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Former Toys ‘R’ Us CEO on importance of the holiday season

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This is a rush transcript from “Your World,” November 24, 2017. This copy may not be in its final form and may be updated.

TRISH REGAN, GUEST HOST: All right, Black Friday isn’t even over, and already retailers are advertising their Cyber Monday deals.

Online competition from Amazon has many traditional retailers fighting for survival. How is this season shaping up and are retailers banking on those GOP tax cuts?

We are asking Gerald Storch, CEO of Storch Advisors and former CEO of Toys ‘R’ Us.

Good to see you. Good to have you here.

GERALD STORCH, FORMER CEO, TOYS ‘R’ US: Great to be here.

REGAN: Tax cuts, how important are they for corporations, for retail, and for the country?

STORCH: Well, I think they’re very important.

Anything that puts more hands — more money in the hands of consumers is great. Anything that puts more money back into companies is fantastic. The U.S. tax rate is among the highest in the world.

And retailers, by the way, don’t have a lot of special tax breaks or loopholes or anything, so they tend to pay very high tax rates as a group of companies. So, this would be very helpful.

REGAN: So, that’s what two investors we were just talking about — talking with were saying as well.

But let me turn now to retail and the Christmas season, holiday season, expectations that sales are going to be up 4 percent. Is this going to be enough for the retail sector, which, frankly, has been under so much pressure?

STORCH: Well, there’s no doubt that this is a very transformational period for retailers.

But there are winners and losers within that. So, there are winners in the bricks-and-mortar world, like a T.J. Maxx or a Costco that are doing quite well, because they offer great value even in those times.

There are companies who are way ahead of the game in terms of getting the Internet and the bricks-and-mortar combination right. And that ultimately is going to be what wins.

REGAN: Mm-hmm.

STORCH: I think, as you read the stories that have taken place this year and what people say, I think it was sort of oversold that the Internet was destroying the bricks-and-mortar retailer, when 85 percent of sales still take place in physical — physical storefronts.

And so what you saw today, for example, was quite a bit of resilience on the part of bricks-and-mortar retailers, where there were mobs in these stores. I went to Walmart and to Best Buy last night.

REGAN: It’s a cool, cool thing, though, right?

STORCH: This is what I do for fun.

REGAN: Oh, it’s what you do for fun. Ah.

(CROSSTALK)

STORCH: And they were mobbed. They were mobbed.

REGAN: The people love — there’s something about Black Friday, right?

STORCH: There is.

REGAN: And Americans love to go out and shop and hunt for deals.

STORCH: Yes.

REGAN: We are consumers.

STORCH: That’s right.

REGAN: That’s a big part of our…

(CROSSTALK)

STORCH: Mobs. And they were in good moods.

REGAN: Yes.

STORCH: People were having fun. This is a form of entertainment.

REGAN: Mm-hmm.

STORCH: People love to go shopping.

REGAN: Mm-hmm.

So, overall, I think that’s a good point, 85 percent of sales still being at brick-and-mortar stores.

(CROSSTALK)

STORCH: The issue is, a lot of the growth, if not all of it, is taking place online.

But even there, not all of that’s Amazon. A lot of that is the growth in the Internet arms of the bricks-and-mortar retailers.

REGAN: So, how should investors be thinking about Amazon? I mean, Jeff Bezos now worth $100 billion. He’s seen $30 billion in his own growth this year. The stock is on a tear. Is it too heady for you? Is it getting to a pop?

STORCH: Look, they have done — they have done — they have done amazing job.

But I have been expecting it not to keep going from the second or third year it was there, and I was wrong. So I’m not going to call anything negative about Amazon.

(LAUGHTER)

STORCH: I would say, though, that there are opportunities in the best bricks-and-mortar retailers, the best traditional retailers.

I mentioned T.J. Maxx. T.J. Maxx is worth more than the entire department store industry. So, if you offer good value, if you take care of the customer, you provide service, a destination they want to go to…

REGAN: It doesn’t matter.

STORCH: And if you’re good at the Internet, you can do it.

REGAN: Yes. Gerald, it’s good to see you. Thank you for coming.

STORCH: Great to be here.

REGAN: All right.

END

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