that trial that's been going on in
[5:10] Speaker 2: Oakland should end with this development. What it won't stop
[5:16] Speaker 2: is other cases brought by school districts. There's over 1,200
[5:21] Speaker 2: school districts across the United States that are suing Meta
[5:23] Speaker 2: on that basis. There are personal injury lawsuits, individuals who
[5:27] Speaker 2: say they're harmed and they're suing the company. All of
[5:31] Speaker 2: that continues and doesn't seem to be displaced by this agreement.
[5:34] Speaker 1: But that's a little bit down the road.
[5:36] Speaker 2: That's not this trial that that's ongoing in Oakland right now.
[5:39] Speaker 2: That one should come to an end. So Zuckerberg should
[5:41] Speaker 2: be off the hook, at least in the near term.
[5:45] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[5:52] Speaker 3: You're listening to the Bloomberg Intelligence Podcast.
[5:55] Speaker 1: Catch us live weekdays at 10 a.m.
[5:57] Speaker 3: Eastern on Apple CarPlay and Android Auto with the Bloomberg
[6:00] Speaker 3: Business App. Listen on demand wherever you get your podcasts
[6:03] Speaker 3: or watch us live on YouTube.
[6:06] Speaker 5: Average property and Fitch, a good quarter. I would say
[6:09] Speaker 5: a really good quarter. The stock's up 38% year to date.
[6:14] Speaker 5: I'm sorry, just today. That brings it to a positive
[6:17] Speaker 5: gain for the year. It was trading down on the
[6:19] Speaker 5: year prior to today. So a big, big turnaround there.
[6:22] Speaker 5: Let's break that down, plus some other retailers reporting numbers.
[6:25] Speaker 5: We do that with Mary Ross Gilbert, senior equity analyst.
[6:27] Speaker 5: She covers all the retail stuff for Bloomberg Intelligence. She's
[6:29] Speaker 5: based out there in L.A. So, Mary, I mean, again,
[6:33] Speaker 5: the stock up 38% today. That doesn't happen very often.
[6:36] Speaker 5: What did Abercrombie & Fitch report?
[6:39] Speaker 8: Well, Paul, Abercrombie & Fitch reported a comparable sales increase
[6:44] Speaker 8: at its namesake brand. It was up 4%. And you
[6:47] Speaker 8: could say, well, look, they cycled at 11% decline last
[6:52] Speaker 8: year in.
[6:52] Speaker 1: The second quarter.
[6:53] Speaker 8: But if you look at the three-year stacked growth, figure,
[6:58] Speaker 8: that was up 32%, 32 and a half percent to
[7:02] Speaker 8: be precise, is the three year stacked increase, and they
[7:05] Speaker 8: still delivered a 4% increase. So that was really encouraging,
[7:09] Speaker 8: and when you look at the total sales, because of
[7:11] Speaker 8: course they're expanding, and with some wholesale opportunities, their total
[7:15] Speaker 8: sales were up 8% for the brand. Hollister, this is
[7:21] Speaker 8: their Gen Z brand, that was down 4% in the quarter,
[7:26] Speaker 8: and analysts were looking for sales to be down less
[7:29] Speaker 8: than 1%, but They were cycling a 19% comp increase
[7:36] Speaker 8: a year ago. And so really what kind of overrode
[7:40] Speaker 8: that is the fact that the name brand, the namesake
[7:44] Speaker 8: brand did really well. And the fact that we're seeing
[7:47] Speaker 8: improving trends in the third quarter so far, starting off
[7:51] Speaker 8: strong for both brands. So we could see the Hollister
[7:55] Speaker 8: brand also return to positive comps. But their overall sales...
[7:58] Speaker 8: For Hollister, we're up 2%.
[8:00] Speaker 4: It's kind of remarkable when you go into an Abercrombie &
[8:03] Speaker 4: Fitch now how different it is from its heyday in
[8:05] Speaker 4: the 90s. I mean, for one thing, the music is
[8:08] Speaker 4: not like so loud that you can't hear anything. And
[8:11] Speaker 4: it's a lot brighter. And it's catered. women a lot
[8:15] Speaker 4: more than it ever used to be. And of course,
[8:17] Speaker 4: that might reflect the sensibilities and the strategic decisions of
[8:20] Speaker 4: the CEO, Fran Horowitz, as opposed to Mike Jeffries, who
[8:24] Speaker 4: really put his stamp on the company. But Mary, just
[8:28] Speaker 4: talk to us a little bit about the dependence on
[8:31] Speaker 4: young women, or maybe not even young women, millennial women,
[8:35] Speaker 4: as the key audience for the close now.
[8:40] Speaker 3: Yeah.
[8:41] Speaker 8: So, Scarlett, you really hit on it. And that is that,
[8:44] Speaker 8: you know, going back to the 90s when it was
[8:46] Speaker 8: really more of a high school, college student. Now it's
[8:51] Speaker 8: really we're talking about millennials. So those are think about
[8:55] Speaker 8: customers in their 30s and 40s. That's really where Abercrombie &
[9:00] Speaker 8: Fitch is going after, and it resonates. And not only
[9:04] Speaker 8: is it that consumer in terms of the age demographic,
[9:08] Speaker 8: but from an income demographic perspective, they tend to be
[9:12] Speaker 8: higher earning. So that's in the $ 100, 000 to $ 200, 000 household
[9:14] Speaker 8: income range. So that's really how that brand has shifted,
[9:21] Speaker 8: just to your point.
[9:23] Speaker 7: And also, they're really looking.
[9:24] Speaker 8: To have more of a balanced business, like half and
[9:27] Speaker 8: half men versus women. And you'll see that in the stores.
[9:31] Speaker 8: It's divided straight in half, men on one side, women
[9:35] Speaker 8: on the other side in terms of assortments.
[9:38] Speaker 1: Promotions.
[9:39] Speaker 5: How promotional were they in the quarter? And kind of
[9:41] Speaker 5: what are you hearing from some of the other retailers?
[9:44] Speaker 9: Yes, Paul.
[9:45] Speaker 8: So you're bringing up a good point. They were actually
[9:47] Speaker 8: able to do more full price business in the quarter.
[9:50] Speaker 8: So that helped them on the margin side, you know,
[9:52] Speaker 8: within the Abercrombie brand. This is distinct and different from
[9:57] Speaker 8: the story that we're talking about here with Abercrombie. If
[10:00] Speaker 8: you talk about Kohl's, Kohl's delivered another comp sales decline.
[10:05] Speaker 8: And this follows, you know, three years stacked sales. sales
[10:09] Speaker 8: declines in the double digits. So Kohl's is still struggling
[10:14] Speaker 8: to make a comeback. We did see some encouraging signs
[10:17] Speaker 8: when we walked the stores more recently. We're seeing much
[10:21] Speaker 8: better merchandising. The store is starting to look more cohesive.
[10:24] Speaker 8: But we also saw that it's a lot more promotional
[10:27] Speaker 8: right now. That should benefit them in the third quarter,
[10:31] Speaker 8: and they might be able to inch closer to break even.
[10:34] Speaker 8: But nonetheless, it just goes to show you that off price,
[10:37] Speaker 8: I think, is really making a dent in that business
[10:40] Speaker 8: and why you're continuing to see declines there, despite the
[10:44] Speaker 8: improvements there. that they're seeking to make. And if you
[10:47] Speaker 8: look at Sephora, which has been about a $ 2 billion business,
[10:52] Speaker 8: their comp sales were down 4%. So here was a
[10:55] Speaker 8: business that initially was showing strength, and that's a business
[11:00] Speaker 8: that draws repeat customers, but again, still seeing weakness there
[11:06] Speaker 8: as they try to you know, improve the assortments there,
[11:10] Speaker 8: bringing in a lot more newness. It just goes to
[11:13] Speaker 8: show you there's still a lot more to go there
[11:15] Speaker 8: at Kohl's. And of course, they're catering to a lower
[11:19] Speaker 8: to middle income consumer, talking about a K-shaped difference there.
[11:23] Speaker 4: So when it comes to Kohl's, it feels like it's
[11:25] Speaker 4: been in turnaround mode for a long time. I can't
[11:28] Speaker 4: remember when we weren't talking about it being in turnaround mode.
[11:31] Speaker 4: And you mentioned Sephora and how that was a bright
[11:33] Speaker 4: light for the company. Outside of Sephora, what other growth
[11:37] Speaker 4: drivers does Kohl's have?
[11:39] Speaker 1: And very quickly here.
[11:41] Speaker 8: Yeah, so Scarlett, key point, it's really the private brands,
[11:45] Speaker 8: and that's where you're seeing strength. So we noticed in
[11:47] Speaker 8: the stores that their private brands, you know, it's always
[11:50] Speaker 8: been around that sort of 33%, 34% of sales. It
[11:53] Speaker 8: looked like it was higher in the stores. They were
[11:56] Speaker 8: much deeper. And again, all promotional. The whole store felt
[11:59] Speaker 8: like it was on promotion and probably 20% to 25%
[12:03] Speaker 8: of the store on clearance. But the junior's business was
[12:06] Speaker 8: up 10%. So they are seeing some, you know, bright
[12:09] Speaker 8: spots there. Their core credit card customer up 1% after
[12:13] Speaker 8: being down, you know, previously. So continuing to see improvement there.
[12:19] Speaker 1: Stay with us.
[12:19] Speaker 3: More from Bloomberg Intelligence coming up after this. You're listening
[12:26] Speaker 3: to the Bloomberg Intelligence Podcast. Catch us live weekdays at
[12:30] Speaker 3: 10 a.m. Eastern on Apple CarPlay and Android Auto with
[12:33] Speaker 3: the Bloomberg Business App. Listen on demand wherever you get
[12:36] Speaker 3: your podcasts or watch us live on YouTube.
[12:40] Speaker 4: It is still earning season, and the retail companies are
[12:43] Speaker 4: busy reporting their results. And we've got a read on
[12:47] Speaker 4: two different parts of the consumer retail economy. Bath &
[12:52] Speaker 4: Body Works, sales sliding, and that is having an effect
[12:57] Speaker 4: on the share price, certainly, this morning. And then you
[12:59] Speaker 4: have Williams-Sonoma, whose sales momentum has extended. Bath & Body Works,
[13:04] Speaker 4: for the moment, up 3.5%. Williams-Sonoma down 2.5%. Lindsay Dutch
[13:09] Speaker 4: is with us right now. She is our Consumer Hardline
[13:12] Speaker 4: Senior Analyst. And Lindsay, if we just take a step back,
[13:15] Speaker 4: first of all, and look at the headlines, look at
[13:17] Speaker 4: the numbers out of Williams-Sonoma and Bath & Body Works,
[13:20] Speaker 4: what kind of story does it tell about consumer spending
[13:23] Speaker 4: and the willingness of consumers to spend on little treats
[13:26] Speaker 4: and bigger, more expensive investments like cookware?
[13:32] Speaker 6: Thanks, Scarlett, for having me. Yes, I think that there's
[13:35] Speaker 6: two different stories happening here. You know, I think the
[13:37] Speaker 6: Bath and Body Works, the stock is up, sort of
[13:40] Speaker 6: results better than feared. But as you mentioned, they're seeing
[13:43] Speaker 6: sales decline and sort of pressure on profit if you
[13:47] Speaker 6: take out any tariff refunds from the result. That company
[13:51] Speaker 6: is going through a little bit of a transformation. They're
[13:53] Speaker 6: kind of cutting interest. So, some of that decline is
[13:57] Speaker 6: sort of a contraction in the assortment that they have
[13:59] Speaker 6: going on with this strategy to revive growth. But the
[14:03] Speaker 6: other piece is, you know, they generally cater towards, you know,
[14:07] Speaker 6: like a broader, like the average U.S.
[14:10] Speaker 7: Consumer.
[14:11] Speaker 6: And you can see, you know, there is some pressure there.
[14:13] Speaker 6: Those consumers need big discounts to come and spend even
[14:17] Speaker 6: on a lower-price item that you'd find at a bath
[14:20] Speaker 6: and body. And by contrast, if we jump to Williams-Sonoma,
[14:24] Speaker 6: you know, they had very strong results, sales growth of
[14:27] Speaker 6: almost 7% in the quarter, super strong across all of
[14:31] Speaker 6: their brands. And I think the bar, you know, for
[14:35] Speaker 6: investors for this company is just very, very high, and
[14:38] Speaker 6: their guidance raised just didn't meet that high bar.
[14:41] Speaker 5: So, what are these companies, just across your coverage, what's
[14:45] Speaker 5: the general feel about the consumer here, because we talk
[14:50] Speaker 5: about the K-shaped economy and some folks are saying maybe
[14:52] Speaker 5: that's changing a little bit. What are your companies kind
[14:55] Speaker 5: of suggesting?
[14:57] Speaker 6: I think the results so far still sort of indicate
[15:00] Speaker 6: the strong divide in the K-shape economy, sort of lower
[15:04] Speaker 6: to middle, pulling back a little bit more, getting a
[15:07] Speaker 6: little bit more selective, going after the value. And then
[15:11] Speaker 6: we have higher income. They are selective, but they are
[15:14] Speaker 6: still spending. So Williams-Sonoma does cater to a higher income consumer.
[15:20] Speaker 6: They said home furnishings industry was about flat in the quarter,
[15:23] Speaker 6: but again, as I mentioned, 7% sales growth for that company.
[15:28] Speaker 6: And they saw growth across furniture and non-furniture categories. So
[15:32] Speaker 6: that higher income consumer is still spending, especially if the
[15:36] Speaker 6: product is new or if it really speaks to them
[15:40] Speaker 6: in terms of a collaboration.
[15:42] Speaker 4: So does this increasing divide between higher income consumers and frankly,
[15:46] Speaker 4: everyone else mean that more merchants, more retailers are actively
[15:50] Speaker 4: choosing to chase the higher income consumer and cater to
[15:54] Speaker 4: that group of consumers rather than sell to the mass consumer?
[16:00] Speaker 1: I think that's a really hard pivot to make.
[16:03] Speaker 6: So if you think of a Bath & Body Works,
[16:05] Speaker 6: for example, they did just earlier this week announce a
[16:08] Speaker 6: new collection that kind of sounds like what you're describing,
[16:11] Speaker 6: going after more of a higher-end consumer. It included home
[16:15] Speaker 6: decor and higher-price items. And I guess that maybe is
[16:20] Speaker 6: some effort from a mainstream retailer trying to get that advantage.
[16:25] Speaker 7: But I think.
[16:26] Speaker 6: executing on that and really pulling in that higher income
[16:29] Speaker 6: consumer out of nowhere is very difficult to do. I
[16:32] Speaker 6: think a company like Williams Sonoma, they have brands that
[16:36] Speaker 6: already cater to that consumer. The consumer already knows to
[16:39] Speaker 6: search for them online. And so I think executing on
[16:44] Speaker 6: that pivot would be extremely hard.
[16:47] Speaker 5: Lindsay, I'm reluctant to ask this question because it suggests
[16:50] Speaker 5: that summer is almost over. But Holiday shopping. What are
[16:54] Speaker 5: the trends?
[16:55] Speaker 6: Really, Paul?
[16:56] Speaker 1: You're going there? I'm going there. I'm going there. What
[16:59] Speaker 1: are you hearing from your companies?
[17:01] Speaker 9: Right.
[17:01] Speaker 6: So I think excluding Williams-Sonoma, the broad trend is very cautious,
[17:08] Speaker 6: sort of a cautious look into second half. Most guidance
[17:12] Speaker 6: changes sort of indicate more of a potential slowing in
[17:16] Speaker 6: sales growth, continued margin pressure, and just sort of very
[17:21] Speaker 6: much uncertain or needing to use a lot of discounts
[17:24] Speaker 6: to draw that shopper. I think Williams-Sonoma would be the exception.
[17:28] Speaker 6: You know, they raised their guide that they, based on
[17:30] Speaker 6: the midpoint, should get at least 4% growth in that
[17:33] Speaker 6: back half, and they kind of chopped off that. sort
[17:36] Speaker 6: of what they were thinking might be the worst case
[17:38] Speaker 6: for the year.
[17:39] Speaker 1: So broadly, I.
[17:41] Speaker 6: Think there's a lot of caution going into holiday. Back-to-school
[17:45] Speaker 6: comments have been minimal so far, but not a lot
[17:49] Speaker 6: of indication of strong momentum for that holiday season.
[17:53] Speaker 4: That's exactly where I wanted to go. I mean, now
[17:55] Speaker 4: is the time to look at back to school, not
[17:56] Speaker 4: the holidays, not yet at least, Paul. So when it
[18:00] Speaker 4: comes to back to school, does that tend to be
[18:02] Speaker 4: a leading indicator for how holiday sales will shape up
[18:05] Speaker 4: or is there not really much of a correlation?
[18:07] Speaker 6: It can be.
[18:09] Speaker 7: So William Sonoma talked about it slightly.
[18:11] Speaker 6: They had acquired Dormify and they relaunched that. They saw
[18:15] Speaker 6: success with, you know, back to college students and their
[18:19] Speaker 6: Pottery Barn Kids brand did well this quarter. Not a
[18:23] Speaker 6: lot of detail, but again, you know, a lot of
[18:26] Speaker 6: their benefit is coming from that higher income brand. When
[18:29] Speaker 6: I think back to yesterday, Dick's results, they didn't really
[18:33] Speaker 6: comment on back to school, kind of gives you the
[18:36] Speaker 6: indication that perhaps the performance from Foot Locker was not
[18:40] Speaker 6: as good as they were expecting. And again, I think
[18:43] Speaker 6: that is reflecting pressure on a lower income consumer for that.
[18:48] Speaker 1: Stay with us.
[18:49] Speaker 3: More from Bloomberg Intelligence coming up after this. You're listening
[18:56] Speaker 3: to the Bloomberg Intelligence Podcast. Catch us live weekdays at
[18:59] Speaker 3: 10 a.m. Eastern on Apple CarPlay and Android Auto with
[19:02] Speaker 3: the Bloomberg Business App. Listen on demand wherever you get
[19:05] Speaker 3: your podcasts or watch us live on YouTube.
[19:09] Speaker 5: Earnings continue to come in. And we heard from J.M. Smuck,
[19:13] Speaker 5: our good friends out there in Orville, Ohio. They raised
[19:16] Speaker 5: a four year outlook for sales and profit.
[19:19] Speaker 7: That's a good thing.
[19:20] Speaker 5: Let's break that down a little bit. Diana Rossetto-Pena, Consumer
[19:23] Speaker 5: Staples Analyst for Bloomberg Intelligence. She joins us live here
[19:26] Speaker 5: in studio. What do we hear from our friends at Smuckers?
[19:29] Speaker 9: Yeah, so the biggest surprise was volume. At the beginning
[19:32] Speaker 9: of the year, management entered the year as a, I
[19:37] Speaker 9: would say, conservative mode. They still expect volumes to remain
[19:43] Speaker 9: relatively flat for the year compared to the 1% decline
[19:47] Speaker 9: that they experienced.
[19:50] Speaker 7: Previously. So, you know, it wasn't just one product.
[19:54] Speaker 9: It was an over, you know, gains all over the board,
[19:58] Speaker 9: like Uncrustables, Coffee, you know, Meow Mix, all were contributors
[20:05] Speaker 9: to the volume growth.
[20:09] Speaker 5: What do they say about their kind of longer-term top-line growth?
[20:12] Speaker 5: Is this a GDP-type story? Is it one of those
[20:15] Speaker 5: companies where you look at consumer products and staples and
[20:18] Speaker 5: things like that? Is that kind of where the market is?
[20:21] Speaker 9: So, yeah, that is the benchmark, I would say. In
[20:25] Speaker 9: the past few years, these companies have tried to compensate
[20:29] Speaker 9: with innovation, premiumization of their products, so they have an
[20:35] Speaker 9: argument for a better market. pricing compared to what you
[20:41] Speaker 9: will normally follow through GDP. So I would say brand
[20:46] Speaker 9: equity has been playing a big part of sales growth,
[20:51] Speaker 9: not only for Smucker, but for all of these companies.
[20:54] Speaker 9: It seems that while Americans are complaining about basket pricing,
[21:01] Speaker 9: they're still going after their favorite brands.
[21:03] Speaker 1: The stock is up.
[21:04] Speaker 5: 3.5% today. It's up 33% year-to-date, a 52-week high. I
[21:09] Speaker 5: haven't looked at the graph. It's probably close to an
[21:11] Speaker 5: all-time high.
[21:13] Speaker 2: Why?
[21:14] Speaker 7: It really, it seems that- It's not an AI story,
[21:17] Speaker 7: is it?
[21:18] Speaker 4: No.
[21:19] Speaker 9: I mean, they do some type of AI for their
[21:22] Speaker 9: products and stuff, so for marketing and stuff like that,
[21:25] Speaker 9: but it's not, it's definitely not that. It seems that
[21:28] Speaker 9: they have been trimming some portfolio and getting rid of
[21:32] Speaker 9: the least performing brands, and that seems to be working
[21:36] Speaker 9: in their favor.
[21:37] Speaker 5: So what's the Industry saying now that we've got several
[21:40] Speaker 5: years of evidence of the GLP-1s. Can we look back
[21:44] Speaker 5: and say it has had an impact on these consumer
[21:47] Speaker 5: staples companies, these food companies, or not so much? What
[21:50] Speaker 5: do we know?
[21:51] Speaker 7: I would say so.
[21:52] Speaker 9: Penetration for GLP-1 products have been increasing significantly, I would say,
[21:57] Speaker 9: in the past year. People seem to be a little
[22:00] Speaker 9: bit more inclined to try them. PepsiCo actually said that
[22:05] Speaker 9: they were going to not pay for GLP products.
[22:12] Speaker 7: Through their insurance. Really? That was a thing that we
[22:16] Speaker 7: saw yesterday.
[22:17] Speaker 2: Wow.
[22:17] Speaker 5: Yeah.
[22:18] Speaker 9: Yeah. Especially from PepsiCo. So that's a little on the nose.
[22:23] Speaker 9: But definitely they have been some headwinds. And obviously with
[22:30] Speaker 9: everything that these companies have gone through, it seems that
[22:33] Speaker 9: they try to position themselves in terms of permissible indulgence.
[22:38] Speaker 9: So you see more calorie-dense products having a smaller packet
[22:43] Speaker 9: or some formulation or some marketing straight up.
[22:49] Speaker 5: What are these food companies doing with their marketing? Are
[22:52] Speaker 5: they going just all digital, all social, or are they
[22:54] Speaker 5: still buying a 30-second spot on a network TV show?
[22:59] Speaker 7: Yeah, I would say a little bit of everything.
[23:02] Speaker 9: They seem to be a little bit more inclined with marketing. social, particularly,
[23:06] Speaker 9: for example, for Café Bustelo and, you know, going back
[23:10] Speaker 9: to Smucker, they seem to be going through the TikTok
[23:15] Speaker 9: audience by formulations of your iced coffee, and that seems
[23:19] Speaker 9: to increase demand for their.
[23:22] Speaker 7: Products as well.
[23:22] Speaker 9: So it's more of like a show and tell, and
[23:25] Speaker 9: they actually rely a lot on social media for that.
[23:29] Speaker 4: Interesting.
[23:30] Speaker 9: Yeah.
[23:30] Speaker 5: So I guess gone are the days of just relying
[23:32] Speaker 5: on magazines, newspapers, you got to go where the influences are.
[23:37] Speaker 5: When you talk to your clients, what's the stock they're
[23:40] Speaker 5: most interested in these days?
[23:43] Speaker 9: Well, I would say Smucker seems to be a really
[23:50] Speaker 9: interesting story, as well as Hershey.
[23:53] Speaker 7: And Campbell seem to be among the most asked.
[23:57] Speaker 5: Those are some diehard, diehard brands for sure, American brands
[24:01] Speaker 5: that have been around forever. How are they all trading
[24:05] Speaker 5: this year? I mean, Smuckers is doing great, but how
[24:08] Speaker 5: about everybody else?
[24:09] Speaker 9: Well, I would say that there seems to be, you know,
[24:13] Speaker 9: within range, you know, for I would say for Smucker,
[24:17] Speaker 9: that seems to be an outperformer compared to the others.
[24:22] Speaker 7: Yeah.
[24:22] Speaker 9: And it is, again, because of that premiumization, that kind
[24:26] Speaker 9: of volume growth that seems to be the driver for
[24:28] Speaker 9: most of the, you know, metrics for these companies, your
[24:32] Speaker 9: ability to show volume.
[24:34] Speaker 7: That's that's the play.
[24:36] Speaker 3: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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