At the Forefront of Best Practice

April 4, 2025

April 4, 2025

Commencing the Quarter – Q1’25

15 min. read

Earnings Season is just around the corner, and we’re gearing up for the most dynamic start to Q1 since the COVID-19 onset. Ahead of what promises to continue to be a high-intensity stretch of investor questions and outreach, we’ll be publishing our 62^nd issue of Inside The Buy-Side® Earnings Primer®, offering a timely look at the current investor sentiment landscape amid this period of uncertainty, and importantly, recommendations for companies to navigate effectively. Always, but particularly in times of uncertainty, we remain at the forefront of investor sentiment and investor communication best practices. In this piece, we have also included a pulse poll of investors over the last two days focused on guidance, transparency, and other critical investor communication matters.

Be sure to join us for our upcoming Inside the Buy Side® Earnings Primer® Webinar The Big So What™ – Q1’25 Earnings Season webinar on Wednesday, April 16^th from 12:00 PM – 12:45 PM EST, where I’ll cover our Earnings Primer® research and emerging trends from our channel checks, including guidance and best practice communication strategies. You can register via the link below.

This week, our Thought Leadership covers:

Key Events this week
Q1’25 Earnings Communication Summary, based on a review of company earnings to date
Pulse Poll: Investor Views Following Trump’s Most Recent Tariff Announcement
Recommendations for Upcoming Earnings Season

Key Events

Tariffs

President Trump announced 10% tariffs on all imports into the U.S., and even higher tariffs on goods from about 60 countries or trading blocs that have a high trade deficit with the U.S. That includes China and the European Union, which will be levied new duties of 34% and 20%, respectively. Trump’s latest actions represent the most significant escalation in U.S. tariffs in nearly a century, since the Smoot-Hawley Act of 1930. (Source: CNN)
China’s Finance Ministry on Friday said it will impose a 34% tariff on all goods imported from the U.S. starting on April 10. Separately, China also added 11 U.S. firms to the “unreliable entities list” that the Beijing administration says have violated market rules or contractual commitments. China’s Ministry of Commerce also added 16 U.S. entities to its export control list and said it would implement export controls on seven types of rare earth-related items, including samarium, gadolinium, and terbium. (Source: CNBC)

Employment

U.S. nonfarm payrolls rose by 228,000 in March, beating economist expectations for 140,000 and up from a revised 117,000 in February. However, the unemployment rate ticked up to 4.2%, topping the 4.1% forecast. February’s jobs gain was revised lower from the 151,000 initially reported. Annual wage inflation, as measured by the change in the Average Hourly Earnings, declined to 3.8% from 4.0%. (Source: Bureau of Labor Statistics)
Wednesday’s ADP report showed private companies added 155,000 jobs in March, a sharp increase from the upwardly revised 84,000 in February and better than the Dow Jones forecast for 120,000. On the wage side, earnings rose by 4.6% YoY for those staying in their positions and 6.5% for job changers. The gap between the two matched a series low. (Source: ADP, CNBC)
U.S. initial jobless claims moved lower last week, underscoring that there has been no big increase in newly employed workers through the end of March. The week through March 29 brought 219,000 initial jobless claims, compared with 225,000 a week earlier and lower than expectations of 228,000. (Source: Labor Department)
On Thursday, the monthly report from Challenger, Gray & Christmas revealed that announced layoffs in March totaled 275,240 in March, up 60% MoM and the highest since May 2020. The outsized figure was disproportionately impacted by DOGE cost-cutting actions with 216,215 furloughs from the federal government. (Source: Challenger report, CNBC)

ISM Manufacturing & Services

U.S. manufacturing contracted in March after growing for two straight months, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over tariffs on imported goods. The ISM said its Manufacturing PMI dropped to 49.0 last month from 50.3 in February. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy. (Source: Institute of Supply Management)
Thursday’s ISM Services report showed that the institute’s Non-Manufacturing PMI dropped to 50.8 in March, the lowest reading since June 2024, from 53.5 in February. Economists polled by Reuters had forecast the services PMI easing to 53. (Source: Institute of Supply Management, Reuters)

Q1’25 Earnings Communication Digest

As we do every quarter, we analyzed the earnings communication trends of off-cycle companies reporting over the past month to identify important themes and precedence. These companies span market cap sizes and sectors. We caveat that these earnings calls occurred prior to Trump’s most recent tariff announcement, but we will provide perspective on our expectations for upcoming calls.

In line with preliminary findings from our Inside The Buy-Side® Earnings Primer® — to be released Thursday, April 10 — commentary from recent earnings calls reveals a sharp pullback in tone as executives contend with heightened policy uncertainty and an increasingly downbeat consumer.

Swirling concerns around a global trade war — and related risk to growth and increased inflation — have dominated the headlines of late, with major U.S. equity benchmarks entering correction territory and several Wall Street firms cutting their S&P 500 price targets and 2025 GDP forecasts. Further, the Atlanta Fed’s GDPNow indicator has fallen sharply, now pointing to a steep contraction for Q1’25 (even when factoring in the outsized impact from a rush of gold imports in the quarter’s trade balance data).

Against this backdrop, executives are striking a more conservative posture toward their 2025 outlooks, acknowledging ongoing macro uncertainty, bracing for various scenarios, and doubling down on factors within their control.

No surprise, trade policy and tariff implications have featured heavily on earnings calls. As we highlighted in last week’s Thought Leadership, the frequency of analyst inquiries regarding tariffs is at an all-time high (access Corporate Tariff Communications for strategic recommendations and effective communication practices). While emphasizing that much remains to be known, more companies are calling out regional exposures and mitigation plans (as noted, these off-cycle earnings calls occurred prior to Trump’s April 2 ‘reciprocal tariffs’ announcement). Further, amid analyst probing for signs of demand being pulled forward to get ahead of tariffs, most contend they have yet to see evidence of this dynamic, and acknowledge it is hard to track.

Regarding labor and impacts from the Trump administration’s immigration policies, executives largely report no immediate disruptions, while acknowledging the situation bears close watching — both as it relates to available labor supply as well as potential knock-on effects to consumer behavior.

To that end, executives point to waning consumer confidence, with lower income cohorts under the greatest pressure but higher income groups also increasingly cost-conscious, delaying big purchases, and displaying value-seeking behavior.

Amid this challenging environment, companies continue to lean into cost-cutting and expense management initiatives to dampen the impact and protect margins, though investment continues in areas tied to efficiency/productivity and strategic growth levers such as AI and marketing.

Globally, executives express mixed views toward the current operating environment, with some pockets of strength emerging in Europe, particularly areas tied to defense spending, while China’s recovery remains uneven.

Earnings Topics

Key trends from our analysis of off-cycle earnings calls include:

Expand All

Collapse All

Macro & Outlook

Companies Brace for Soft Demand, Policy Shifts, and a Downbeat Consumer; “Focus is on What We Can Control”

General Mills ($32.6B, Packaged Foods): “Coming into this year, we thought the consumer environment would improve as the year got on, and that hasn’t really been the case. And consumers are still seeking value as much or more than they had when our fiscal year began. If you look at the most recent confidence indices, it would indicate consumer confidence is actually below where it was three months ago and about where it was in 2008. And so, the situation we find ourselves in is different than we thought the one coming into the year.”
Lennar ($30.0B, Residential Construction): “Consistent with last quarter’s earnings call, the macro economy remains challenging as mortgageinterest rates have remained higher for longer, which has left the overall housing market weaker for longer. Across the housing landscape, actionable demand has slowed materially.”
Accenture ($194.7B, IT Services): “As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue. While we continue to believe our work for federal clients is mission-critical, we anticipate ongoing uncertainty as the government’s priorities evolve. Second, in recent weeks, we are seeing an elevated level of what was already significant uncertainty in the global economic and geopolitical environment, marking a shift from our FY’Q1 earnings report in December. At the same time, we believe the fundamentals of our industry remain strong, and we are very well-positioned with our clients.”
Nike ($97.6B, Footwear & Accessories): “We are navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates and tax regulations, as well as the impact of this uncertainty and other macro factors on consumer confidence. Our Q4 guidance includes our best assessment of these factors based on the data we have available to us today.”
Williams-Sonoma ($20.3B, Specialty Retail): “Looking ahead to fiscal 2025, the macroeconomic and policy environment is unpredictable. Our focus is on what we can control, executing on our three key priorities: returning to growth, elevating our world-class service, and driving earnings. Our guidance assumes no meaningful changes in the macroeconomic environment or interest rates or housing turnover. Regarding tariffs, our operating margin guidance includes the tariff increases implemented as of this call.”
Dollar General ($18.9B, Discount Stores): “While our guidance is centered around a macro-neutral outlook, the full range does recognize that there’s still uncertainty both in the broader macro environment as well as for our core customer. We are currently anticipating continued economic pressure on our core customer, though at a relatively consistent level to what they were experiencing as we closed 2024.”
Jefferies ($10.9B, Capital Markets): “The capital markets have become increasingly more challenging due to the uncertainties that have arisen around U.S. policy and geopolitical events. There remains strong dialogue around potential investment banking transactions (capital raising and advisory) and our high-quality backlog continues to build. Its realization depends on confidence and visibility reemerging, which may be beginning.”

Tariffs

Cost Pressures Mount, but Executives Emphasize Agility, Sourcing Shifts, and Pricing Levers as They Await a Clearer Policy Picture

Costco ($423.3B, Discount Stores): “Given events over the last week, it is difficult to predict the impact of tariffs, but our team remains agile, and our goal will be to minimize the impact of related cost increases to our members. About one-third of our sales in the U.S. are imported from other countries and less than half of those are items coming from China, Mexico, and Canada.”
AutoZone ($63.8B, Specialty Retail): ”Recently, 20% tariffs were instituted on all SKUs purchased from China. Now, there are several outcomes that may impact our go-forward results, including vendor absorption, diversifying sourcing, taking pricing actions or some combination of the three. To be clear, we intend to maintain our margin profile post-tariffs, and we expect the entire industry will behave in a rational way as our historical experience has shown.”
FedEx (58.6B, Integrated Freight & Logistics): “I would say to the point on inflation that we are talking to a lot of customers who are anticipating that they will increase prices or already have. So, thematically, that is one conversation that we’ve heard a lot from.”
Lululemon ($35.4B, Apparel Retail): “In terms of tariffs, we’ve got approximately 20 bps of a headwind embedded in our guidance, which is reflective of current actions on China and Mexico imports, and we’re closely monitoring the environment. We’ll continue to look across our cost structure as well as to pricing should the environment change.”
Academy Sports & Outdoors ($3.1B, Specialty Retail): “Contemplated within guidance is the impact of two 10% tariffs placed on China in February and March, and the 25% tariff on steel and aluminum. As we mentioned on the last call, our direct import exposure to China was 10%, and as we sit today is under 9% and trending towards 8%, while we continue to diversify our sourcing base. We have virtually zero exposure to Canada and Mexico. We have mitigated the pressure from the announced tariffs, and we’ll continue to work with our vendors and our price optimization teams to ensure we remain a value leader for our customers.”
McCormick & Company ($22.1B, Packaged Foods): “At this time, we plan to offset costs related to U.S. import tariffs on China with our CCI savings and some very targeted price adjustments. Our focus remains on safeguarding the health and competitiveness of our brands, sustaining the growth momentum in our business, and maintaining transparency with our customers. We don’t believe our current plan actions will be material to the total business or will have a significant impact on our volume mix outlook for the year. That said, due to continued uncertainty on this topic, our outlook does not include any additional impact from tariffs that could potentially be implemented this year. As things evolve, we will provide updates on our outlook within our typical reporting cadence.”
Micron Technology ($98.7B, Semiconductors): “On tariffs, Micron serves as the U.S. importer of record for a very limited volume of products that would be subject to newly announced tariffs on Canada, Mexico and China. We continue to monitor the possibility of future tariffs and are prepared to work with our customers and suppliers to understand future tariff effects and supply chain options that may arise. Where tariffs do have an impact, we intend to pass those costs along to our customers.”
Lennar ($30.0B, Residential Construction): “We’ve been in discussions regarding the potential impacts of tariffs with our supply chain. These discussions all start with a view on margin reductions Lennar has already taken. This leads to a constructive effort to identify alternative sourcing and material strategies. Additionally, we prepare our trade partners to absorb potential increases to their supply chain costs in the event of tariffs. To date, we have had no impact to our costs from tariffs and we will work closely with all our trade partners if further tariffs present themselves to mitigate and offset cost impacts.”
Williams-Sonoma ($20.3B, Specialty Retail): “Mexico and Canada are not a material source of production for us, but there is an impact from tariffs embedded in our guidance. To offset the tariff impact, we have an effective 6-point plan. First is obtaining cost concessions from our vendors. We’re also re-sourcing goods to lower cost countries, including out of China. We are passing on targeted price increases to our customers. And we are identifying further supply chain efficiencies, and we’re reducing SG&A expense. Finally, we’re expanding our Made in USA assortment.”
Winnebago Industries ($1.0B, Recreational Vehicles): “In the event that the tariff environment changes, which is probably more likely than not, we have to have agile methods and processes to be able to react relatively quickly. And so, it will be a mix of different forms of costs going to the market. But, again, I want to reiterate that we’re going to do everything we can, first and foremost, with our suppliers to mitigate that cost. In general, we’re in better shape in fiscal year 2025 into 2026 than we were back in fiscal year 2018, when we saw the first versions of these tariffs from this administration.”

Pull-forward Demand

Most Executives See Little Evidence Ahead of Tariffs, but Note Customer Elasticity Remains ‘Pretty Uncertain’; With Demand Inflections Looming, Expect This to Be a Key Topic on Upcoming Calls

FedEx (58.6B, Integrated Freight & Logistics): “From a feedback perspective, the number one thing that we keep getting asked is has there been a pull forward. We did not see any significant pull forward in FY’Q3. For the most part, a pull forward is really hard, so we have not seen that. Actually, in all the sales calls that I’ve done over the last 90 days, I’ve only met one customer who attempted it, and they regretted it because they ended up storing some excess inventory. Most customers have not made any major changes to date because it’s quite difficult to be able to set up additional inventory in another country or move manufacturing. These are things that happen over months and years, not over weeks.”
Williams-Sonoma ($20.3B, Specialty Retail): “In terms of the question is [consumer] demand being pulled forward, we have no hard evidence of this.”
REV Group ($1.7B, Farm and Heavy Construction Machinery): “This is a unique industry. These are municipally-funded vehicles with a normal replacement cycle that obviously can be extended, but are already pretty extended lead times. It is too early to have any meaningful customer feedback on price, what their buying patterns are going to be based on potential tariffs, which the impacts of those are still pretty uncertain at this point.”
Lindsay ($1.4B, Farm and Heavy Construction Machinery): “[In regards to pull forward demand] I will say in the quarter, we did ship a little bit more of the large project than what we had originally anticipated. I think we had indicated roughly $20M a quarter. We were a little bit above that during Q2, but I don’t think that affects our expectations for Q3 and Q4 which still be kind of back to that cadence that we originally planned on. “
AAR ($2.0B, Aerospace & Defense): First of all, we are not buying ahead of any tariffs. We’re not making any meaningful decisions there. We are focused on keeping track of…to the extent that tariffs impact the OEM price increases to us, we want to make sure that we’re able to pass those increases along to the end user. And it’s important to remember that we’ve been in an inflationary environment for some time even before the tariffs were part of the narrative. Our OEM partners in distribution have been making substantial changes to their pricing to us, which we’ve had to pass on and we’ve been doing that successfully. And we would certainly do that in a tariff environment.”
H.B. Fuller ($3.1B, Specialty Chemicals): “When talking about progression through Q1, we had a strong February. And we’re continuing to see progression like that throughout this quarter. So, we’re not seeing customers push volumes out or move them forward. It’s not really a volume story anyway. It’s just like a slow, steady crawl of volume that we’re experiencing in the market.”
Commercial Metals Company ($5.3B, Steel): “There’s probably some pull-forward of demand in that [rebar] number. But in general, we feel really good about where things are. If we look at our bidding on the rebar side, that remains very strong. You saw our booking numbers and they continue to be strong as we move into March. So, we feel really good about where we are on that front.”

Consumer

Confidence Wanes; Execs Point to Delayed Purchasing and Value-Seeking Behavior in Mid- to Lower-Income Levels

General Mills ($32.6B, Packaged Foods): “[Regarding weakness in the snacks category], our view is that a lot of that has to do with consumer confidence. I mean, yes, GLP-1 use is increasing, but it didn’t change that much QoQ. And we’re also seeing the same kind of activity in dog treats. And to my knowledge, there is not a GLP-1 for dog treats. So even though we take the GLP-1 trend seriously, that’s really not what we see in this environment.”
Lululemon ($35.4B, Apparel Retail): “The dynamic macro environment has contributed to a more cautious consumer. In fact, based on a survey we conducted earlier this month in conjunction with Ipsos, consumers are spending less due to increased concerns about inflation and the economy. This is manifesting itself into slower traffic across the industry in the U.S. in Q1, which we are experiencing in our business as well. However, we see guests who visit us responding to the newness and innovations we’ve brought into our assortment. We are controlling what we can control, and we expect to see modest growth in U.S. revenue for the full year of 2025.”
K.B. Homes ($4.3B, Residential Construction): “Consumers are continuing to cope with affordability concerns and uncertainties around macroeconomic and geopolitical events. As a result, consumer confidence has declined sequentially each month for the past several months, and homebuyers are moving more slowly in making their purchase decisions. While longer-term housing market conditions remain favorable, demand at the start of the spring selling season has been more muted than we have seen over the past few years. As a result of this softer selling environment, we are lowering our revenue guidance for fiscal 2025.”
Lennar ($30.0B, Residential Construction): “Until recently, consumers have been generally confident that they will remain employed and that their compensation is safe. But more recently, even that safety has been called into question, as a somewhat confused consumer and wavering confidence have challenged the consumers’ desire and ability to transact. While there continues to be considerable traffic of customers looking for a home, the urgency to actually transact remained tepid.”
Darden Restaurants ($24.5B, Restaurants): “As it relates to the consumer between $50,000 and $100,000, it’s not growing quite as much as it was before, but it’s still growing when you adjust for weather. Across all income groups, adjusting for weather, the only income group that was negative across our casual brands was below $50,000. All of the other things were positive when you adjust out that bad weather this quarter.”
McCormick & Company ($22.1B, Packaged Foods): “There is increasing consumer uncertainty and concern over returning to more inflation, and this has impacted consumer sentiment, particularly in the last month. This prolongs the consumer context of 2024 where consumers, especially lower-income consumers, are more cautious, exhibiting more value-seeking behavior and tightening their budgets, as many are worried about the future, job security and rising costs. We are seeing this not just in the U.S., but across our key markets.”
Dollar General ($18.9B, Discount Stores): “Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation. Many of our customers report that only have enough money for basic essentials with some noting that they have had to sacrifice even on the necessities.”

Margins & Efficiency

Cost Cutting and Expense Management a Clear Focus, but Investment Continues in Strategic Areas Such as AI and Sales/Marketing

Nike ($97.6B, Footwear & Accessories): “We’re going to continue to manage expenses tightly. And we are focused on ensuring that we invest behind our sales organizations, our key city teams on the one end, and on the other end, making sure that we’ve got the right resources in product and innovation. And so, we’ll continue to try to do it while we manage expenses tightly as we look forward to returning to growth.”
Paychex ($56.4B, Software – Application): “Adjusted operating margins for the quarter were 46.9%. This represents an increase of ~180 bps due to increased productivity and cost discipline. We feel like we have a lot of opportunity in front of us to be able to continue to invest in the business to drive that sustainable top line growth and at the same time deliver the strong margin expansion and earnings growth that our investors have gotten used to over many years.”
Williams-Sonoma ($20.3B, Specialty Retail): “Our supply chain team continues to challenge the status quo and come up with new ways to reduce costs. In 2025, we will continue to limit out of market and multiple shipments to reduce customer accommodations, to lower returns and damages, and to reduce replacements. This part of retail execution is often overlooked but is the key to profitability and customer satisfaction. We believe 2025 will be a year of additional optimization and efficiency. Moving to other earnings drivers, we’ll be tight on employment in 2025 with a focus on using AI to offset headcount growth. Also in marketing, there is opportunity this year to leverage spend by using efficiencies in our in-house marketing program.”
Rubrik ($11.6B, Software): “We improved our subscription ARR contribution margin, 1,400bps YoY. The key leverage areas of efficiency came from a big investment areas in sales and marketing and R&D. Out of the 1,400 bps in margin, ~1200 bps came just from sales and marketing and a number of drivers there. One is productivity. Productivity is a key driver of sales efficiency. We are investing in multiple different levers from a product perspective and more products to sell drives greater productivity. We’re also investing in enablement to make our reps and sales team more productive in the messaging around cyber resilience. And then the last point I would say in R&D, we hire from a global talent pool, and in addition to able to attract great talent outside the HQ, we are also able to get more cost leverage as well by leveraging our presence in India and Israel.“
United Natural Foods ($1.7B, Consumer Staples Distribution & Retail): “As we’ve emphasized before, we are laser-focused on improving processes and removing waste, so we’re better able to bring value and improving service levels to our customers and suppliers. This improving efficiency also partially reflects some benefits from the customer mix shift impacting our gross margin rate…we have now rolled Lean Daily Management out to nine DCs, and we’re pleased with the improvements we are seeing. Several of the newer implementations have already seen initial low single-digit productivity gains, which is good progress to the higher gains we ultimately expect. This is coupled with improvements in safety and delivery quality.”

Labor & Immigration

No Immediate Disruptions Reported as a Result of Tighter Immigration Enforcement, though Companies Continue to Monitor for Long-Term Workforce and Consumer Impacts

Lennar ($30.0B, Residential Construction): “With respect to potential labor disruptions that could derive from immigration policy enforcement, our consistent high volume makes our construction a priority for our trade partners. To date, there’s been no shortage of labor or impact to cycle time. We expect to be as well positioned as possible, should any disruptions present themselves.”
K.B. Homes ($4.3B, Residential Construction): “On the labor, outside of the normal things that we would deal with outside of any regulatory change or ICE or immigration policy change, it’s really just been the same. We’ve seen nothing at all related to immigration. Any kind of normal type of labor shortage we might see on a day-to-day basis in a typical year may still be there, but nothing at all related to immigration policy.”
ABM Industries ($2.9B, Commercial Services & Supplies): “We’re keeping a close watch on the current administration’s approach to immigration policy. While shifts in policy could affect the balance of supply and demand for qualified workers, we’re confident in our ability to adapt, as we’ve always done. Our strong talent acquisition strategies, including technology-driven vetting and hiring, help us stay ahead. So far, we haven’t seen any disruptions or meaningful changes in labor supply or course, and we’re prepared to navigate any challenges that may come as we’ve done time and time again.”
Ross Stores Inc ($42.2B, Specialty Retail): “On immigration policy, what I’d say is we serve a very broad segment of the population. From an ethnic perspective, as you know, we over-indexed to the Hispanic customer versus the general population. We’ll have to wait and see how the macroeconomic environment. And as you say, the immigration policy impacts this important customer for us longer term. We believe the initial shock value of the recent policy actions could dissipate over time while we continue to provide great value and support the communities we serve.”

Around the World

In Europe, Results are Mixed though Strength is Seen in Pockets, Especially in Defense, while China’s Recovery Remains Uneven as U.S. Firms Face Mounting Competitive Pressure

Europe

Cintas Corp ($84.3B, Specialty Business Services): “We’re certainly paying attention to the commentary from the airlines here in Europe and other geographies. Generally speaking, we are not seeing any meaningful decline in demand signals for the services that we offer. So, for parts supply, for airframe-heavy maintenance, and for component maintenance, all of the demand for those services for our customers is as strong as we’ve seen.”
FedEx (58.6B, Integrated Freight & Logistics): “I’ve got a lot of positivity for Europe. From a momentum perspective, I am really pleased. The economy in Europe is not helping that team, and it’s much more difficult to take profitable market share in a down economy, but that’s exactly what the team is doing. How are they doing it? Service has been sequentially better QoQ. Productivity is also improving. And so we’re seeing great flow-through, which allows that flywheel to continue.”
H.B. Fuller ($3.1B, Specialty Chemicals): “In Europe, the construction market was not very good, so our BAS business was slower. Our EA business, which is exposed to automotive there and other durable goods, also, was weak. But the HHC business was in really good shape in Europe. However, there’s a big component of that, which is share wins. So I don’t want to draw too many conclusions about the consumer feeling really good in Europe because a lot of the benefit that we saw was both from innovation and share wins.”
Enerpac Tool Group ($2.5B, Specialty Industrial Machinery): “On the defense side, we’re optimistic about the outlook as European governments look to increase their defense budgets. In the EMEA region, rail has remained solid, mainly due to activity in Italy and Spain; and we are encouraged by our rail-focused new products, some of which have already been approved by network rail in the UK and others in the process of approval. We are also experiencing good activity in infrastructure outside of the U.S., particularly in Europe and the Middle East. Additionally, we are encouraged by the German government’s recently announced spending package that will include additional infrastructure investments of some €500B. We expect that will present a favorable tailwind in the coming years.”

China

Nike ($97.6B, Footwear & Accessories): “Here’s what I’d say about China. We remain committed to China. We see the long-term opportunity there. There’s 1.3B consumers and it’s our opportunity, and what we’ve always done there is to invite and inspire those 1.3B consumers into sport, fitness, and lifestyle sport. I spent some time over there in December. I hadn’t been over there in a while. The competition is a bit more aggressive than when I remembered it four-and-a-half years ago. And so, we’ve just got to accelerate our pace.”
PVH Corp ($4.3B, Apparel Manufacturing): “Starting in February, we began to face incrementally tougher headwinds in China, including a post New Year holiday slowdown that led to a step down in revenue. The trend has since stabilized at these new lower levels. Importantly, we remain fully committed to serving our Chinese consumers and partners for the long term.”
H.B. Fuller ($3.1B, Specialty Chemicals): “In China, we’re seeing MSD-HSD digit growth. As for the overall environment, it is an interesting one. We don’t participate there in the construction space, and I’m pretty glad about that right now. Consumer electronics for us was flat. In some of the smaller electronics, there is really weak consumer demand there. I don’t know if you’ve heard about this cell phone upgrades that normally would have been announced by now by Chinese producers getting delayed a bit, we’re clearly seeing that.”
McCormick & Company ($22.1B, Packaged Foods): “In Asia Pacific, our business in China is recovering gradually relative to the prior year, as expected. We delivered strong performance amid a continually challenged environment. Growth in our categories, including spices and seasonings and condiments, outpaced the market, which included the Chinese New Year holiday.”

Pulse Poll: Investor Views Following Trump’s Most Recent Tariff Announcement

To garner real-time perspectives on the April 2^nd tariff announcements, we pulsed investors and below are our findings:

The majority anticipate broad-based earnings downgrades as a result of the April 2^nd announcements; very few expect companies to offset most of the impacts through mitigation methods

Selected Commentary

“Implied multiples have clearly declined for multiple reasons.”

“I expect earnings forecasts cuts as a function of supply chain disruptions, lower demand from consumers/businesses, and higher input prices.”

“A pullback in corporate investment will have a cascading effect in many sectors of the economy.”

“This is only if we take the announcement at face value. TBD what actually develops.”

When asked what they most want to hear from management teams on upcoming earnings calls, investors point to tariff mitigation strategies as the top priority, including specific self-help initiatives, competitive positioning, and the timing of pricing actions; one-quarter are focused on demand shifts and gaining visibility into how customers are responding in the current environment

Selected Commentary

“I want detail around self-help initiatives and an articulation of what the second derivative impacts might be such as a much slower decision-making process by the company’s customers.”

“How will you absorb the tariffs? Will you raise prices and if so, how broad-based across your portfolios?”

“How will tariffs effect change in pricing and margin or not, and what are the top-line growth impacts? I don’t want them hidden in new guidance, but actually want the delta in their view.”

In terms of credibility-enhancers, investors indicate a strong preference for companies to provide quantified impacts, demonstrate transparency about what’s unknown, outline scenario-based guidance, and address concrete mitigation actions

Most respondents prefer companies wait until the normal quarterly cadence to address tariff impacts, and a slight majority support companies rescinding guidance if they cannot yet responsibly quantify the effects; commentary highlights investor skepticism around premature updates, comparing the situation to early COVID uncertainty, and emphasizing the need for measured, well-informed communication

Selected Commentary

“Companies don’t have enough information to credibly put out a press release and assess the full impact. Take more time to get it right the first time.”

“There are still a lot of moving pieces. We don’t want 5 different updates. Probably best to wait for earnings.”

“We are very close to the normal 1CQ earnings release and conference calls. I don’t see any reason to try and issue any update before that. Additionally, it will take time for everyone to fully evaluate the ramifications.”

“Since tariff news could change quickly, I prefer they wait.”

Selected Commentary

“Somewhat similar to COVID when lots of moving pieces created too much uncertainty.”

“But if you do rescind guidance, provide a scenario analysis.”

“It would feel premature until we know the response from other trading partners and what actually goes into effect. Adjust ranges if necessary.”

“Until companies have concrete information about tariffs, better not to speculate.”

Key Recommendations for Upcoming Earnings Season

At some point over the next few weeks, you’ll receive a litany of questions on tariffs, your exposure, expected impacts, etc. While these questions are inevitable, it’s important to recognize that most investors understand how fluid the situation remains.

The investment community isn’t expecting certainty right now; they know that’s not realistic. What they are looking for is credible, transparent communication and a management team they can trust to steer through the shoals of this intensely dynamic period. To support this perspective, we recommend a two-part framework for upcoming earnings communication:

Reinforce the Economic Engine and Provide a Modeling Kit

Offer investors a clear high-level reminder of how your business model works, what drives performance, and what key assumptions are baked into current guidance. This isn’t about over-indexing on tariffs alone, but rather providing helpful context and modeling inputs, such as:

End-market demand assumptions and geographic exposure
Sensitivities to major COGs inputs like commodity pricing (e.g., steel, oil), interest rates, housing starts, etc.
Assumptions around share count, buybacks, interest expense, and other factors in model mechanics

Being transparent here helps investors build or refine their models and signals that management is operating from a place of control, even in uncertain times. That which investors cannot reasonably assess and process becomes uninvestable.

Outline Your High-Level Mitigation Playbook and Levers at Your Disposal

Once you’ve reinforced and made clear a framework for current guidance, turn to what you’re doing about what’s not fully known — especially as it relates to tariffs and other emerging risks. A few ways to build credibility and instill confidence:

Consider a high-level summary of your supply chain that helps clarify your major direct tariff exposures, and what portion of the cost structure is at risk
Remind the investment community that it is early and the situation remains fluid, but these tariffs are likely to create second and third derivative impacts; then, offer that you are already executing a playbook of mitigating actions
While pricing dynamics are very competitively and commercially sensitive, if you can, reinforce your value proposition to customers (e.g., the critical nature of your products, or the role your offering plays in a broader, essential solution) as this will help support confidence in pricing power without being unnecessarily specific
Emphasize your flexibility, whether in supply chain diversity, cost structure levers, or pricing strategy (we see many pointing to how their supply chains have already evolved dramatically for resilience post Trump 1.0 and COVID)
Avoid phrases such as “it’s too uncertain” that erode already fragile investor confidence; instead, offer guardrails (e.g., outline steps you’d take if market weakness accelerates or if cost impacts exceed thresholds)
Reinforce long-term strengths, such as market positioning, resilience in past cycles, and any early indicators of how customers are reacting

Guidance shouldn’t be pulled reflexively. Doing so without a clear message can send the wrong signal. Instead, consider whether it’s possible to provide a view with reasonable guardrails — even if that view is framed in ranges or scenarios.

In Closing

Over the coming weeks and months, we will hopefully gain clarity around the tariff landscape. Only then will companies be expected to provide a definitive view on impacts. Until that point — and certainly not before April 9th, when President Trump’s reciprocal tariffs are slated to take effect — tariff-related impacts remain largely amorphous for most companies, aside from those directly affected by sector-specific actions such as the 25% tariff on foreign autos or Canadian steel and aluminum.

In the interim, companies should expect order books to slow and decision-making hesitancy to rise. Countries will respond with tariffs of their own, engage in dialogue with the Trump Administration, and jockey for position.

Things will change, and during upcoming conversations with the investment community, companies will be expected to strike the right balance between acknowledging uncertainty while reinforcing preparedness. We will not be providing a ‘catch-all’ guidance recommendation at this time and will navigate each of our client situations based on the circumstances and context.

As noted above, keep an eye out for our Q1’25 Earnings Primer®, which we’ll publish next Thursday, April 10th.

As always, we’re here to support you in mitigating risk and building credibility with investors during these unprecedented times and period of uncertainty.