How is the Modern Consumer Faring in Today’s Economy? A Discussion with Susan Anderson, CFA and Brian McNamara, CFA from CG’s Consumer Research Team

In light of fourth quarter earnings and recent economic data, senior analysts Susan Anderson, CFA (who covers Health, Wellness and Beauty) and Brian McNamara, CFA (who covers Home, Outdoor and Auto) join the podcast to discuss the latest trends and themes in the consumer sector. Susan highlights changes in the consumer’s relationship with wellness and beauty, and Brian discusses the evolving housing landscape. The two analysts also explore the impacts of consumer bifurcation (differences between the health of higher-end consumers vs. lower/middle income consumers), tariffs, innovation, and demographic shifts on their covered companies.

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Transcript

Michael Graham | 00;00;00;00 | 00;00;06;18 | Come along on our journey through the growth economy. I'm your host, Michael Graham, director of research at Canaccord Genuity.
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 | Michael Graham | 00;00;15;24 | 00;00;45;00 | So here at Canaccord we cover four segments of the growth economy technology, health care, sustainability and consumer. Within consumer, we cover the growth areas around the modern consumer. We have a big franchise in this area. It's got a great group of investment bankers. In CG. So we're partners. We have a great research team. We have two of our best and brightest analysts here on the podcast today.
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 | Michael Graham | 00;00;45;02 | 00;01;07;24 | The first is our wonderful health, wellness and beauty analyst, Susan Anderson, CFA. Susan has over 20 years of outside research experience in these areas, and she's been here at the firm with us for several years now, and we're very gratified to have her. And similarly, Brian McNamara, CFA, also has over 20 years of experience covering his sector.
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 | Michael Graham | 00;01;07;25 | 00;01;31;11 | He covers the home, outdoor and auto sectors. He has a great deal of buy side experience as well as sell side experience, which serves our investor clients, very well. We had a fascinating discussion with Susan and Brian today. We talked about the health of the consumer, innovation from consumer companies, the bifurcation of the consumer along income and wealth lines.
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 | Michael Graham | 00;01;31;13 | 00;01;34;17 | Fascinating discussion. So let's jump right into it.
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 | Michael Graham | 00;01;42;07 | 00;02;03;10 | Very excited to have our consumer research team here on the podcast. Susan, why don't we start with you? Maybe describe your coverage area for us and talk about, some of the key themes that you've been seeing, come out of earnings season and some of the key themes you're hearing when you're speaking with investors of these days.
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 | Susan Anderson | 00;02;03;12 | 00;02;27;18 | Yeah. So I cover the health, wellness and beauty space here at Canaccord, which includes companies such as Chem View and Bakersfield Consumer Health Care. In the health space, companies such as Nature's Sunshine and Wellness and Then and Beauty, we cover well-known brands such as S.A. Lauder, to up and coming brands such as Elf and Olaplex. So it's an exciting time to be following the space.
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 | Susan Anderson | 00;02;27;18 | 00;02;50;19 | I think there's been a lot of new consumer trends driving innovation. We see several themes emerging in the space. So, you know, the first one I want to talk about is how we think self-care is really ripe for growth. With this increased consumer focus on wellness and a changing health care view, consumers continue to prioritize their health and wellness.
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 | Susan Anderson | 00;02;50;19 | 00;03;23;04 | There was a McKinsey survey, out that found that 82% of consumers now consider wellness a top priority, and that's up from 42% back in 2020. So a pretty big jump there. Additionally, with RFK now focus on changing the health care view and prioritizing preventive versus reactive solutions, I think that the self-care industry is really ripe for growth, particularly in new innovation areas such as personalized BMI students, medicine, preventive testing, and telehealth.
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 | Susan Anderson | 00;03;23;07 | 00;03;48;21 | This could also eventually, you know, push payers to pay for preventive wellness or, you know, even have been covered by HSA or face. So I think a huge opportunity there. The second thing that we saw emerging out of earnings is that beauty has normalized down. But it's really not out. So beauty remains strong through holiday with mass up mid-single digit percentage up high single digit.
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 | Susan Anderson | 00;03;48;23 | 00;04;12;16 | So we've seen a slowdown from the post Covid double digit rates of growth and entering 2025. We think that growth is more normalized in the low single digits to mid-single digits range. That said, though, beauty growth is down but really just normalized. We think in our view, we think that consumers still want to look and feel good, and that will keep beauty as a priority in their wallet.
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 | Susan Anderson | 00;04;12;19 | 00;04;41;05 | And then finally, we expect innovation to pick up across health, wellness and beauty. A lot of companies that we cover have been talking about innovation that's, really, you know, over the past since Covid, a good portion of sales were driven by higher prices. And now companies are really refocusing on driving that growth through a ramp up in their R&D to drive innovative new products, to really entice consumers about what you need to do nowadays.
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 | Susan Anderson | 00;04;41;06 | 00;04;56;02 | So that's been really a key theme across recent reports that we've seen come out. And really we've heard about who consumers will open their wallet when they have something new and innovative to buy.
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 | Michael Graham | 00;04;56;04 | 00;05;09;05 | That's a really interesting point you made about payers potentially, paying for preventative wellness products. Have you seen any, you know, big examples of that so far, or is that something that is still sort of out on the horizon?
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 | Susan Anderson | 00;05;09;07 | 00;05;39;22 | I think it's out on the horizon. It's been a topic of conversation. There's been a lot of new innovative companies, but such as, you know, a biome that has preventative testing and offers, personalized via mesh to go with. Go with that. And they've been working with a lot of employers, you know, and then a lot of these other similar companies have contracted with even some of the payers and health insurance companies, as you know, really more of a test at this point in time.
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 | Susan Anderson | 00;05;39;22 | 00;05;48;29 | But, you know, as that view on health care kind of changes, we could see different ways that health care is paid for.
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 | Michael Graham | 00;05;49;01 | 00;06;00;29 | Fantastic. Thanks for the rundown. Let's turn it over to Brian. Brian, can you talk a little bit about your coverage and tell us what themes are on the top of investors minds these days?
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 | Brian McNamara | 00;06;00;29 | 00;06;35;21 | Yeah, sure. So I cover the home, outdoor and auto sectors primarily, and we also branched out into consumer services recently. And I also cover, a pawnshop operator. So it keeps me, pretty well rounded with, a nice group of eclectic names ranging from Central Garden and Pet to Shark Ninja to Yeti, among others. So I think, broadly speaking, my coverage in general, the key themes are kind of, you know, the pandemic and its aftermath, particularly as it relates to the home and outdoor segments.
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 | Brian McNamara | 00;06;35;23 | 00;07;07;11 | You know, you've seen a lot of things since the pandemic, like supply chain hiccups, you know, you know, inhibiting, supply kind of across autos. You've seen it in the home space as well. So I'll kind of break down a couple of themes for each of my kind of my subsegments in the home space. I think the current, you know, broad theme is kind of that affordability issue, the kind of the rate lock, you know, so higher rates of encourage, staying in place, which has muted kind of repair and remodel activity.
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 | Brian McNamara | 00;07;07;14 | 00;07;30;09 | We think lower rates could go a long way towards kind of remedying this and kind of reigniting housing activity. You look from July blues, I think till July of 21 through September of 24, you had 38 straight, year over year declines in existing home sales. I think they currently stand about 38% below, the peak in January of 2021.
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 | Brian McNamara | 00;07;30;12 | 00;07;57;02 | So that's been a major issue. Kind of across the home space, whether, you know, before you sell a home or what kind of after you purchase a home, you're, you're doing little things to fix it up to make it either more valuable or kind of customize it, for you, for your liking. Kind of when you get into the space, those kind of activities have, have really, you know, they've, they've been subdued, to say the least, over the last couple of years.
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 | Brian McNamara | 00;07;57;05 | 00;08;22;05 | On the affordability front, I mean, it's just been night and day in terms of where we were with 3% mortgage rates, you know, 3 or 4 years ago. And now we're kind of we've been hovering around 7% for quite a while. To put that into perspective, if you just look at the January 3rd, median home sale price, relative to where it was in January of 21, you're up about 30, 31%.
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 | Brian McNamara | 00;08;22;07 | 00;08;42;03 | And if you just translated that into a mortgage payment, you know, not not including property tax or anything like that, you're up about 106%. So it's been it's been a struggle and kind of what you've seen is, you know, the luxury buyers and the kind of the older people kind of taking a the lion's share of the of the home purchase activity.
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 | Brian McNamara | 00;08;42;05 | 00;09;02;27 | We can dig in more, more here as we go along with the discussion. And the outdoor space, I think it's just really the pandemic pull forward. And like, that's been kind of the thing like everybody who needed a grill or, you know, a refrigerator or whatever, kind of bought 1 in 2021 and like that, that that story kind of made sense for the first couple of years.
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 | Brian McNamara | 00;09;02;27 | 00;09;24;27 | But now I think the pendulum is kind of swung too far in the other direction. You know, you have things that are, you know, below 2019 levels in terms of sales, like I'll call out grills for an example, probably about 20% below 2019 levels for grills. In terms of, you know, outdoor participation, that's, that's still seems to trend nicely higher.
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 | Brian McNamara | 00;09;24;27 | 00;09;48;22 | The only difference is the the incremental outdoor participant today is less hard core. We'll call it. So they're not spending the money on the technical gear and the things like that that some of the hardcore folks are. So the issue with, you know, participation is up now. We're just waiting for kind of spending to follow. So we think we could we could have a nice tailwind as it relates to just pure mean reversion.
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 | Brian McNamara | 00;09;48;24 | 00;10;09;25 | You know, as, as, you know, spending trends, you know, kind of go back to where they were, you know, in 2020 and before that and then finally, on autos, I think from the OEM standpoint, in kind of the from a transactional standpoint, affordability is a big issue here as well. I mean, this was exacerbated by supply chain shortages in kind of 2021.
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 | Brian McNamara | 00;10;09;25 | 00;10;30;05 | And 2022. And what you're seeing in the used car market is, you know, that that sweet spot of, of of used cars, kind of that, that three year lease that rolls off and you're seeing that lack of supply. So you know, from 20, I think it's a five year ending 2020, you'll have about 12 million fewer vehicles produced.
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 | Brian McNamara | 00;10;30;05 | 00;10;53;18 | And then, you know, 2021 to 2025. So that that has a big impact on supply. And then for the aftermarket, I think you have, everything remains positive. You have a large aging car park, with miles driven now ahead of pre-pandemic levels and kind of across the my space. You do see this kind of consumer bifurcate and where the higher end is doing a lot better than the lower end.
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 | Brian McNamara | 00;10;53;18 | 00;10;56;15 | But we can get we can dig more into that as the discussion goes on.
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 | Michael Graham | 00;10;57;19 | 00;11;11;03 | Fantastic overview. And I and I know you're famous, Brian, for your channel checks. Maybe just give us a quick rundown on one of your recent, channel check reports. Just maybe spend a minute describing, what you did.
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 | Brian McNamara | 00;11;11;06 | 00;11;29;23 | Yeah. So we'd like to, get our boots on the ground. We love, going into Dick's Sporting Goods stores for one of them. It kind of an informed, our opinion on one of our stocks about a year ago. But it's a trend we're seeing, is in kind of water bottles, I guess they call it hydration.
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 | Brian McNamara | 00;11;29;23 | 00;11;52;12 | These days. A wallet is a big up and coming brand. That's almost taken the place of Stanley, which we kind of discovered in some of our work in 2023. So that's a trend that we continue to monitor. It's been kind of a Johnny come lately trend. We do cover Yeti and Yeti's one. One thing I really like about the Yeti branded is kind of stood the test of time.
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 | Brian McNamara | 00;11;52;14 | 00;12;11;06 | But those those insights have been, you know, really interesting. It's funny because the wallet trend, I'm seeing it with my 11 year old daughter right now, and I can point to a report in November 23rd where we kind of identified it. I don't think we were the one that had been the first to identify, but, it helps at the dinner table to kind of one up.
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 | Brian McNamara | 00;12;11;06 | 00;12;13;07 | My 11 year old there.
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 | Michael Graham | 00;12;13;07 | 00;12;35;20 | That's good. That's, the those opportunities are few and far between. So you got to take those when we can get them. Okay. So you mentioned both of you actually mentioned bifurcation of the US consumer. You know, we've seen this, really coming to the forefront of the discussion. There was a big article in the Wall Street Journal, for earlier, earlier this week or late last week.
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 | Michael Graham | 00;12;35;23 | 00;13;01;13 | That talked about it in detail. Brian, you mentioned, that, you know, the Nar data shows, that really, you know, only wealthy people are sort of buying homes right now. I'd like to just ask Susan first and then Brian, like, how acute is this bifurcation of the consumer in your sectors? You know, Susan, do you do you even really have a low end consumer in your, in your sector?
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 | Michael Graham | 00;13;01;13 | 00;13;06;28 | And just like maybe talk about what you both are seeing on the bifurcation from.
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 | Susan Anderson | 00;13;07;00 | 00;13;39;14 | Yeah. So you know definitely our sector plays across income levels. We have masked beauty and then prestige beauty. But consumer where is really of all income levels kind of shop across both. It's a very interesting dynamics. It just shows how important the beauty is to the consumer or also health and wellness. That said, though, we, you know, we have heard some commentary from some of our companies or, you know, consumer companies as well, that, you know, is still seeing a pretty big bifurcation of the consumer.
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 | Susan Anderson | 00;13;39;16 | 00;14;00;02 | One of our companies that we cover, Helen of Troy, they have a wide range of products from value to premium and they, you know, continue to noted all last year and end of this year that they're still seeing those value products, particularly value hair tools struggle for them. So you know, they sell a lot of hair tools at mass such as Walmart and Target.
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 | Susan Anderson | 00;14;00;05 | 00;14;20;08 | And they just haven't been doing well. And that's been, you know, going on for quite some time now. And then when you look across, you know, just other consumer companies, a lot of them have noted, you know, just that consumers in that high income area continue to do well. But really the the mid tier to low continue to struggle.
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 | Susan Anderson | 00;14;20;08 | 00;14;40;23 | Macy's had noted that, you know, that's the case for them. Is that lower end consumer continues to be pinched by grocery prices and the cost of heating their home or housing. So you know I think that it's still a dynamic that's going on. And you know, we don't really see it changing anytime soon.
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 | Michael Graham | 00;14;40;26 | 00;14;43;22 | And Brian, what are your thoughts on that topic.
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 | Brian McNamara | 00;14;43;22 | 00;15;11;23 | Yeah. So I mean it really the data. So like for existing home sales for example 38 straight months of declines, the last four months have been positive. And like it's kind of like bouncing along the bottom like the worst year 2024 was the worst year since 1995. I'll get to a point here. But I think the if you look at if you break down the data, for January, for example, the 0 to $100,000 home price that, that, that range, was down 14%.
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 | Brian McNamara | 00;15;11;26 | 00;15;32;00 | And then the million plus was up 27%. And so kind of the middle range was kind of up or down kind of single digits. So like what you're what you're seeing is that, the, the higher end buyers taking up more and more share of the few houses that are actually selling at the moment, that's driving median home prices higher.
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 | Brian McNamara | 00;15;32;03 | 00;15;57;03 | So when lower and middle income buyers return, this will probably cause median prices to drop. You know, just a, a change in mix. This underscores kind of the importance of, you know, using other, you know, repeat sales indices, like, you know, Case-Shiller which kind of attempts to demonstrate the more apples to apples comparison. If you look at the median age of a home buyer, in 2024, 56 years old, that was 44 in 2016.
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 | Brian McNamara | 00;15;57;03 | 00;16;16;25 | That is a massive change in a pretty short period of time. And that's really just this affordability complex. If you look in autos similar dynamic year, it's kind of a tale of two cities. You have your your winners and your losers. You know, the luxury buyers keep, keep spending and then the mass market buyers, you know, continue to kind of shift their priorities.
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 | Brian McNamara | 00;16;16;25 | 00;16;45;07 | A case in point, if you look at auto loans transitioning into kind of that 90 day delinquency, that's that's, we're at or near kind of a 15 year high. They're not quite the, the global financial crisis high, but it's approaching that, that number so that that's, you know, gets you a little concerned on the low end. You know, luxury buyers, though, if you look at, you know, sales of I think cars that were $80,000 or more in December were up 37% year over year.
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 | Brian McNamara | 00;16;45;08 | 00;17;05;18 | The car was up, you know, single digits. So, you know, mass market buyers are continue to kind of shift their gears. I think in 2024, the Toyota Rav4 outsold the the F-150. F-150 has been one of the best pickup selling pickup trucks kind of forever. So that kind of tells you that dynamic that we're dealing with as it relates to the bifurcation in the market.
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 | Michael Graham | 00;17;05;18 | 00;17;25;01 | Brian, you have a you have a sector, especially in auto and home that's, you know, sensitive to consumer credit quality and, you know, what their what the consumer is doing with their balance sheet, what are you seeing on the, on the consumer credit front that might be impacting your sector?
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 | Brian McNamara | 00;17;25;01 | 00;17;44;13 | Yeah. I mean, on autos, I just mentioned the kind of the tidbit on the 90 day delinquencies. That's for I think that's for all buyers. The the subprime has been I think that's been at or near the pandemic highs for a while now. So not not great there. On the, on the home side, we're seeing kind of similar dynamics.
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 | Brian McNamara | 00;17;44;13 | 00;18;05;06 | You know, lenders are tightening, tightening up their lending standards. Keep in mind that, you know, 40% of, of homes are owned outright in the US. So it's just it's tougher to get a loan these days and it's tougher to, you know, typically the rule of thumb was, you know, a mortgage or, shelter cost was kind of 28, 30% of your, of your income.
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 | Brian McNamara | 00;18;05;06 | 00;18;27;09 | And now that's kind of trending closer to 40 if you even get the loan. So like it's been a, it's been a struggle to say the least. So like I think in general we need to we need rates to kind of move in the, the lower direction to kind of start kind of springing that housing activity. You know, three quarters of, of mortgages or 5% or below at the moment.
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 | Brian McNamara | 00;18;27;11 | 00;18;43;08 | I want the rates at seven. There's really no incentive to kind of leave your home, I think. I think the market will start to get used to this higher rates, because if you look at it relative to history, like 7% isn't really that high or relative to, you know, lower for longer. It is a an eye opening,
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 | Brian McNamara | 00;18;43;08 | 00;18;44;14 | difference.
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 | Michael Graham | 00;18;44;16 | 00;18;55;25 | Yeah, we definitely saw in the, in the February CPI report that, you know, shelter is a huge weighting in the CPI and it was also up a lot. So as a one and a half point contributor to,
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 | Michael Graham | 00;18;55;25 | 00;19;06;26 | to CPI inflation, which is, you know, a really dramatic increase. So, definitely housing is a key thing that we need to look at here as we, as we roll through the year.
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 | Michael Graham | 00;19;06;29 | 00;19;33;11 | Another topic that is, really front and center these days are, are tariffs and the possibility that they could expand or contract or who knows, there's a lot of volatility in that, you know, kind of messaging in that activity. But can you take a moment and talk about what you're hearing from investors in your companies in terms of tariff impact, how, how nervous are people about tariffs?
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 | Michael Graham | 00;19;33;13 | 00;19;40;06 | You know, are there some sectors of your coverage, that would be more impacted than others? Susan, maybe we could start with you.
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 | Susan Anderson | 00;19;40;06 | 00;20;09;00 | I would say that there's a few companies that I cover that are, you know, more exposed to tariffs. One of them, Alice, which has, you know, pretty high exposure coming from China, where they do most of their manufacturing. And then the other one is Helen Choi, which also does a lot of manufacturing in China. So, you know, just looking at tariffs from China coming into here, you know, those are the two ones that investors have been nervous about.
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 | Susan Anderson | 00;20;09;00 | 00;20;33;06 | But I would say, you know, they've kind of gotten used to it as well. And both companies have done things to, you know, kind of arm against any increase in tariffs similar to what they did during the last of it. The one thing that's the unknown, though, that could impact a bigger portion of my coverage would be is, you know, if tariffs were put on products coming from Europe.
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 | Susan Anderson | 00;20;33;08 | 00;21;10;14 | Whereas a lot of prestige, beauty players manufacture their products in Europe, particularly fragrance. And, you know, there's shipped into the US. So that's kind of one question mark that we don't really know what's going to happen there. And you know, it definitely could impact a larger subset of my companies. But when you look at the health and wellness companies such as, prestige Consumer Health Care, it can do most of them manufacture, you know, procedures primarily in the US and most of their manufacturing in the US can do their manufacturing is typically close to where they sell their products.
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 | Susan Anderson | 00;21;10;14 | 00;21;19;13 | So they're not necessarily as exposed to a tariff situation. I would say it's the players are.
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 | Michael Graham | 00;21;19;15 | 00;21;22;09 | And Brian, what are your views on on tariffs.
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 | Brian McNamara | 00;21;22;09 | 00;21;44;00 | Yeah. So the tariff debate goes back to 2019. And a lot of the, a lot of consumer companies in general started moving their supply chains back then. And then you look, you know, fast forward to today, you know, just just looking at this earnings season like Newell Brands is a coverage stock. They did not include the tariff impact or some kind of tariff estimate in their guidance.
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 | Brian McNamara | 00;21;44;04 | 00;22;12;02 | And the stock got shellacked. For that reason and some others, and then a week later, Shark Ninja, which is kind of been the poster child of tariffs just given, you know, it was spun out of a Hong Kong conglomerate, big China exposure and the like. And they, you know, they expect to be out of China, production, by the end of 2025 with like 90% out by by the end of Q2, they included the incremental 10% Chinese tariffs.
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 | Brian McNamara | 00;22;12;02 | 00;22;34;16 | And their guidance in the stock, I think was up 4%. So there's definitely a heightened sensitivity, from the market in terms of tariff, tariff noise. I know, President Trump kind of said the, the Mexican and Canadian tariffs will kind of go as planned after that kind of initial 30 day pause, yesterday. So we'll see.
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 | Brian McNamara | 00;22;34;16 | 00;23;04;18 | That's definitely going to impact the auto sector because, you know, auto has a lot of dynamics going on right now. One thing that's kind of not really being contemplated is that is that a tariff impact, which is likely to be inflationary on a in a space that can kind of can hardly afford it at the moment. But like I think most, most stocks that I cover, you know, a lot of the kitchen appliance and stuff like that, a lot of that is produced in Asia weather and a lot of it's produced in China.
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 | Brian McNamara | 00;23;04;20 | 00;23;24;05 | Whether that's contract manufacturing or the like. And that's you can't move supply chains that quickly. So, you know, one thing, Shark Ninja has done a really good job of is they started planning for this kind of 5 or 6 years ago. And they're using the same partners and they're going to the Southeast Asia, whether it be Cambodia, Vietnam and the like.
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 | Brian McNamara | 00;23;24;08 | 00;23;46;02 | And a lot of these partners, you know, 70% of their business is with Shark Ninja. So these are like long, long lasting, good relationships where the supply quality, is something that, that they can, kind of count on with these partners. But that's, that's not the same for everybody else. You know, Newell, I think has a lot of the, the domestic manufacture sharing that's insulated.
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 | Brian McNamara | 00;23;46;05 | 00;24;05;26 | They own the great co brand, which is a, you know, think of, think of baby, strollers and things like that. The politicians and go after that last time and I think that kind of benefits them. I think it'll be more of the same this year. But it's definitely something that that that kind of level of policy uncertainty is definitely keeping, investors out.
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 | Brian McNamara | 00;24;05;28 | 00;24;11;21 | You know, if it's the required return, I think is a little bit higher, just given that uncertainty.
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 | Michael Graham | 00;24;12;17 | 00;24;34;21 | Auto is another big category in the CPI, which has not really inflated too much yet. Even though like that market's been very slow in terms of turnover. So Susan, on your example of innovation picking up across health, wellness and beauty, could you give us a few examples of some of the things that you're seeing your companies do to innovate and, you know, compete in the marketplace?
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 | Susan Anderson | 00;24;34;23 | 00;25;18;03 | Yeah, sure. So, you know, I think, it varies across really my coverage and depending on if it's health and wellness or beauty. But you know, within health and wellness, within personal care products or OTC, you know, we're seeing new innovation, you know, within OTC that, you know, potentially coming from consumer demand, whether or not, you know, like Tylenol is coming out with a new easy to swallow pill or something like that, something that's new, where, you know, companies can potentially, you know, mix the price up a little bit, offer a little something extra to the consumer, give them a reason to buy their brand over another brand or private label.
 |   |   |   | 
 | Susan Anderson | 00;25;18;05 | 00;25;44;09 | Then within personal care, you know, there's a lot of DTC brands that have popped up. Some of them are personal ly some of, you know, particularly within the VMs industry, some of them are, you know, just really subscriptions online. So, you know, we're seeing a lot of, traditional platforms such as Edgewell that bought Billy a while back, you know, continue to find new and innovative ways to increase the attractiveness of their products.
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 | Susan Anderson | 00;25;44;09 | 00;26;19;18 | For instance, like in Suncare, Billy came up with a not our, Edgewell came up with a non aerosol can of suncare a last summer, which was very popular. So those types of things, you know, we're seeing, you know, simple things like that. But then when you go into more intricate things such as personalization, movement products, preventive health, there's a lot of new companies, not necessarily within these public companies, but new companies popping up that's offering products and services to, help consumers really prioritize their health.
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 | Susan Anderson | 00;26;19;21 | 00;26;38;02 | Then going into beauty, you know, I think that's one of the reasons why investors think that the industry has slowed recently is there's just been a lack of innovation and a lack of dupes, for that matter, for LPs to be great at doing, you know, prestige products. And we just haven't seen as much as we've seen historically.
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 | Susan Anderson | 00;26;38;06 | 00;26;59;17 | So, you know, from what we're hearing out there, everyone's really kind of ramping up R&D, ramping up innovation to really, kind of really jumpstart that growth. Not that, you know, we've seen that term negative or anything, but just really kind of get it back to better growth than what we've seen in the past. And beauty can be anything from just a new way to apply makeup, such as gel.
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 | Susan Anderson | 00;26;59;17 | 00;27;08;24 | So Milk Makeup, which is owned by Wall and Cars, came out with, you know, gel, blush and lip makeup. And that's been one of the hot new innovations.
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 | Michael Graham | 00;27;08;24 | 00;27;14;21 | Fantastic. Brian, in your space, what are some of the key innovation vectors that you're seeing?
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 | Brian McNamara | 00;27;14;21 | 00;27;35;05 | Yes, I, I would point out one, I guess name and then one kind of, subsector, which would be kind of small kitchen appliances and shark ninja. So shark Ninja separated from a Hong Kong conglomerate in the summer of 23. The stocks done very well. And I think it's all driven by, I always say to investors, they spend money to make money.
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 | Brian McNamara | 00;27;35;07 | 00;27;56;13 | And so they have this consumer feedback loop where they their their go to market strategy. Let's solve consumer problems. They introduce 25 new products a year. And then you know that maybe Gen two of an existing product or the like, but they constantly innovate. They're they're constantly trying to one up, one up themselves. And that has paid tremendous dividends for them.
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 | Brian McNamara | 00;27;56;13 | 00;28;20;02 | So between, you know, sales and marketing and R&D, they spend kind of a mid-teens percentage of sales every year. On, you know, investing in behind, behind these innovations. So I think that's kind of, kind of separated them from the pack. But at the same time, you also see competitors now kind of reigniting their kind of innovation pipeline.
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 | Brian McNamara | 00;28;20;02 | 00;28;31;17 | So I think in general, this kind of renewed innovation is should actually, bode well for kind of multiples in the space. Because it was it was definitely lackluster for several years.
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 | Michael Graham | 00;28;31;18 | 00;28;53;00 | So another overarching theme that we've been talking a lot about in the US is the demographic shift towards an aging population. We've seen multiple takes on this and the impact it could have. On the one hand, you know, you've got it hurts economic growth. You're spending a lot on health care to take care of these folks on the other hand, they tend to be wealthier.
 |   |   |   | 
 | Michael Graham | 00;28;53;00 | 00;29;03;16 | And and maybe a little more spendy, I'm not sure, but, I'd love to get your take, on how, you see this demographic shift impacting your sectors.
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 | Brian McNamara | 00;29;03;16 | 00;29;28;27 | So I think it's actually a net positive, I think, for housing. And I'll give a few reasons here. But, you know, through the pandemic, I think baby boomers preference to kind of age in place has only increased, with many boomers now focused on making their home safe and kind of functional to meet their changing needs. So only 1%, of homes in the U.S are conducive to aging in place at the moment.
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 | Brian McNamara | 00;29;29;00 | 00;29;49;23 | So more than 75% of Americans want to kind of stay in their homes for as long as possible. And this is according to the United, Disability Services. So obviously that's a nice tailwind for the the housing stock that we currently have. And so that's why I'm pretty constructive on, kind of this, you know, repair and remodel dynamic housing investment.
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 | Brian McNamara | 00;29;49;26 | 00;30;11;28 | You know, relationship moving forward. And I think if you look at just the average age of, of, of a home in the US, it's over 40 years old. And obviously that's, that's a nice, you know, sweet spot for you know, obviously repair remodel, renovation, things like that. So I think just from that standpoint, given changing preferences to age in place, that's a net benefit for for the, the, the home segment of my coverage.
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 | Michael Graham | 00;30;13;11 | 00;30;16;22 | Susan, what are your thoughts on the aging population?
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 | Susan Anderson | 00;30;16;24 | 00;30;42;24 | Yeah. So I think it's also a net positive for my industry. You know, these aging consumers are looking to stay healthy and focusing on longevity. Like you said, they're wealthier, so have extra money to spend on aging healthy. This is leading to new products such as preventive testing and VMs. Beauty's also taking advantage of this with new beauty products to help with signs of aging both inside and out.
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 | Susan Anderson | 00;30;42;26 | 00;31;07;29 | New molecules such as in R that help to create Nadp+, which also help combat, aging has been really popular right now. They're being used in supplements and topical aging creams. And then also there's the halo effect around aging concerns that have trickled down to Gen Z teens and tweens, where they're using skincare at historically young ages.
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 | Susan Anderson | 00;31;07;29 | 00;31;15;20 | So I think really that demographic shift will continue to be a positive on my face.
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 | Michael Graham | 00;31;15;23 | 00;31;16;20 | Awesome.
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 | Michael Graham | 00;31;23;10 | 00;31;31;16 | Brian and Susan, thank you so much for the discussion today. We really learned a lot. Really appreciate you taking the time to share your thoughts on the show.

 | Michael Graham | 00;31;24;13 |   | As a reminder, this content is for informational purposes only and should not be taken as legal, business, financial or investment advice. This content is not intended to promote any product or service of Canaccord Genuity. The opinions and views expressed in this program may not necessarily reflect the institutional views of Canaccord Genuity or its affiliates. This program should not be copied, distributed, published or reproduced in whole or in part without the express written consent of Canaccord Genuity.
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 | Michael Graham | 00;31;47;04 | 00;32;01;12 | Certain information contained in this program constitutes forward looking statements, and there is no guarantee that these results will be achieved. Canaccord Genuity has no obligation to provide update or changes to the information in this program. Past performance does not guarantee future results, which may vary.