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Shares of FedEx and Nike (NKE-5.58%) plunged Friday after their quarterly results both contained disappointing earnings outlooks — in part because of the uncertainty arising from President Donald Trump’s on-again, off-again tariff plans.
FedEx stock fell about 6.6% after the company downgraded its EPS guidance, and gave a range of 60 cents in the forecast. That’s a lot of wiggle room, given that the freight carrier has only three months left in its fiscal year and already knows what’s happened in March, Bloomberg Intelligence’s Lee Klaskow said.
“Getting rid of the de minimis exemption for stuff coming out of China will have an impact on companies like FedEx (FDX-6.64%) and UPS (UPS-1.86%),” Klaskow, BI’s senior freight transportation and logistics analyst, told Quartz. Traffic from Chinese retail sites including Temu (PDD-3.83%) will dry up if the U.S. really ends the tariff exemption on small parcels — and the mechanics of such a change aren’t clear.
Additionally, FedEx’s freight business is suffering from a slowdown in the U.S. industrial economy, with the ISM index staging a fragile rebound in the last couple of months after an extended decline, and could be imperiled by a slowing economy, Klaskow said. The company also has its own individual stressors, including its restructuring efforts.
Nike’s stock fell about 5.8% on Friday after the shoemaker conceded that Trump’s new tariffs are among the factors putting pressure on its operations, affecting its earnings outlook.
“Geopolitical dynamics, new tariffs, volatile foreign exchange rates, and tax regulations” are among the challenges Nike faces, CFO Matthew Friend said during the earnings call on Thursday. “Our fourth-quarter guidance includes our best assessment of these factors based on the data we have available to us.”
CEO Elliott Hill didn’t address whether the company would ask its Chinese suppliers to absorb U.S. tariffs — which retailers including Costco and Walmart have pushed their manufacturers in the country to do. If suppliers won’t cut their prices, then the duties could dig into Nike’s margins.
—Francisco Velasquez contributed to this articke.