This is a partial transcript from Your World with Neil Cavuto, February 25, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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NEIL CAVUTO, HOST: Do we shop when are simply afraid? When we're afraid of war, when we're afraid of something happening like a terror attack? The president of the United States weighed in on that today with economic journalists at the White House, myself included. One of the issues that he raised again and again was that, no, we do not. And he can well understand this reluctance to spend. But it certainly weighs in on retail figures. And this fellow knows them probably better than anyone else, the incoming CEO of Federated Department Stores, Terry Lundgren.
Mr. Lundgren, welcome, good to have you.
TERRY LUNDGREN, INCOMING CEO, FEDERATED DEPARTMENT STORES (FD): Thanks, Neil.
CAVUTO: Is the president right? are we not shopping because we are just all fear ridden?
LUNDGREN: Well, I think it's a number of things, I mean, certainly the financial markets have not helped. People are not feeling confident about their investments, those coupled with the uncertainty in the Mideast, all add up to slowness in consumer spending and a dip in consumer confidence. So it all comes together to make it for a challenging period for retailers.
CAVUTO: Now, Mr. Lundgren, one of the other issues the president stressed was that once we get over this, this doubt about Iraq, that is a big chunk of the angst out of the way. And people do start sort of spending again, businesses start spending again. Do you agree with that?
LUNDGREN: Well, I definitely do. But in our case it is even perhaps more positive. And that is, for the last two years during this economic uncertainty and challenges we just described, consumers have been buying. What they have been buying is more basic inventories. And what we represent best in Macy's and Bloomingdale's and the other of our stores is a focus on the fashion-oriented consumer. That is missing from the consumer's closet. And so when consumer confidence does return and when they are feeling more sound about their investments, personally and otherwise, that is when we have a strong sense that the customers will return not just to retail, but to stores like Federated Department Stores.
CAVUTO: But you know better than any other that if people don't see the price they want in this very low inflationary environment, some are saying deflationary environment, it's almost spoiling consumers into thinking they can get guys like to you give in and pare your profits to the bone just to keep them shopping.
LUNDGREN: Well, our earnings are pretty good, at least relative to consensus. We just turned in our fourth quarter results which were above the prior estimates by Wall Street. And we have now raised our earnings estimates for 2003. So we are managing in this difficult environment. We understand how consumers react and spend. We are recognizing that this is not going to be a robust period over the next several months for all of the reasons you and I have just discussed. So we are going to use this time to reposition ourselves, make sure that we are focused on the right things, make sure that our product is differentiated to make sure always that we are giving great value to our consumers and making the shopping experience more simple in our stores. So this is a great time for us to reposition ourselves on all of those fronts.
CAVUTO: Terry Lundgren, very much enjoyed having you on, appreciate it.
LUNDGREN: Thanks very much.
CAVUTO: The incoming Federated CEO.
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