Even if consumers feel stressed, they're spending, says fmr. Toys R Us CEO Gerald Storch

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what does it mean for next year let's talk about it with jerry storch he runs storch advisors he is the former CEO at hudson 's bay and toys R us he was also vice chair at target jerry listen i am surprised a little bit by the turnaround recently last few weeks in target stock

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maybe we can get to that but your take overall on the numbers that you've seen so far for the holiday shopping season because it ain't over yet this week i can assure you is a lot of people out there looking for bargains

Gerald Storch (CEO) 00:32.280

well i've been saying it's going to be a strong holiday season all year the consumer has really hung in there growing four percent in sales year over year month after month after month after month there's no reason they're going to suddenly stop spending during the holiday time

Gerald Storch (CEO) 00:44.560

so i still think we're on pace for a four to five percent increase year over year in holiday sales very strong

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yeah how would that is that when you say four to five percent is that because of inflation and the dollar value of the same goods is higher or is that just more people and more spending overall

Gerald Storch (CEO) 01:04.890

well it's both there's always inflation in sales but you know people talk about sort of the K shaped economy you mentioned that earlier i keep looking at the at the at the numbers you know kind of looking at clouds trying to find animals i don't see AK in there anywhere you know

Gerald Storch (CEO) 01:18.570

K means sort of the wealthy people have done great and so they're going up and the the less wealthy people have done poorly and they're going down that's not what the numbers say certainly the wealthy have done well the stock market 's been been great it's made made a lot of

Gerald Storch (CEO) 01:30.690

money but they don't tend to spend the money by the way they reinvest it that's why everyone says the sales tax is a regressive tax but they have done well but meanwhile people who don't make quite so much money real wages are still up wages have risen faster than inflation and

Gerald Storch (CEO) 01:43.350

they continue to spend so it's not like a K it's like a tree where the branches are both going up just at different rates

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jerry your notes as it relates to home the home essentially home improvement retailers whether it's home depot or lowe's you're not terribly bullish you think the dynamics both around interest rates but also just frankly housing starts and whatnot are not encouraging and yet

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that K shaped economy i kind of agree with you i think there's a lot of consumption going on i think it's underappreciated and i think the global growth story is underappreciated why not home depot and lowe's i mean valuation wise and i know that's our job but i you know from

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the trenches what's your sense on where these guys are not hitting on all cylinders relative to other retailers that you love that have also had i mean a walmart you know costco you can make an argument these guys had their two to three year run certainly those stocks did

Gerald Storch (CEO) 02:32.520

well it's an open book exam you don't need to use the think method to figure out what's going to happen here you know look back in time you see the numbers that have been posting and what home depot and lowe's have been saying they're saying look people are doing the small

Gerald Storch (CEO) 02:43.600

projects that's fine but not the big projects and they're very interest rate sensitive tied to the housing industry and we've seen there the level of interest rates has held them back that's true also for some of the home goods companies as well like a william sonoma you know

Gerald Storch (CEO) 02:57.600

those kinds of companies as well so we you know i don't think that's going to change less interest it's come down more and they've said as much home depot earnings analyst meeting where they looked forward into next year and said it's going to be slow