caroline: from bloomberg world headquarters in new york i'm caroline hyde. stocks saw some red, thanks in part to retail, the sector. u.s. numbers show sales falling in july by more than forecast. is it higher prices for things like groceries, meals out? home depot posting weaker than expected results. saying its e-commerce business

slowed for walmart last. walmart. u.s. e-commerce sales are kind of drifting lower. romaine: that was one of the interesting data points we got out of walmart, in the retail sales numbers. take a look at this next chart. earlier this year we were up around 87, 80 $9 billion in retail, non-store sales. this is what people are spending online. you see that flaking downward over the last couple of months. an interesting trendline that seems to suggest either we are spending less or going into the store or maybe we are not buying things, or maybe we are moving to services or other things to read let's talk more about this and bring in our senior analyst who joins us right now. jennifer, let's start off with some of the numbers we saw a lot of the companies, and specifically the contributions of online sales to the overlying comp sales growth numbers. i believe it was only about .2%. jennifer: it actually was a lot

slower this quarter than it has been in previous quarters. it was expected, it just was a little bit lower -- [indiscernible] and really it has to do with how strong walmart was last year compared to how the consumer has changed this year. and we're just singing consumers are headed back into source, so -- seeing that consumers are headed back into source. -- into stores. anything that you cup curbside counts as a digital order. that is a dynamic that is shifting. taylor: a while ago there was a big push to increase e-commerce. a huge success for the company to take on amazon. then of course there was some margin and you felt like you were ever so close to finally getting profitability within the e-commerce segment. where are we in that process? jennifer: walmart has been edging closer and closer to

profitability in their e-commerce business and that is really because they have done the investment in terms of supply chain and fulfillment capability. and in feet on the ground in the stores is helping to fill the orders. it is going to continue to be a margin strain. we see that it takes a couple of years for an online offering to really reach parity with the sale that is in the store. we're still at the beginning stages of the journey with walmart. so, we'll expect to see some additional margin pressure but it is getting better over time. caroline: what isn't get them better our concerns over supply chain issues, worries about port being closed in china. talk about a from walmart. what is their back-to-school and holiday season going to look like, jennifer? jennifer: we actually think that walmart is well-positioned for the second half of the year for back-to-school and for the holidays. one of the things that walmart has done is they started contracting ships just for their goods to make sure they get here

and get out to their distribution centers and stores. so, they've taken a pretty, an aggressive approach to make sure they will have what they need in stock for consumers this holiday season. we think that they should, all things considered, have a pretty solid end of the year. taylor: jennifer, from bloomberg intelligence. always really appreciative, recapping walmart and that leads us nicely to another retail report we had today. home depot reporting second-quarter results that came in weaker than expected. liz suzuki joins us where she is over at the securities research analysts. what stood out to you when you see home depot? what are your key takeaways? liz: so, i think this quarter, when we think about home depot comparing against one of his strongest quarters in history and it still grew sales by 8%. at bought back almost $7 billion

worth of stock in the first half of the year. it's really deploying that strong balance sheet towards shareholder from initiatives and towards investing in its own capex in terms of the supply chain and improving its competitive mode. what came through was the strength large ticket purchases. the professional customers outpacing the diy customer. last year was really a diy surge. and now we are lapping those strong diy -- we're in a period where the professional is still seeing very strong backlogs of projects. so, growth in high ticket sales came across as an area of strength. romaine: we definitely saw that in the numbers, even the transactions were down we saw the dollar value per transaction go up. lowe's don't quite have the same pool professional customers that home depot has. i'm wondering whether that works against them in their earnings tomorrow morning.

liz: that is right. lowe's only about a 5% of their customers are professionals whereas for home depot it is 45%. home depot gets an outside benefit from that strengthen their professional customer. but i think with, that's been built into expectations for lowe's. the consensus is that lowe's will be reporting negative same-store growth this quarter, down 3%. i think that is a reasonable expectation. when we see that come through tomorrow, i do not think the markets should be surprised. i do think that a deceleration in diy is very much likely but lowe's still has a lot of company specific initiatives where they are gaining share with the pros. they are still the second largest retailer. they are very well positioned in terms of the category to gain market share from all of the smaller independents that are still the majority of the market. caroline: small independents.

against the big players that are looking positive for the rest of the. what is your take, we're talking day in and day out on the show about lumber prices, falling up significant, many talking about inflationary pressures putting off the consumer. do you think that was a reality, and is that going to be less of a headwind going forward? liz: that's right. we actually saw lumber prices contribute a little bit to this top line sales growth for home depot. we'll likely see that at los. -- at lowe's. given the sharp decline in lumber recently, they said it was more of an impact in the first couple months of the quarter and certainly not in july. now that we have seen lumber prices come back down to earth, we think that, for one, that will not be a contributor to topline growth going forward, but i t also will not be a headwind to gross margin which is something we have seen in the last couple quarters. lumber should hopefully be kind of a nonissue for the next couple quarters. something that has been dis --

that will no be as discussed as heavily. taylor: correct me if i am wrong, in the last three years, you have done some good research on this. there is concern about lowe's falling behind home depot in where the stores were located and the physical layouts of the stores. they went under a huge turnaround. how were you thinking about relative value between two, and then the lowe's has done to turnaround the physical layout of the store? liz: lowe's has done a lot of free merchandising, which they put forward. it was in their longer-term plan because they were generating so much cash and doing really well throughout all of 2020. they pulled forward those plans and started investing in that re-merchandising effort earlier. they have made the storm much more pro friendly. they combine products that go together in ways that are more logical for the pro. so, we should start see that

coming through in the gradual market share gains, along with all of the investment with in inventory which is a key element for keeping the loyalty of those pro customers and having good in stock availability. caroline: that is how you able to push us forward. thank you so much. very busy woman at the moment. this earnings season. this is a key company she covers. coming up we continue our discussion about the health of the consumer. with a strategist at consumer spending data analytics company codify. we are getting the inside track of where gen z and the millennials are spending their cash right here, right now. this is bloomberg. ♪

romaine: the big news today was those retail sales numbers and some of the retailers reporting, all the focus on consumer spending and what it means for the recovery. what better way to get a sense of that than some of these high-frequency trades? caroline: coming straight from the likes of codify, which hel ped get -- critically tailored towards gen z and millennials and understanding where they are spending at this moment. it was against we were talking about. lowe's, home depot, perhaps slowing. up 18.8% in terms of sales on week on week basis. year-over-year we are seeing a slowdown. on an anna perspective versus what is happening in the moment. whereas travel, perhaps a little bit of a warning, travel spending starting to slow down in the moment. that speaks to an terms of the delta headwinds we start to see and more lockdowns. let's do it inside with amber foucault, the head of product

and strategist at consumer spending analytics company codify. what really stood out to you on your week by year an -- week by week and year by year data? where are your users putting money? amber: thanks, caroline had great question we did see travelstar to spike. we're really hopeful. in the last month, it has taken a big die. we are seeing entertainment, slightly, especially among those of our users that are currently back. we are seeing theme parks a movie theater start to seeing a return which is encouraging. the other part which is the personal-care space. we're seeing a 35% increase and spend there versus pre-pandemic. some people are try to give themselves a big warm hug during these times, even if the delta variant makes its way back into the mainstream. romaine: they actually go at have to go out of the house. that might have something to do that. i'm curious with regards to

folks being out of the house. we've been talking about how spending on -- is shifting to spending on first services , whether it is traveler going to restaurants. amber: we are seeing a decline right now in the grocery /restaurant space, particular restaurants being down 2% right now, which we are at your meeting, we think to some inflation that we're -- seeing gas and convenience has gone up. we are 15% higher overall and spend then we were pre-pandemic. so, definitely i think that's hurting consumers pocketbooks and that impact is bleeding over to the discretionary spending restaurants. taylor: talk to us about those pocketbooks and how sensitive the consumer is. you mentioned higher gas prices means we pull back in driving. how sensitive really is the consumer, and are they more sensitive than other times? or have we always been this way?

amber: taylor, there is definitely some consumers that have been that way. where we're seeing some's potential spikes are in retail, apparel, ath-leisure. so, certainly, there is no shyness to purchasing those larger, more affluent brands. and basket sizes are also bigger there. it doesn't seem to be impacting consumer spend it all. of course, there is a bigger tendency right now to book travel with brands that you trust. those travel companies that -- did supply refunds for users, they are certainly seeing a lot more of a bounce back since some of those had much more customer support. caroline: this is getting very nitty-gritty, but when we had airbnb numbers, some were saying, maybe delta could be a positive for an airbnb company, because you are going to a private house and you do get more nervous, and you do not

want to going to hotels again. how much of that nerves is being highlighted? you're talking about getting out there into the likes of disney, for example. how much are you seeing that nervousness in the market? amber: it is exactly what we are seeing. we are seeing airbnb numbers continue to steadily rise. where your traditional hotel rooms are not seeing the same. we're up may be a percentage year-over-year on those traditional hotels where airbnb continues to climb. theme parks up 250%, which i do not know about you but the last year felt like a roller coaster to me. but definitely front and center right now for consumers. romaine: just to give us a little bit of an insight into how you guys at cardify track this date up in we talk about the purchases and pointed purchases, what specifically are you looking at to make sure we are getting accurate data amber: we look at actual

transactions in real-time. we have a good view into -- that's helping us make some predictions. we have some compatibilities to run surveys. we're consulate having a full conversation with the users around what they want -- we're constantly having a full conversation. that really gives us a good customer sentiment. taylor: we talk about customer sentiment, not to be too delicate, but there was a time when i was buying mascara not lipstick because we were wearing masks. what is the consumer buying and what is that telling you and using that one example about where they are at? amber: yeah, you know, this personal-care category is really surprising to me. to be up almost 36% tells me there are a lot of things that are moving ahead. things like manicures, were used to go to a salon. instead, there is a lot of purchases that are happening

from amazon and the likes o f other retailers, getting the chance to do these things at home. it's perhaps pulling away from more of the professional services we use to use so much before. they give it like your diy beauty. caroline: do it yourself. i wish do it myself. i'm interested in which the way people are paying on the way in which they have, whether it is media created a reality, that there is a big hole of gen z who aren't caring about getting the vaccine the data supports that p they are willing to go out. is that what you have seen, or are they more reticent, are they more nervous, or are you leaning towards an older gen z, younger millennial? amber: we have got pretty much the full bandwidth of gen z, along with millennial. you're right. the unvaxed folks we have in our platform right now, they're

definitely more likely to be going out to the movies, heading out to concerts. they're the ones booking travel consistently. we're watching the decline of the -- there's a lot of trepidation out there. on a recent survey we did about 2000 participants, 65% of them said that they are not looking to travel over the next couple of months, because they are worried about the delta variant. so, there is definitely some consumer pullback in spend across all categories right now. romaine: great read on what is going on in our economy. amber, really great to get your insights. amber foucault of cardify, th e big consumer spend their tracking data compete. remember shopping malls, guys? caroline: american dream. remember that one? romaine: i do remember. there's one billionaire that is trying to make a fortune buying up shopping centers that no one else wants. that's coming up next on bloomberg.

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taylor: even before the endemic fewer people going to malls. now there are more empty malls than ever before. there is one billionaire who says he cannot hold us down. he's buying shopping malls and no one else wants. joining us is our investing reporter. the headline of the story, calling them bottom feeders catches our attention. talk to us about why the malls and why not? >> bottom is like bottom of the market, so bottom price, and you know -- buying stuff that other people do not want. there are huge mall operators walking away from properties.

diamond, brookfield, startwood. this guy has a formula to make it work, at least for a while. he now owns 268 properties in 35 states. romaine: explain to us what is making it work? how was he making money or making this a viable business in a way that those other companies couldn't? >> the basic thing he does is he buys cheap. buy low. and fill them up with tenants who can play low - pay low rents and not spend a lot on capital improvements. so, the piercing palaces, piercing pagodas, the lids, the pretzels, all the guys you see at the malls, they will be there. there is enough traffic to keep them going and people do not have to, they do not necessarily have to spend a lot. romaine: is that all there is, piercing pagoda and pretzels? what drives it?

i'm just a snobby east coast elite. i don't really understand, does that draw people to the mall, piercing pagoda? >> it takes a lot less to pay off a mall when you pay $10 a square foot than when you pay hundreds and expects thousands of dollars of revenue per square foot per year. these guys can make it work on a few hundred dollars per year per square foot. they do not have apple or tesla source. they have old jcpenneys and a lot of dick's sporting goods, a lot of -- stores that people will spend at in middle america. caroline: this guy, who runs this property company, he's going to be forced to do them up at some point. dicks sporting goods wanted to be kept to standards. >> sure. he says that we maintain our malls unless we are disposing of

the property. yes, you have to make sure they are not leaking and make sure that they meet safety codes, but you do not have to do a total makeover. his plan is to keep these malls functioning as malls. many other people that are buying malls these days think they can get them at a price low enough that they can make money redeveloping the property. that is not his strategy. so, yes, you do have to spend a certain amount of money to keep them up and safe and secure, but you don't have to spend as much as the guys who -- have a bloomingdale's or a luxury hermes shop. caroline: or a ski slope, like they do in new jersey. thank you so much. great story. i mean, kind of interesting the way that apparently some people,

build it and they will come. i'll come. romaine: i think we should all go after this. caroline: i say we go to krispy kreme. romaine: doughnuts. taylor: place inflation is here. bloomberg technology is here. it is up next. ♪

announcer: from the heart of where innovation, money and power collide, and silicone valley and beyond. this is "bloomberg technology" with emily chang. emily: ample ramps up testing for its employees amid the rapid spread of covid-19. testing twice a week and even three times a week in some offices instead of just was. it's the latest