Oliver Chen: Retail's Single Best Buy

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00:00Oliver, I remember the day a pair of 501 Levi's became more than $9.99 a pair.

00:08You feature in your research note Levi's.

00:13What is their strategy given Amazon and given 2025 retail?

00:20Well, Tom, it's a pleasure to be here.

00:22Happy Black Friday as well.

00:24Levi's is an iconic brand with dominant market share at the premium end of the market.

00:29Also, as we think about what's happening now in product execution, it's about classics with a twist.

00:35It's about getting great value as well.

00:37And denim fits really nicely into these themes.

00:40What Levi's is doing specifically is more direct to consumer, basically opening their own stores globally.

00:46And consumers are looking for value.

00:48It plays quite nicely with quality.

00:50As you know, 501s last forever, and you shouldn't wash them either.

00:54We turn to Surrey, oh, Tom, yeah, I get that lecture at home.

00:57We turn to Surveillance Fashion Correspondent, Lisa Matteo.

01:01Lisa, Brandy Melville is on the Matteo target, isn't it?

01:05Oh, okay.

01:06So yesterday I received my daughter's seven-page PowerPoint presentation for her Christmas list.

01:11My question to you, Oliver, is are people going to be spending as much as they did last holiday season?

01:17That's what I want to know because I put a budget out there.

01:19Yeah, Lisa, first of all, I want that deck, please.

01:23Second, we are seeing spending.

01:26We're seeing a consumer that does have plenty of anxiety, that's looking for great deals.

01:31That being said, the consumer still has money, wants joy.

01:35We're forecasting up 2% to 3%.

01:37Keep in mind, inflation and pricing will be about 2% to 3%.

01:41So your units are flat, and there's a bit of a struggle.

01:45On the one hand, consumers want joy and wellness and gifting.

01:49On the other hand, they're feeling anxious.

01:51So we're watching both, and there's a bunch of cross currents.

01:54But don't bet against the U.S. consumer.

01:56It's been solid.

01:57Worldwide, Oliver Chen with us, T.D. Cohen, and we continue.

02:01Oliver, are we going to get out charge cards or like the Affirm buy now, pay later kind of thing?

02:07How are we going to acquire our Christmas, our holiday, 2025?

02:13Well, we're going to be using both.

02:15What's still happening is mobile is in the new mall.

02:18So we're seeing increased rates of mobile use.

02:20But a bit of everything from buy online, pick up in store to curbside pickup to delivery is being used so much.

02:27And then I like the good old-fashioned way.

02:29It's just thrilling to be in the stores this morning and across the country and earlier this week.

02:34So it's all happening, and certainly these new ways of payment and the future of payments is very different for younger customers, too.

02:44Oliver Chen on luxury right now.

02:46Kevin Gordon is in the French Alps at that hotel Audrey Hepburn was in in charade with Cary Grant.

02:52He emails in, Oliver, with a great question.

02:55This is Kevin Gordon at Charles Schwab.

02:58Bottega Venata blew it up and is doing better with the British type Louise Trotter.

03:03The fashion heads of different luxury brands, they still really matter, don't they?

03:10Yeah, what's happening is lots of change.

03:13The creative matters.

03:14I'm really creating desire, having new design.

03:18And we're seeing a lot of newness at Gucci and others.

03:21And Bottega has been doing great.

03:22The themes for luxury continue to be quiet luxury in terms of what's happening with less focus on logos

03:29and a real emphasis on quality and material.

03:33So Bottega Venata fits nicely in that trend.

03:36As you know, Brunello Cuccinelli, Laura Piana.

03:39And I'm a personal lover of Gucci, so I want to see them win.

03:42We're watching some creative change there at Tom Ford, too.

03:46Right.

03:46We've seen that.

03:47And Lisa, you mentioned today Burberry a little bit off the mark.

03:50They've been hugely promotional.

03:52Lisa Matteo.

03:52Now, also on the luxury segment, I'm going through the Wall Street Journal this morning

03:57and it has this article that says jewelry is outperforming the rest of the luxury world.

04:03Are you seeing that?

04:05Yes, we are.

04:05We love Cartier.

04:07So there's definitely a barbell and bifurcation where more pressure at the low and middle

04:14and then some real strength at the high end.

04:16And Cartier Richemont Group is outperforming Van Cleef as well as Cartier.

04:21Customers are gravitating towards gold, jewelry, real stores of value.

04:27And the prices here are compelling because handbag prices have gotten extreme.

04:33So the Love Collection at Cartier, Love Unlimited at Cartier, the Maison, really enduring value

04:39and timelessness.

04:40And overall, the jewelry growth rates have been in the high single digit.

04:44And we've been struggling to grow in handbags.

04:47Well, we see M&A this year.

04:49I mean, in so many other industries, we talk about mergers and acquisitions and Wall Street's

04:54on fire with a boom economy.

04:56In the Oliver Chen world, do they gobble up the weak providers in luxury or, frankly, in

05:03other markets as well?

05:05Yeah, Tom, I think what we'll see is selective M&A.

05:08Beauty is always an M&A-orientated sector in terms of large players acquiring brands that

05:15have been developed by founders.

05:17Skincare, longevity, niche fragrances, those are big opportunities.

05:22In luxury, it'll be selective.

05:24There are some assets that have sold, and we'll see.

05:27But the market's getting better with the consumer on more stable footing.

05:31So M&A is totally possible.

05:34And we're watching the IPO market too.

05:36Oliver Chen, your single Best Buy, please.

05:39We like Walmart.

05:40We like the AI story.

05:41We like the value story.

05:43We like delivery, curbside pickup, marketplace model, digital advertising.

05:47That remains a favorite for us.

05:49Oliver, I got a PE of 43 on Walmart.

05:53You've got to be kidding me.

05:55How is that possible?

05:57There's a lot ahead.

05:58Digital advertising for Walmart is in the $5 billion range.

06:02Think about Google, Amazon, and others that are 50 plus.

06:05Furthermore, their capabilities, it's themes about the big getting bigger and reaching more

06:10and more profitability online, in part because of digital advertising as well as the marketplace.

06:16In addition, it's defensive in that it's a leading grocery business with 60% of the revenue

06:21being grocery.

06:22So we're excited about all these things on the offense, on AI, as well as delivery and micro

06:27fulfillment, on the defense, as well as the everyday low price.

06:31And that's what consumers are looking for today.

06:33Finally, they're getting higher household income consumers as well.

06:37And they're serving the middle and low well too with that everyday low price.

06:41I grew up in Louisiana going to the Walmart Supercenter.

06:44And it's a real community-driven retailer as well.

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