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00:00 Speaker A
hopefully not too bad of a hit when it comes to Cyber Monday. And when we take a look a couple days ago to Black Friday, those sales were pretty strong and there was a lot of fear heading into the holiday shopping season that the consumer was going to pull back. We recently saw retail sales miss expectations. Consumer confidence has been low. Put it all together. What’s your takeaway when it comes to the state of the US consumer?
00:30 Speaker B
So the the, you know, the the letter K is appropriate. Um, you know, that gets used a lot and I think that um, overall e-commerce trends are relatively strong, 6 to 9% for the holiday. Um, you know, the, uh, the the higher income consumers doing better, but um I think overall trends are actually pretty pretty positive. You know, if you want to keep it simple in retail, um, there’s an endless number of retailers in the world, but just focusing on Amazon and Walmart, you know, probably takes care of the vast majority of investor needs. And then when you layer in companies like Apple and Tesla, now that Tesla cars drive themselves, um,
01:21 Speaker B
you know, there’s some some nice high-end gifts that can be purchased as well and investment ideas um on more product-based companies, you know, as well. But that’s kind of simple. otherwise, you know, you’re dealing with trends and and things that change every year in and out. And so we try to keep it simple with retail ideas and those are probably four that are the most interesting.
01:46 Speaker A
Mhm. So keep it simple and it’s it’s hard to keep it simple when there’s so many different signals of where you can look at to tell you what’s going on with the consumer, whether it be earnings, the hard data, the soft data, the surveys, expectations. Is there one thing that you look at that that gives you more confidence than maybe some of the other data points?
02:13 Speaker B
So, you know, we focus on the e-commerce names and so to the extent that that e-commerce trends continue to be healthy, which they are, so growing in the upper single digits. You know, that’s an indication. You have to find the companies that are gaining share within that mix. Of course, Shopify with the exception of the outage today is gaining a tremendous share growing at about three times the rate of the industry. Amazon given its size, scale, ability to ship so close to the holiday, is a tends to be a huge beneficiary around the holidays as well. And then other names like eBay and Etsy, uh they’re doing well, um but for different reasons and sorry for that phone call, but um they’re doing well for other reasons. But um, you know, they’re they’re not I think particularly levered to the holiday the way that the traditional retailers are.
03:09 Speaker A
Do you think they could do well beyond the holiday season or or are there other things at play that maybe they’re struggling to to catch up to some of those bigger names that you mentioned?
03:22 Speaker B
So, eBay’s had a tremendous turnaround and they’re doing well as a company, but you know, eBay and Etsy are, you know, lower single digit growth type businesses now. And so I think when you’re looking for compounding businesses and growth, you want companies that are really gaining market share, which is why I highlight Amazon most prominently because of the valuation support that it has and the market share gaining trends that that support that business. Shopify, although it’s an expensive stock, is gaining a tremendous amount of share. And then Walmart, which we don’t cover, but’s doing a very good job of of um managing its business and becoming a much more relevant company again.