Nvidia is Unstoppable and Trouble at Lululemon

[00:00:00] Welcome back to the Canadian Investor Podcast.

[00:00:17] I'm here with Dan Kent.

[00:00:19] We're doing our news and earnings episode.

[00:00:21] Pretty excited for this one, Dan, because the most, I would say the most important company

[00:00:27] in the world just reported and we'll be talking about it.

[00:00:30] And obviously for those who are not sure, it's Nvidia.

[00:00:32] They reported last week and bucked the trend basically for the market because a lot of

[00:00:38] companies were down.

[00:00:39] Yet Nvidia popped what was like 8, 9, 10% on the day and even the following day was

[00:00:44] up.

[00:00:45] Yeah.

[00:00:46] And I think like originally after they reported the markets were up, were pretty

[00:00:49] green in the morning, but then I think they kind of sold off throughout the day.

[00:00:53] But Nvidia kept it like, I mean, yeah, I think they,

[00:00:57] they closed maybe in the double digits, if not 10%, like they were in the 8, 9%

[00:01:01] range.

[00:01:02] Pretty good quarter.

[00:01:03] I mean, you can't even, you can't even say it was like not expected because they,

[00:01:07] they crushed it yet again.

[00:01:08] It's like they just continue to crush it.

[00:01:12] Yeah, exactly.

[00:01:13] I mean, it just, I mean, I, I thought it was expensive a year ago and clearly

[00:01:19] there was a lot of runway.

[00:01:21] I mean, you'll go over these results, but what I find is there's just a lot of growth

[00:01:27] priced in on the firsthand for Nvidia and granted it could go on for a little

[00:01:31] while.

[00:01:32] So that's definitely something that could happen.

[00:01:35] But the other thing we were talking about before we started recording is I find

[00:01:39] it amazing that there seems to be very little risk assigned to Nvidia right now.

[00:01:46] And I was just talking about the geopolitical risks since most of their

[00:01:50] chips are produced by Taiwan semiconductors, which is predominantly has

[00:01:56] facilities in Taiwan.

[00:01:57] And we're seeing now tensions kind of rise a little more between Taiwan and

[00:02:02] China because of the new president that was elected.

[00:02:06] And I just find it funny that not funny, but I find it odd that the

[00:02:10] market is not assigning at least some risk there.

[00:02:14] Maybe they are.

[00:02:15] Maybe it would be even higher.

[00:02:17] But my perception is that there is not much risk assigned to that yet.

[00:02:21] They are very dependent on that.

[00:02:24] Gia Geo country, let's just say they're very dependent on that one company in

[00:02:29] Taiwan and TSMC.

[00:02:31] So that's what I find very odd is that the I don't see many people talking

[00:02:36] about those risks when it comes to Nvidia.

[00:02:39] Yeah, they talk about it when it comes to Taiwan semiconductors.

[00:02:43] Yeah, I think to the extent with how good Nvidia has performed, I guess the

[00:02:48] performance is just kind of overshadowing the risks.

[00:02:51] I mean, I think right now it's trading at about 30 X expected earnings,

[00:02:56] which I mean is like when you consider how fast they're growing seems like

[00:03:01] reasonably cheap.

[00:03:03] I think even some big tech companies like Apple, Google, Microsoft are

[00:03:07] trading at those valuations.

[00:03:09] I mean, those are all obviously dependent on analyst estimates looking forward,

[00:03:13] which are far from guaranteed to happen because they're pretty bullish right

[00:03:18] now as well.

[00:03:18] But I mean, they're just killing it.

[00:03:21] And I think to that extent, like people are just kind of either

[00:03:25] completely ignoring or just, you know, maybe they believe that there's

[00:03:28] more upside in terms of future growth than there is in potential

[00:03:32] geographical risks and political risks.

[00:03:34] But yeah, they've crazy, crazy story.

[00:03:37] So, yeah, get us started.

[00:03:39] So tell us like what was so good about those earnings?

[00:03:42] Yeah, so I personally believe that Nvidia to a certain extent, like they

[00:03:47] have kind of the fate of the market in their hands.

[00:03:51] I mean, we saw this with a lot of big tech back in 2022, like when

[00:03:55] they would report the market would just either go up or it would crater

[00:04:00] based on the results of big tech.

[00:04:01] And I mean, after Nvidia reported, as mentioned, the market went up, but

[00:04:06] it kind of sold off by the end of the day.

[00:04:08] But they just like they reported revenue of 26 billion on the quarter,

[00:04:12] which is up 18 percent on a quarter over quarter basis and 262 percent

[00:04:18] year over year.

[00:04:19] They had guided to revenues of 24 billion, which means that revenues

[00:04:23] came in 8 percent higher than they had guided at the end of the

[00:04:26] previous quarter.

[00:04:27] Data centers continue to just absolutely explode.

[00:04:30] It reported data center revenue of 22.6 billion.

[00:04:34] This is up 427 percent from last year to give you just an insane idea

[00:04:40] of the insane amount of growth.

[00:04:41] The company had 1.1 billion in data center revenue in April of 2020.

[00:04:45] And now you're four years later, you're sitting at 22.6.

[00:04:49] This is a compound growth rate of 110 percent with a huge chunk of it

[00:04:54] coming just over the last, like I would say, 18 months earnings per share.

[00:04:59] I'm just going to add here, Dan.

[00:05:00] So for our joint TCI viewers, you'll see the graph.

[00:05:04] So this is on a yearly basis, but just the sheer amount of growth

[00:05:09] for data center.

[00:05:10] It's you know, it goes from being like in 20, you know, pre I would

[00:05:15] say pre 2021, like not that big of a portion of their business.

[00:05:21] And then in 2021, it starts picking up, but it doesn't really start

[00:05:25] picking up until last year where things just go pretty much crazy.

[00:05:29] So it's really interesting just to see that even if you you don't understand

[00:05:34] like the full business or, you know, how their revenues work and so on.

[00:05:38] Just seeing the sheer growth, just looking at the graph is just it's just crazy.

[00:05:43] Yeah, it's just like it's it's kind of leveled off.

[00:05:45] And then it just like what would it be July 20, 23, which was when the big,

[00:05:50] you know, whole AI wave started to come and it's just like up

[00:05:54] like parabolically up.

[00:05:56] It's crazy from even from quarter to quarter.

[00:05:59] Which is like not on a year over year basis, really just, you know, on a sequential.

[00:06:04] So one quarter to the next growth, it's just you rarely see that

[00:06:08] and even less for a company this big.

[00:06:10] Yeah.

[00:06:10] And it's just driving a huge chunk of its overall results.

[00:06:15] I mean, earnings per share came in at six dollars, 12 cents, which is up

[00:06:19] four hundred and sixty percent on a year over year basis.

[00:06:23] And they issued this was one thing that puzzled me a bit.

[00:06:26] I mean, they issued one hundred and fifty percent increase to the dividend.

[00:06:29] I mean, I believe this pushes a dividend from yielding point

[00:06:32] oh four to point one or something like that.

[00:06:36] So, I mean, it's a dividend income investors.

[00:06:39] There you go. You've got a new and you get on the block.

[00:06:42] Yeah. I mean, I would imagine they'd be able to raise a dividend

[00:06:46] much more than they are.

[00:06:47] But I mean, why? I just I don't get it.

[00:06:50] Like, especially with the rapid expansion of its data centers,

[00:06:53] like why distribute cash out?

[00:06:55] You could I would imagine they'd be able to find some way

[00:06:58] to spend this better internally rather than pay it out.

[00:07:01] But I mean, it's such a minuscule amount.

[00:07:03] And then the other one, they were they issued a 10 for one stock split.

[00:07:08] So, I mean, stock splits for are interesting to me as well these days,

[00:07:11] because I mean, prior to fractional trading,

[00:07:13] it made sense to make your stock price cheaper as whole shares

[00:07:16] were a tough sell for those who have smaller portfolios.

[00:07:19] I mean, right off the top of my head,

[00:07:21] I can think of something like Constellation Software.

[00:07:23] It's thirty five hundred dollars a share.

[00:07:26] And if you have a ten thousand dollar portfolio,

[00:07:28] it's pretty tough to just allocate 35 percent of your portfolio

[00:07:32] to a single holding. But these days, I mean, most all US

[00:07:35] brokerages are offering fractional trading.

[00:07:38] And in Canada, I know I'm I know for sure you can do it through.

[00:07:42] Well, simple trade. I pretty much do it every single week now.

[00:07:44] Yeah. So it depends.

[00:07:46] So there is a bit more new month.

[00:07:48] So I was listening to another podcast.

[00:07:50] I can't remember who it was saying that, but he had a good point.

[00:07:53] So he's an investment advisor.

[00:07:55] And depending who they're working with,

[00:07:57] chances are that they're not necessarily allowing the purchase

[00:08:01] of fractional shares.

[00:08:02] So for them, for clients that would have still meaningful

[00:08:06] amounts of money, but you know, they want to make,

[00:08:09] for example, Nvidia trading a thousand dollar a share.

[00:08:12] If you have someone that has, you know, half a million dollars,

[00:08:17] then you and you don't want to make that allocation too big.

[00:08:20] You can only buy a few shares.

[00:08:23] And then you end up having to decide,

[00:08:25] do I trim and remove a big chunk of my holdings?

[00:08:29] And then you get more flexibility with the trimming if there is a stock split.

[00:08:33] So that's kind of the counter argument.

[00:08:35] And obviously, I think for individual investors, retail investors like we are

[00:08:40] and I'm sure most of our listeners, most of them will have access

[00:08:44] to fractional shares, but it's not all the brokers.

[00:08:47] I know in Canada, I think, well, simple.

[00:08:49] I think they're the only one.

[00:08:51] There might be some, but some others, but I'm not aware of them.

[00:08:54] Interactive brokers does it.

[00:08:56] Interactive brokers.

[00:08:57] I don't know if they allow it on everything.

[00:09:00] I know they allow it on Canadian and U.S.

[00:09:02] stocks, whether like how broad that is for the Canadian market, I'm not sure.

[00:09:05] But I don't think any of the the big six brokerages offer it at this point.

[00:09:11] I maybe figured like National Bank, but they still don't do it.

[00:09:15] I mean, the one thing that's important about stock splits

[00:09:17] and there's been a lot of commentary on like the splits have no impact

[00:09:22] like to the value of the company.

[00:09:24] And I think we actually ran a bunch of like kind of backtested data

[00:09:28] that kind of suggests like a lot of people have the misconception

[00:09:32] that after a stock splits, it generally performs better.

[00:09:35] But I can't remember the exact numbers, but we did some digging into this

[00:09:38] and it's relatively just it's a non factor over the long term for a stock to split.

[00:09:44] It just I mean, it's worth the same value.

[00:09:47] Market capitalization wise, pre pre split post split.

[00:09:51] So but there's a surprisingly amount, a large amount of people who believe,

[00:09:56] you know, they do better after splits.

[00:09:58] I think that was a big thing for what was it?

[00:10:01] Tesla during the pandemic.

[00:10:03] But I mean, that was primarily due to just Tesla running up an absurd amount.

[00:10:07] I don't really think it was based on the stock split,

[00:10:09] but they issued guidance for next quarter.

[00:10:11] They expect revenue to be 28 billion and gross margins to be

[00:10:15] anywhere from pretty much seventy four and a half to seventy five and a half percent.

[00:10:21] The revenue guidance would represent a more than 100 percent increase.

[00:10:24] And I mean, there's no question that the demand for AI is just surging

[00:10:29] and is probably continuing to surge.

[00:10:31] And as I had mentioned at the start of it, they're trading at 30 X expected earnings.

[00:10:36] I mean, this seems relatively cheap on the surface,

[00:10:38] especially considering the company's growth.

[00:10:40] But again, it's important to understand that these are analysts estimates.

[00:10:44] That's how they use that's how forward P is calculated.

[00:10:47] They'll take the like, let's say the next 12 months expected earnings,

[00:10:51] which are speculative.

[00:10:53] I mean, it's just what analysts are predicting for the company.

[00:10:55] They you know, they could come true.

[00:10:57] They can not come true.

[00:10:57] They could do better less.

[00:10:59] But 30 X on a forward basis.

[00:11:02] And I mean, it'll be interesting to see how it goes.

[00:11:04] I'll be the first to admit I thought the company was overvalued at five hundred dollars

[00:11:09] and it's doubled since then.

[00:11:10] So they just continue to put up massive numbers.

[00:11:14] Over and above what what anybody has expected.

[00:11:17] Yeah, I mean, I'm in the same boat as you.

[00:11:20] So don't feel too bad about that one.

[00:11:21] I thought it was a bit crazy and just the assumption that people are extrapolating

[00:11:26] in the future where it will just keep going essentially forever.

[00:11:30] I feel like that's the sense I get from a lot of people that are on the Nvidia bandwagon,

[00:11:35] which, you know, it's fine.

[00:11:36] It's their prerogative.

[00:11:37] But my view is that the potential downside over the next five years

[00:11:43] is greater than the potential upside.

[00:11:44] So that's the way I view it.

[00:11:47] Whether there's more upside, a lot more to come.

[00:11:50] It's very possible.

[00:11:51] Maybe the stock triples from here, quadruples, whatever it is.

[00:11:54] But my view is that there is just so much growth baked in.

[00:11:58] And like we were talking earlier, is that there's just seemed to be very little

[00:12:03] priced in in terms of risk.

[00:12:05] So people are really just disregarding it and they're just going all in on the AI

[00:12:10] story, the data center buildup.

[00:12:12] And, you know, the next big thing.

[00:12:14] That's my view on it.

[00:12:15] I could completely be wrong, but that's how I view this.

[00:12:18] Yeah, I agree.

[00:12:20] It's just I don't know.

[00:12:22] It just seems like like I mentioned Tesla in the pandemic.

[00:12:24] It kind of seems like the same thing, like it just ripped and ripped and ripped

[00:12:28] until it didn't.

[00:12:29] And then it really struggled.

[00:12:31] I mean, they're they're in a bit more cyclical industry.

[00:12:34] I don't think that's going to happen to Nvidia.

[00:12:37] But it's not something that I would buy at this price.

[00:12:41] But I I definitely kudos to the people who bought this thing and held it for this

[00:12:46] long. You've made a ton of money.

[00:12:48] Yeah. And on the bull case, I think they were mentioning that government

[00:12:53] so, you know, sovereign entities could potentially be building up as well.

[00:12:58] Their AI infrastructure, which could be a good tell when for them.

[00:13:01] Yeah. Yeah, definitely.

[00:13:05] Now we'll continue something a bit different here, although

[00:13:09] yeah, a bit different.

[00:13:10] The Ethereum spot ETF that was approved by the SEC.

[00:13:15] And so the SEC approved the 19 B-4 order that was submitted by ETF's

[00:13:20] provider to change the rules to allow the spot Ethereum ETF to be approved.

[00:13:26] There were eight providers in total that submitted the 19 B-4

[00:13:30] to be approved by the SEC.

[00:13:32] Now, to be clear, and I've listened to some people that are very well

[00:13:36] into know because this is a bit beyond my expertise in terms of

[00:13:41] what goes into getting an ETF approved.

[00:13:44] Well, what this means, it doesn't mean it's set to start trading

[00:13:47] this week, next week or even a couple of weeks from now.

[00:13:50] It could take weeks or months for the ETF to start trading

[00:13:53] because they all have to submit what is called the Ness one.

[00:13:56] Similar when to when a stock goes public, it's also called the perspective,

[00:14:01] which will need to then also be approved by the SEC.

[00:14:06] However, from what I've been reading and listening to is the big step

[00:14:10] was indeed the 19 B-4 approval because that's a rule change

[00:14:15] that has been approved.

[00:14:16] So essentially the ETF provider had to submit this to request a rule change

[00:14:20] for the SEC to agree to it so that the Ethereum spot ETF's will be approved.

[00:14:26] And it sounds like there's about probably a 95 plus percent

[00:14:30] chance that the S1 will be approved, if not 99 percent chance.

[00:14:34] But again, it's not officially approved until each provider has submitted

[00:14:39] this prospectus. And one of the things that is not included

[00:14:43] is staking with these ETFs. Staking is a way to earn

[00:14:46] yield with Ethereum in exchange for securing the network.

[00:14:50] And the most fascinating thing about this is honestly the politics.

[00:14:55] So I know we try not to talk too much about the politics,

[00:14:58] but the more I read about this, it was a constant.

[00:15:02] Literally, there was a big political flip in the US, in Washington.

[00:15:08] So literally less than two weeks ago, there was virtually no chance

[00:15:12] of the ETFs being approved or very little chance.

[00:15:15] There are various issuers that said it that said it was basically

[00:15:19] radio silence from the SEC.

[00:15:21] That's why they were not preparing for this to be approved.

[00:15:25] And then all of a sudden, within a few days of these approvals,

[00:15:29] they did a 180 and started engaging with the various ETF providers.

[00:15:34] A lot of people think that the Democrats are now realizing

[00:15:36] that their anti-crypto stance could cause them votes in November

[00:15:40] for the not just the presidency election, but also Congress.

[00:15:44] And it also comes after Trump has been embracing crypto more

[00:15:48] and more over the last few months.

[00:15:50] On May 21st, even said that he would be accepting crypto

[00:15:53] donations for his campaign.

[00:15:55] And of course, like I said, we try to stay out of politics as much as possible.

[00:15:59] But every single thing I've read with people in the know

[00:16:03] seems to be the exact same thing.

[00:16:05] There was literally a 180 degree shift by the Democrats.

[00:16:08] I mean, I listened and read some of the work by people at Bloomberg

[00:16:13] that specialize in ETFs.

[00:16:15] I don't have the names on top of my head, but they're very well

[00:16:18] regarded regarding this, and they said the same thing.

[00:16:21] Even Biden was threatening to veto a bill that was in Congress

[00:16:25] if it passed, that was essentially a crypto bill

[00:16:29] and is no longer threatening to do so after a lot of representatives

[00:16:34] from the Democrats side ended up voting for the bill

[00:16:37] and siding with the Republicans.

[00:16:39] So there was clearly a big change that's been happening

[00:16:42] over the last like two weeks, maybe been a bit more than that

[00:16:45] over the past month or so in kind of the back end, the back rooms.

[00:16:49] It's just I just find it fascinating, regardless, you know,

[00:16:53] who you'd prefer to be elected in the US or president.

[00:16:57] To me, that doesn't matter.

[00:16:58] It's not the point here.

[00:17:00] It just kind of goes to show that for certain types of investment,

[00:17:04] crypto is definitely one of them.

[00:17:06] Politics can play a big role because they are the ones

[00:17:08] that set the regulations in place.

[00:17:11] And this is not just specific to crypto.

[00:17:13] There are other industries, right, where some were more used to it.

[00:17:17] But take railways, for example.

[00:17:20] There is very intense regulation surrounding railways

[00:17:23] that make it very difficult.

[00:17:25] These were set, you know, decades and decades ago.

[00:17:27] But nonetheless, politicians will set these and can have a big impact

[00:17:32] on certain investments.

[00:17:34] That's just the reality of it.

[00:17:37] Yeah, the one thing I'm like, is there

[00:17:39] that big of a demand among like the US population of crypto

[00:17:44] to like influence an election?

[00:17:46] I didn't think it was like that big.

[00:17:49] I mean, I don't follow crypto much at all.

[00:17:50] I own Bitcoin just because I mean, I guess my thesis was a fear

[00:17:54] of not owning Bitcoin, so that's why I own it.

[00:17:57] I will admit I don't know much about it.

[00:17:59] But I mean, the one thing is in regards to these ETFs,

[00:18:03] I mean, it ultimately just.

[00:18:05] Opens it up so that retail can gain access to it rather than buying it,

[00:18:09] having to go through an exchange, which is.

[00:18:12] I mean, for some people is kind of a deal breaker.

[00:18:14] It's just too confusing.

[00:18:15] Complex and scary.

[00:18:17] Yeah, yeah, definitely.

[00:18:18] Well, to go to your question.

[00:18:20] So the data I've seen is around 20 percent of Americans own crypto.

[00:18:24] So that is there is definitely.

[00:18:26] Yeah, that's not a small percentage of the population.

[00:18:31] And you have to say that most of these would be voting age,

[00:18:35] because clearly, you know, I'm not sure that many like 12 year olds

[00:18:38] actually own crypto.

[00:18:41] I'm sure they're selling said.

[00:18:42] Yeah, but having said that, apparently they are quite vocal and they

[00:18:48] there is a big portion of that 20 percent that crypto is a big issue for them.

[00:18:53] So it actually would be single issue voters, for example,

[00:18:57] that will vote for the candidate that is the most supportive for the industry.

[00:19:03] They and that's what I've been reading is they don't really

[00:19:06] care for about the rest.

[00:19:08] And when you have single issue voters,

[00:19:10] if you are against their issue, well, there's a good chance

[00:19:14] that they're going to go for the other candidate of the other candidate

[00:19:16] is more favorable.

[00:19:17] So apparently that's what's been happening is people were quite vocal to

[00:19:23] not necessarily I think most people want regulation,

[00:19:26] but they want regulation that makes sense,

[00:19:28] that also doesn't destroy the industry and forces them to to go elsewhere,

[00:19:33] which created an own set of problems. Right.

[00:19:35] FTX, one of the big issues with FTX is that

[00:19:39] essentially most of the business was being done overseas

[00:19:43] or outside the US in the Bahamas.

[00:19:46] So they were at quarter there.

[00:19:47] So they were evading a lot of the US regulation.

[00:19:50] So you have to be careful.

[00:19:51] And I know some people are very against it.

[00:19:53] Some are pro.

[00:19:54] But when you try to ban something completely

[00:19:58] and there's a lot of demand for it, they find ways around it

[00:20:02] or they go offshore.

[00:20:04] So you have to sometimes, you know, do something that's a bit more in the middle.

[00:20:08] Yeah, they're going to find ways to operate pretty much.

[00:20:11] I mean, this the one thing about you said 20 percent.

[00:20:15] I mean, these ETFs probably open it up to be much more than 20 percent here

[00:20:19] in Canada, especially if they come out.

[00:20:21] They already came out with the Bitcoin ETFs, which pretty much

[00:20:24] you can buy a US Bitcoin ETF for about one fifth of the fees

[00:20:29] you'll pay from a Canadian ETF.

[00:20:31] And I know I know we have a theory of ETFs as well.

[00:20:34] Yeah. Yeah.

[00:20:35] And I mean, yeah, definitely.

[00:20:36] It's almost a guarantee these are going to be much lower fees as well.

[00:20:39] So, I mean, it opens up Canadians to get get cheaper options.

[00:20:43] I mean, I know I used to own a camera.

[00:20:46] What was BTCC?

[00:20:47] And it was like one and a half.

[00:20:49] Yeah, one and a half percent, I think.

[00:20:51] And now I BIT is is I think they were point one.

[00:20:56] And then they once they hit five billion in AUM, they went up to point two five.

[00:20:59] But it's still like it's a fraction of the cost.

[00:21:03] Oh, yeah, exactly. Like to me, it's a no brainer.

[00:21:05] Even when you factor in the currency exchange.

[00:21:09] Yeah, I mean, you're looking like exactly one percent,

[00:21:12] one percent plus in Canada versus like a quarter or fifth of the fees in the US.

[00:21:17] So it doesn't take long, especially if you have a decent amount of money

[00:21:21] invested to make it a no brainer to own the US ones.

[00:21:25] The Ethereum, I think there's obviously there's going to be a lot less demand.

[00:21:29] Again, I read a lot on macro.

[00:21:31] I listen to other podcasts too on micro and

[00:21:35] I listen to a lot of people and read a lot of people that work

[00:21:38] and work with institutions.

[00:21:41] And there does not seem to be a lot of institutional demand for this,

[00:21:46] at least so far, at least not compared to Bitcoin.

[00:21:48] So it'll be interesting to track when they do launch how they fare.

[00:21:52] But to me, the more the takeaway is just

[00:21:55] if we're going to see other kind of political issues

[00:21:59] kind of come up that impacts investing in certain types of asset or stocks

[00:22:04] or companies, and I think we will because there I have another segment later on

[00:22:08] that again has a little bit of a political taste with the department

[00:22:13] of just in the US.

[00:22:14] So I don't think it's the last that we see in terms of politicians

[00:22:18] down south trying to I don't know.

[00:22:21] Is there a better word than buy votes?

[00:22:22] I don't know. But it'll be interesting just to follow

[00:22:26] in the months coming up to the election.

[00:22:28] No, yeah. Well, well said.

[00:22:30] I mean, do you want to go on to the management issues?

[00:22:33] Yeah, exactly.

[00:22:35] This was this was I had been keeping somewhat of an eye on this,

[00:22:40] but it's like accelerated to the point where it's gotten

[00:22:43] it's gotten pretty nasty at Gildan activewear.

[00:22:46] So I mean, it's a pretty big company.

[00:22:50] I didn't realize it was as big as it was, but I think it's got

[00:22:52] a market cap of nearly nine billion dollars, but they're pretty much like

[00:22:56] I would say they're maybe a bit of a discount, like discount clothing line.

[00:23:00] I mean, they have it. They have a wide variety of brands.

[00:23:04] The only one I've ever really heard of is American Apparel,

[00:23:07] but they have things like Anvil, Golden Toad Secret.

[00:23:11] But I don't know if you've heard of any of those other ones.

[00:23:13] I mean, American American Apparel is very popular, but the other one.

[00:23:17] Yeah, I've heard about that one.

[00:23:19] And, you know, I'm just showing their website here for people

[00:23:22] and it keeps asking me to put my email in.

[00:23:26] But yeah, I mean, I don't think I've really purchased a lot of their clothes,

[00:23:30] but I know there's a lot of drama that's definitely been going on with them.

[00:23:34] Yeah, so they had.

[00:23:36] A couple of months ago, the company released a report

[00:23:39] saying that it got an offer from a potential purchaser of the company

[00:23:43] and that its investment banks, they pretty much went and said,

[00:23:47] you know, we want to look for other possible suitors as well.

[00:23:50] And they did end up in a situation where there there were multiple

[00:23:53] non binding offers made.

[00:23:55] Last year, the company got rid of its CEO, Glenn

[00:23:59] Shemandi, I guess you would say it, and replaced him with Vince Tyra.

[00:24:03] I think Vince Tyra was was big with like Fruit of the Loom.

[00:24:06] This caused a bit of outrage among the current major

[00:24:10] shareholders of the company.

[00:24:12] And they've been in a pretty large dispute ever since.

[00:24:15] So at the time, whenever I think about Fruit of the Looms,

[00:24:19] it's like Tidy Whitey's. Yeah, pretty much.

[00:24:21] Yeah, that's the only thing.

[00:24:22] Like what else do they do? Maybe socks.

[00:24:25] Yeah, it's I mean, they said.

[00:24:28] So at the time, the Gildan executives, like the board members,

[00:24:31] the executive said that Shemandi had lost his vision for the company.

[00:24:36] He had no long term plan.

[00:24:38] They said he was looking to make risky acquisitions

[00:24:40] that would ultimately put shareholders at risk.

[00:24:43] And then many shareholders, you know, they stepped up.

[00:24:46] They didn't buy it.

[00:24:47] They said they didn't like the move at all.

[00:24:49] And the pushback from major shareholders was so large

[00:24:51] that the executives had to issue a special shareholder meeting

[00:24:56] that was supposed to occur on May 28th, which would be today.

[00:25:00] But just from the fallout here, I imagine it either occurred

[00:25:04] before this or just the board just gave up.

[00:25:08] A few days ago, the entire board just pretty much up and quit.

[00:25:12] So this includes the CEO, Vince Tyra.

[00:25:15] So they just all left Browning West, which owns five percent of Gildan shares.

[00:25:20] They were pretty much the activist investor that that was like, no,

[00:25:24] this this isn't how we want this to go.

[00:25:26] Like the boards kind of lost their vision firing him and things like that.

[00:25:31] They took control of the board.

[00:25:32] They added United Rentals Chairman Michael

[00:25:35] Neeland as the chair of the board and actually reinstated Shemandi as the CEO.

[00:25:41] So he was out last year.

[00:25:42] They replaced him.

[00:25:44] Then the board all quit.

[00:25:46] CEO Vince Tyra quit.

[00:25:48] They re replaced him with the guy they fired six months ago.

[00:25:52] And I mean, a lot of times these spats lead to very volatile stock price

[00:25:57] and even large drawdowns due to many shareholders just

[00:26:01] not wanting to own stocks that have this type of drama.

[00:26:04] But Gildan is nearly back to its all time highs in regards to price.

[00:26:09] And clearly a lot of people view the reinstatement

[00:26:11] and the exit of the current board as a good thing.

[00:26:14] It's pretty interesting when activist investors get involved.

[00:26:17] I mean, we've witnessed it.

[00:26:19] I believe CN Rail had one probably like a year ago.

[00:26:22] Parkland Fuels had one a year ago and they're still

[00:26:26] they still have ongoing board issues.

[00:26:28] I actually ended up selling my position because of just the drama

[00:26:32] with Parkland Fuels, their activist investor, and they have a huge,

[00:26:36] huge shareholder in Simpson, Simpson oil that they're kind of

[00:26:40] like messing around with Suncor Energy at a similar situation like this.

[00:26:44] I know there was a huge feud.

[00:26:46] This was more so internally, but with like Rogers,

[00:26:49] these situations are pretty interesting, but I mean, they just.

[00:26:51] Oh, yeah. The family feud. Yeah. Roger.

[00:26:54] Yeah, that's a little bit different, but it's just crazy.

[00:26:57] The entire board, they just gave up, I think.

[00:26:59] Maybe they knew they weren't going to, you know,

[00:27:02] when they had that shareholder meeting and they would have been vetoed anyway.

[00:27:05] So they all just quit and they

[00:27:08] I think they're going to be, you know, replacing the board gradually here.

[00:27:12] And it's not necessarily a company I would own,

[00:27:16] but it's one that I didn't realize was as big as they are.

[00:27:19] And, you know, has the reach that they do.

[00:27:21] But it's a pretty interesting situation.

[00:27:24] Yeah, I'm just looking at the numbers here and sales

[00:27:27] have definitely not been all that great.

[00:27:29] It's kind of stagnating a little bit.

[00:27:32] And if you're looking, I haven't looked at net income here.

[00:27:36] But net income is OK. It's not great.

[00:27:39] I'm not quite sure.

[00:27:40] Like, it's kind of looks like it's peaked a bit a couple of years ago.

[00:27:44] And now it seems to be going down a little bit.

[00:27:46] So who knows?

[00:27:48] Maybe there are some efficiencies they can find, but not a company

[00:27:51] I had on my radar, but just like you,

[00:27:54] definitely a larger company than I thought.

[00:27:57] That's what's kind of interesting to me is like they this

[00:28:01] shimandy is in place.

[00:28:02] And I don't know the company that well,

[00:28:04] because I just haven't followed them all that much.

[00:28:06] But I mean, they've had declining revenue and earnings

[00:28:08] for three plus years now, and they replace them and people are upset.

[00:28:11] So like, I don't know, it seems to me like

[00:28:15] it's not like the company was performing well and they turfed them

[00:28:18] and then everybody was mad.

[00:28:19] They haven't been doing all that well.

[00:28:21] And I mean, I imagine, you know, the the multiple

[00:28:25] the multiple offers that they got a few a few months ago.

[00:28:28] Maybe they just took them into consideration and then

[00:28:31] and then kind of thought, you know, maybe maybe it'd be better

[00:28:34] to not take these and instead just try and overhaul the board

[00:28:38] and get things back on track.

[00:28:40] But we'll see what comes of it over the next few months here.

[00:28:43] No, definitely.

[00:28:45] Now we'll stay in the fashion space and look at Lululemon,

[00:28:49] because there were some big news last week.

[00:28:52] News came out that Sun Show, the chief product officer for Lululemon

[00:28:56] had resigned and will leave the company by the end of the month.

[00:28:59] So by the time you listen to this, I'll probably have left the company.

[00:29:03] The stock was down 8 percent on the news.

[00:29:06] At the same time, Lululemon announced it was implementing an updated

[00:29:09] and more integrated organizational structure to support the company's

[00:29:14] near and long term growth plans and accelerate product innovation.

[00:29:18] I think the market is looking at this and thinking they're announcing this

[00:29:22] because growth is slowing more than they had expected.

[00:29:26] It's going to be really fascinating what they say on the call on June 5th,

[00:29:30] because that's when they'll be releasing their earnings.

[00:29:32] To me, I own the shares, so I actually bought some more shares about a month ago.

[00:29:37] Clearly in hindsight, I should have waited a little more,

[00:29:40] but there already had been a pretty good drop in the share price.

[00:29:45] Evaluation was starting to become quite attractive, in my opinion.

[00:29:48] It's clearly better now because it's dropped probably another 10 percent

[00:29:52] and 15 percent since I bought it, which is fine.

[00:29:54] I mean, it's still early on, but

[00:29:58] and it's quite a small position for me.

[00:30:00] It's about one point five percent.

[00:30:02] Having said that, I think slowing demand could be a real possibility,

[00:30:06] even with them expanding in newer markets like China,

[00:30:09] where they don't have a big presence just yet.

[00:30:12] It is getting bigger.

[00:30:13] But compared to their presence in Canada and the US,

[00:30:18] which is by far their most important markets,

[00:30:22] they are still growing in China.

[00:30:25] And what this makes me think is

[00:30:28] we're probably going to see a slowdown in the Canada and US market

[00:30:33] because that's the majority of their market.

[00:30:35] And we're seeing more and more whether

[00:30:37] and we'll be talking a bit later about target earnings.

[00:30:40] But we saw it with Nike not too long ago,

[00:30:43] Canada Goose, Canadian Tire, Home Depot.

[00:30:46] The consumer is starting to struggle, not just in Canada,

[00:30:50] but in the US as well.

[00:30:51] And we're talking about, you know, things that are discretionary

[00:30:54] that people can cut out.

[00:30:55] And Lululemon is definitely one of those things.

[00:30:58] So I think it could be them getting ahead of that,

[00:31:01] getting the move done and then people kind of expecting

[00:31:05] the quarter to not be that great or the forward guidance.

[00:31:10] Maybe it was kind of the idea to do that all at the same time

[00:31:13] when the chief product officer said he was resigning.

[00:31:16] And who knows, right?

[00:31:17] Maybe it's like, you know, it was shown the door

[00:31:20] but decided to resign, came to some kind of an agreement.

[00:31:23] No one really knows.

[00:31:24] But there's definitely looks like there is smoke happening there.

[00:31:28] I don't know what your thoughts are on that, but that's what I'm sensing.

[00:31:32] Again, I'm not panicking.

[00:31:34] I own the shares, but I'll be definitely looking at those earnings

[00:31:37] pretty closely and listening to all the whole call to see what they say.

[00:31:42] It does seem like kind of a lead into a relatively soft quarter,

[00:31:47] like maybe kind of cushioning it doing something like this.

[00:31:51] I mean, Aritzia is another company which would probably be...

[00:31:55] Well, I mean, I wouldn't say they'd be closest to...

[00:31:58] Well, I guess it would be probably closest to Lululemon

[00:32:01] outside of like Canada Goose and things like that.

[00:32:03] But they're another thing, another company that's realizing just slower growth.

[00:32:07] I mean, especially for people who just don't have the money right now

[00:32:11] to spend on premium brands.

[00:32:13] Like, I don't know how expensive...

[00:32:14] I've never bought Lululemon before, but I know they're they're pretty pricey

[00:32:18] relative to a normal line of clothing.

[00:32:22] And I mean, that's just something that people are probably going to pass up now.

[00:32:27] I mean, it's going to be interesting.

[00:32:28] Another thing is like I've noticed quite a few companies with like Chinese

[00:32:33] growth, like where they're relying a lot on China to fuel growth moving forward.

[00:32:38] I mean, we've seen Starbucks is really struggling there.

[00:32:42] Another company just right off the top of my head is Jameson Wellness.

[00:32:45] They're like a vitamin supplement company with...

[00:32:47] I mean, China is pretty much where all their growth is coming from.

[00:32:50] And again, they're seeing struggles there as well.

[00:32:53] So, I mean, there's a little risk there in terms of just, you know,

[00:32:57] overseas expansion in a place like China, where,

[00:33:00] as I've mentioned numerous times here before, too,

[00:33:02] that the consumer is way stickier in China than they are in the United States.

[00:33:07] I mean, we're a bit more spend heavy here, but it is going to be interesting.

[00:33:10] I've been looking at Lululemon for quite a while.

[00:33:12] I mean, they're like nearly 50 percent off their off their highs,

[00:33:16] which were not too long ago.

[00:33:17] Like you're talking December 20, 23, late December 20, 23.

[00:33:22] And they're down 44 and a half percent since then.

[00:33:26] Retailers can take an absolute nose dive on any fears of just slowing overall.

[00:33:33] Yeah, yeah, exactly.

[00:33:35] And I mean, and just to give you an idea how big

[00:33:39] Canada and the U.S. are in terms of revenue.

[00:33:41] So you have the U.S. is about two point one billion.

[00:33:45] The latest quarter in terms of revenue, Canada is four hundred

[00:33:49] and twenty eight million.

[00:33:50] And you have China that's three hundred and forty million.

[00:33:53] So Canada, as small as we are,

[00:33:56] are still getting more revenue for Lululemon than China.

[00:33:59] So there's definitely some growth potential there.

[00:34:02] But like you said, I think the Chinese consumer,

[00:34:04] they're seeing a lot of their value in real estate being hit over there.

[00:34:08] So I think it's very easy to make the argument

[00:34:11] that they're probably a bit more reluctant to make more expensive purchases.

[00:34:15] And Lululemon is definitely on the more expensive side.

[00:34:18] I mean, I don't think it's outrageous.

[00:34:20] And the reason I buy Lululemon is because their clothes actually

[00:34:24] last for a long time and they're good quality.

[00:34:26] But if you're struggling financially, I mean, that's not your priority.

[00:34:30] If you need new clothes, you're going to go for the cheapest option

[00:34:34] because whether the clothes last for a year or two or five years,

[00:34:38] it doesn't matter.

[00:34:38] You don't have the money to buy the five year option right now.

[00:34:42] I got a couple of Kirkland Signature

[00:34:46] shirts last week for 10 bucks each.

[00:34:48] Oh, definitely cheaper than Lululemon.

[00:34:50] I can tell you that.

[00:34:53] And then, yeah, it's crazy.

[00:34:55] I mean, I like I shop a lot at Costco for clothes.

[00:34:57] I mean, everybody probably sees me on the TCI with the Kirkland

[00:35:01] Signature hoodies. They're good hoodies and they're cheap.

[00:35:03] Yeah. You're walking Costco billboard.

[00:35:06] Yeah. But yeah, I mean,

[00:35:09] it's not surprising to see a lot of these like more like mid level

[00:35:13] fashion line companies struggling.

[00:35:14] Aritzia, Lululemon, Canada Goose, I would say is like an upper tier

[00:35:19] and they're struggling mightily.

[00:35:21] But yeah, they're going to be cyclical.

[00:35:23] I mean, when the economy improves,

[00:35:25] the one thing is a lot of people, when retailers do this,

[00:35:27] they fear that like the brand is losing its strength.

[00:35:30] And like there's a lot of like, exactly fears on that.

[00:35:33] But I mean, it's just like I highly doubt Lululemon is going anywhere.

[00:35:36] It's just going to take a healthier consumer, I would I would guess

[00:35:40] to kind of kick things back in line.

[00:35:43] Yeah. Sells could slow a bit.

[00:35:44] And I think margins may end up taking a hit, right?

[00:35:48] If people are not spending as much, they may end up having to discount

[00:35:52] a bit more. So that's the other risk there.

[00:35:54] But I think we'll move on to the next one here

[00:35:57] because we alluded to this at the start and feel free.

[00:36:00] Feel free to chime in here.

[00:36:02] So the U.S. is suing Live Nation.

[00:36:05] And for those who are not familiar with Live Nation,

[00:36:09] they own the Ticketmaster amongst other things.

[00:36:12] So they are quite a large company.

[00:36:15] And the U.S. Department of Justice announced that it was suing them

[00:36:19] along with 30 states for antitrust practices.

[00:36:23] You can say antitrust.

[00:36:24] It's like anti-competitive practices for those who are not familiar with that.

[00:36:28] And they own Ticketmaster, but it's also one of the largest

[00:36:31] promoters of live events in the world.

[00:36:33] They also get revenues from sponsorship and advertising,

[00:36:37] artist management, venue operation and merchandising.

[00:36:40] So you can see with just the things that they're offering

[00:36:44] and their business lines that there could be a lot of,

[00:36:47] you know, intertwining and pressuring for using their own venues

[00:36:53] and things like that.

[00:36:54] And in the release, I went on and looked at the release.

[00:36:59] They said, and I quote,

[00:37:01] As a result of its conduct, music fans in the U.S.

[00:37:04] are deprived of ticketing innovation and forced to use outdated technology

[00:37:09] while paying more for tickets than fans in other countries.

[00:37:12] At the same time, Live Nation Ticketmaster exercises power over performers,

[00:37:17] venues and independent promoters in ways that aren't competition.

[00:37:22] Live Nation Ticketmaster also imposes barriers to competition

[00:37:25] that limit the entry and expansion of its rivals.

[00:37:28] And the main point that the DOJ is alleging here

[00:37:32] is that they are colluding with Oakview Group,

[00:37:35] which is a competitor to avoid bidding wars on artists.

[00:37:39] They are threatening potential entrance in the space.

[00:37:41] They are threatening and retaliating against venues

[00:37:44] that work with rivals over Ticketmaster or other promoters.

[00:37:48] They're locking out competition.

[00:37:51] They're restricting artists access to venues

[00:37:53] unless they agree to certain conditions favorable to Live Nation.

[00:37:57] And they're acquiring competitors that pose competitive threats to them.

[00:38:01] So this one will be interesting how the courts rule in this case,

[00:38:06] because I think I can think of a few large companies

[00:38:11] that may be in the big tech space that could also end up

[00:38:14] being in the Department of Justice across there.

[00:38:18] And that's been one of the big things.

[00:38:20] Again, it's hard to not get into politics here,

[00:38:23] but that's been a big push for the Biden White House and the Democrats

[00:38:28] to clamp on those anti-competitive,

[00:38:31] anti-trust companies that take advantage of their monopoly

[00:38:36] or oligopoly situation.

[00:38:38] I don't think this will be the last one that we see.

[00:38:41] We'll probably see some more actions like this leading up to the election,

[00:38:46] because that way the Democrats will be able to say, like, look, war.

[00:38:49] We know, for example, in this case, ticket prices are expensive.

[00:38:53] We know you want to go see Taylor Swift and we're trying to make sure

[00:38:57] that these prices come down.

[00:38:59] And here's what we're doing about it.

[00:39:01] Whether it's the right move to do from a political perspective,

[00:39:05] I don't know.

[00:39:06] But I'm just saying that I think the election coming up

[00:39:10] will probably see some more actions like this.

[00:39:13] Yeah, I mean, it's hard to like not just absolutely hate Ticketmaster,

[00:39:18] to be honest.

[00:39:19] It's like they know it's like we have tickets like oilers tickets, for example.

[00:39:25] I mean, when we look to sell them like.

[00:39:28] So I had mentioned, like, say a three hundred dollar ticket,

[00:39:31] they'll jack that up to three hundred and seventy three hundred

[00:39:35] and eighty dollars for somebody to buy, which is a simple one click

[00:39:39] transaction like in their pocketing, eighty dollars.

[00:39:41] But what a lot of people don't know is from a seller's perspective,

[00:39:45] they also on a three hundred dollar ticket, they're going to take 40,

[00:39:49] 40 bucks from the seller.

[00:39:51] So they're on a three hundred dollar sale.

[00:39:53] They're like banking over one hundred and ten dollars.

[00:39:56] And like there's really I mean, outside of it,

[00:39:59] I guess you could go to other places like StubHub or like

[00:40:02] there's a bunch of other ones.

[00:40:04] But I mean, the fees are just as crazy high.

[00:40:07] So I mean, a lot of people go to like groups on Facebook

[00:40:11] or something like that.

[00:40:11] And then you open yourself up to like huge scams,

[00:40:14] just getting scammed on tickets like that.

[00:40:16] And it's put people in a really

[00:40:18] tough position to be to be paying that markup on something like this

[00:40:22] is just absurd.

[00:40:24] I mean, when you buy it, when you buy the tickets like fresh

[00:40:28] off the market, it's like an eight dollar fee.

[00:40:30] But somehow, like if you want to resell them, it's one hundred

[00:40:34] and ten dollars worth of fees like they're just taking it.

[00:40:37] Want to make sure?

[00:40:38] Yeah, they want to make sure they get their cut, I guess.

[00:40:40] Yes. As simple as that.

[00:40:42] And I mean, it's hard to think just as without knowing

[00:40:47] right what happens, you know, with these companies.

[00:40:50] But it's hard not thinking that there's some kind of collusion here.

[00:40:54] Like how would how are these margins sustainable?

[00:40:59] Like wouldn't new entrants try to come in and lower

[00:41:03] some of that market?

[00:41:04] Exactly. Grab some of that market share.

[00:41:07] Yeah, something is definitely something doesn't make sense

[00:41:10] because when there's profit margins that are that high

[00:41:13] and you make that much money, usually you have entrepreneurs

[00:41:18] that kind of see this and they're like, you know what?

[00:41:20] We can get a share of that if we lower the prices,

[00:41:23] offer better product and so on.

[00:41:25] Yeah, like if you have if you were even to come start

[00:41:29] a new company and say you say I'm not going to take one hundred

[00:41:31] and ten dollars on a three hundred dollar ticket, I'm going to take 50.

[00:41:34] You would get every ticket sale imaginable.

[00:41:38] But for some reason, like StubHub is just as bad.

[00:41:41] I don't know about any of the other ones, but there's got to be something

[00:41:44] going on because I mean, like I said, StubHub, like you said,

[00:41:48] StubHub could easily just lower their fees and grab a huge chunk

[00:41:51] of the market, but they just won't.

[00:41:53] It's kind of like a it's like the big telecoms here in Canada.

[00:41:57] I mean, they're they're all they're all just organizing

[00:42:00] prices between the three of them.

[00:42:01] It's it's it's a bad situation.

[00:42:06] Yeah, and we're Canadian.

[00:42:07] So we know all the gopolis.

[00:42:09] Yeah, exactly.

[00:42:10] Right. So they run most of the most of the country. Yeah.

[00:42:15] Oh, no. But it'll be anyways.

[00:42:17] It'll be interesting to see what happens.

[00:42:19] And obviously the kind of precedent it sets for other kind of companies

[00:42:24] in the U.S. that could be in different space.

[00:42:25] So that's something we can touch on when there is actually development

[00:42:29] happening there.

[00:42:30] The next one on the slate here is Target.

[00:42:34] And it was another rough quarter for Target,

[00:42:37] with revenues down 3.1 percent to 24 billion.

[00:42:40] Revenues have declined in three of the last four quarters for Target

[00:42:45] on a year over year basis.

[00:42:47] Comparable store sales were down 3.7 percent

[00:42:50] and have now declined four quarters in a row.

[00:42:53] Numbers of total transactions were down 1.9 percent.

[00:42:57] Average transaction amount was also down 1.9 percent.

[00:43:01] Earnings were down 0.8 percent to 950.

[00:43:06] Forty two million and EPS was down one percent to two dollars

[00:43:10] and three per share on the bright side.

[00:43:13] Gross profit margins were up 60 basis point and operating margins were unchanged.

[00:43:18] They generated 427 million in free cash flow for the quarter,

[00:43:22] which was a nice surprise compared to negative free cash flow last year.

[00:43:26] And on the call, they mentioned that there is consumer softness due

[00:43:30] to a preference to spend on experiences and services,

[00:43:34] as well as budget being tighter due to higher prices.

[00:43:38] This has led customers to pull back on discretionary spend.

[00:43:42] And they said on the call that one in three Americans

[00:43:46] have maxed out the limit of their credit card

[00:43:50] or max out the limit of at least one credit card or is nearing the limit.

[00:43:55] So that is pretty, pretty scary.

[00:43:58] I mean, I saw those numbers before.

[00:44:00] So they're not the first one that actually come out with those.

[00:44:02] But I think it was interesting that they mentioned that on the call,

[00:44:05] because you have one in three Americans that are nearing the limit

[00:44:09] or at the limit of their credit card.

[00:44:11] I mean, this is pretty dangerous because you're looking over there.

[00:44:14] They're looking at interest rates, I think, average of 26,

[00:44:17] 27 percent on the credit cards.

[00:44:20] I mean, is this is this a target card?

[00:44:22] Do they have a finance or is this just in general?

[00:44:25] In general. Oh, OK.

[00:44:27] I thought you maybe meant like a specific target credit card,

[00:44:30] like, you know, Canada.

[00:44:31] It's the worst case.

[00:44:32] It's the worst of this just overall.

[00:44:36] I mean, I laugh, but it's too bad because it is,

[00:44:39] I think, painting a bit of a picture.

[00:44:40] And I've been looking at that kind of data and it's true.

[00:44:44] Americans are more and more in debt, especially credit cards.

[00:44:48] The credit card balances are increasing.

[00:44:50] So despite, you know, mainstream media kind of feeding us

[00:44:53] the information that the American consumer is being resilient.

[00:44:56] I think now we're starting to see the crack is maybe some of them are resilient.

[00:45:01] But to me, when you're getting, you know, you're maxing out your credit card,

[00:45:04] you're not resilient.

[00:45:05] You're just pushing the inevitable.

[00:45:07] You're extending and pretending,

[00:45:09] kicking the can down the road.

[00:45:11] Exactly. And things will get much worse

[00:45:13] because then you'll just be servicing the debt at 25, 26, 27 percent interest.

[00:45:18] Now, because of the uncertainty regarding the consumer,

[00:45:20] they are putting increased focus on operational excellence.

[00:45:24] That just means they want to, you know, their business to be more efficient,

[00:45:28] better service, all these different things.

[00:45:30] They also announce 1500 price cuts to commonly purchase items

[00:45:35] and will be doing price cuts to another 1000 items.

[00:45:38] The cuts are focused on food and essential categories.

[00:45:42] They also redesign their customer rewards program

[00:45:45] to make it easier for consumers to use and understand.

[00:45:49] And the last thing here,

[00:45:50] they think that revenues will start increasing in the second quarter.

[00:45:54] They are very cautious, however, and they are guiding for comparable sales

[00:45:58] to be slightly up in the quarter or flat.

[00:46:01] So between zero percent and two percent, depending how it goes.

[00:46:05] So I think we're starting to see a bit more of a clear picture here

[00:46:09] with retailers, right?

[00:46:10] There's just few and far between that are doing well.

[00:46:14] I think Costco is still doing well.

[00:46:16] You have a Walmart that did pretty well.

[00:46:18] But we're starting to see that these are the retailers that have more essentials

[00:46:22] versus those that have more consumer discretionary.

[00:46:26] Yeah, and you're even seeing Walmart when they went on the conference call,

[00:46:30] they're saying like they've had to roll back more items

[00:46:34] to get people in the stores which are hitting margins like Walmart,

[00:46:38] I think was able to offset a lot of it due to like its membership

[00:46:42] and its advertising and all that type of stuff that's kind of boosting it.

[00:46:45] But they pretty much said like they they've had to put huge sales

[00:46:49] on stuff to get people because it's so competitive now.

[00:46:52] Like people are willing to go to different stores to get deals now,

[00:46:55] whereas during the pandemic or even before that,

[00:46:58] like maybe that drive is a little inconvenient.

[00:47:02] You don't take it. You pay more somewhere else.

[00:47:04] But now it's just like they're having to, you know,

[00:47:07] do these type of price cuts, which ultimately eats in the margins.

[00:47:11] But I didn't even know Target sold food, to be honest.

[00:47:15] I just yeah. Yeah.

[00:47:17] I mean, I go. Yeah.

[00:47:18] Do you have them? No.

[00:47:20] No, we don't.

[00:47:21] I mean, they were in Canada years ago and they left.

[00:47:24] But because I have family in Syracuse, it's three, three hour,

[00:47:28] three hour and a half drive from Ottawa.

[00:47:30] We go there probably once, sometimes twice a year.

[00:47:34] And we'll go from time to time to Target.

[00:47:36] And they do have a decent food section,

[00:47:39] but it's not anywhere near close to Wal-Mart.

[00:47:41] So that's what's I think been a big differentiator for Wal-Mart.

[00:47:46] Yeah. And I mean, this is pretty much I don't know if there's been

[00:47:48] a single retailer outside of like a Costco that's kind of bucked

[00:47:53] this trend like we're seeing with Home Depot, with Wal-Mart to a certain extent.

[00:47:57] And I mean, it's just softer consumer overall.

[00:48:01] That's going to hurt the retailers.

[00:48:01] Yeah, it'll be interesting.

[00:48:03] Like, do you know when Dollarama is reporting?

[00:48:05] I'll be interested in seeing.

[00:48:08] Yeah, they're the ones I want to.

[00:48:10] Yeah, I definitely want to have a look at.

[00:48:13] I don't know when they report.

[00:48:14] They have a mix of discretionary and kind of essential or nondiscretionary

[00:48:20] items, but it's such a low price point.

[00:48:22] Yeah, they've been doing very well, even as they increase those price points.

[00:48:26] They've been killing it. Yeah.

[00:48:28] June 12th, it says, but that's just a general search.

[00:48:30] A lot of them a lot of them are wrong.

[00:48:33] Like the quick searches for earnings.

[00:48:35] It'll be somewhere around there, though.

[00:48:37] Yeah, I was going to say that we have time for your last segment,

[00:48:40] but I think it'll be a bit too long for this episode.

[00:48:42] So are you OK if we keep it?

[00:48:45] Well, no, the week after because next week will be banks.

[00:48:47] Oh, yeah, banks.

[00:48:48] You got to be all about banks.

[00:48:50] So for those wondering why we didn't talk about banks,

[00:48:52] I know TD reported last week, Scotiabank today, I think.

[00:48:57] And there's going to be a few more reporting for the rest of the week.

[00:49:00] So we just decided, you know what?

[00:49:02] We'll just do them all at once.

[00:49:04] I'm not sure if we'll do all the big banks,

[00:49:06] but we'll at least do four or five.

[00:49:09] And kind of I think it'll be interesting because we'll be able to get some

[00:49:13] takeaways from all of the big banks reporting.

[00:49:17] So we'll be doing that next week.

[00:49:18] So make sure you don't miss the show.

[00:49:20] Aside from that, anything else you want to add or you're just going to go,

[00:49:25] you know, in a corner and cry that the oilers,

[00:49:28] you know, drop the ball last night?

[00:49:30] Well, no, I got to actually go pack because we're going to the game.

[00:49:33] I hope. Yeah.

[00:49:34] Oh, it's tough costs.

[00:49:36] Tough price for tickets right now.

[00:49:38] I really hope I don't go there and they pull that off again.

[00:49:41] That'll hurt. Yeah, especially with, you know, all those fees from Ticketmaster.

[00:49:45] Yeah. At least if you get a win, right?

[00:49:46] It makes you forget about the. Exactly.

[00:49:49] Man. Well, I think we'll wrap it up here.

[00:49:52] So everyone, thank you for listening.

[00:49:54] We really appreciate the support.

[00:49:56] As always, you can find me on X.

[00:49:59] I'm pretty active, although it kind of comes and goes.

[00:50:01] Sometimes I'll be a few days without posting.

[00:50:03] They'll post like 15 times in a day.

[00:50:05] You can find me at Fiat underscore iceberg and then at stock trades underscore

[00:50:10] C.A.. So thank you for listening.

[00:50:13] And we'll be back next week for another episode.

[00:50:16] The Canadian investor podcast should not be construed as investment

[00:50:20] or financial advice.

[00:50:22] The host and guest featured may own securities or assets discussed on this

[00:50:26] podcast. Always do your own due diligence

[00:50:30] or consult with a financial professional before making any financial

[00:50:34] or investment decisions.