This Week in Earnings – Q1’25

Executive commentary reflects an increasingly cautious stance, with even those posting solid Q1 results acknowledging potential headwinds from fluctuating trade policy dynamics and downbeat consumer sentiment, causing them to soften 2025 outlooks (or reaffirm guidance rather than raising). While many point to stable demand trends at present, some cite signs of pressure and increased volatility through April. Amid the heightened uncertainty, executives note the current environment warrants a greater degree of conservatism, with some widening their guidance for a range of scenarios and others withdrawing guidance altogether until they gain greater clarity. 

Indeed, “uncertainty” and “tariffs” continue to dominate earnings calls, with analysts probing for expected impacts and offsets. While tariffs were already top of mind at the start of the year, executives are dedicating more time on calls to mitigation efforts and providing greater granularity around manufacturing footprints, sourcing routes, and regional tariff rate exposures. While those with a strong U.S. manufacturing presence are framing their companies as competitively advantaged to be “net winners” from Trump’s trade policies, others cite obstacles to onshoring/reshoring, noting Asia, including China, will remain a key manufacturing hub for certain products.

Against this backdrop, with consumer sentiment in the doldrums and tariff policy clouding the road ahead, executives are turning to their downturn playbooks, evaluating spending plans, readying cost control levers, and pointing to success navigating prior downturns.

Key Themes

• Macro & Outlooks – Executives Strike a Cautious Tone as Uncertainty Rises; Even Strong Q1 Performers Temper Expectations, While Others Augment or Withdraw Guidance as They Await Greater Clarity  
• Tariffs – Amid a Fluid Trade Policy Backdrop, Companies Prepare for Various Scenarios and Dive Deeper into Impacts and Mitigation Levers; Some Cite Strong Domestic Footprints as a Competitive Edge
• Sourcing – Despite Moves to Reduce Reliance on China, Asia, Including China, Remains a Key Manufacturing Center for Some Industries; Execs Cite Obstacles to Onshoring / Nearshoring
• Consumer Spending Patterns – Execs Point to Weakening Sentiment and Volatile Demand Trends; Some Highlight Cushion from Industry-Specific Dynamics and Value Propositions
• Expense Management – Execs “Recalibrate” Spending Plans and Lean into Expense Management Actions