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The Trump Tariff Era: Say Goodbye To Earnings Forecasts

Alice by Alice
2025-04-14
in News
The Trump Tariff Era: Say Goodbye To Earnings Forecasts
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A few weeks ago, a public company CEO complimented me over coffee. The comment was exactly what I’ve heard from IR directors, CFOs, and CEOs over the years.

These number keepers told me that they are at the mercy of the market and its dynamics, spending a lot of time writing earnings call narratives and developing guidance ranges.

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It all seems so silly, because there’s no need to issue guidance!

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Which brings me to these thoughts today.

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Now might be a good time for corporate executives to use the cover of Trump tariff uncertainty to stop providing any kind of guidance once and for all.

After all, if a “truth social” post can make a difference, how can anyone trust any stellar numbers in this environment (and three and a half years later)?

Delta Air Lines ( DAL ) CEO Ed Bastian caught on this week and withdrew his guidance.

Levi’s ( LEVI ) CEO Michelle Gass went all in and kept her company’s stellar full-year profit forecast alive.

I find this odd, since Levi’s would be hit by tariffs based on where they’re made. Shortly before Trump announced a 90-day tariff pause, a former apparel CEO texted me that the price of a pair of jeans could go up 50% to 100%. But the pause doesn’t include China, where tariffs are currently as high as 145%.

But at least Gass has formed an internal “working group” to start looking at the impact of tariffs on the business.

Walmart ( WMT ) CEO Doug McMillon and CFO John David Rainey met with investors mid-term. The company warned on first-quarter operating profit but kept its full-year outlook unchanged.

“I’ve paused guidance once during my six years in office, and that was during the COVID pandemic,” Andy Callahan, former CEO of Hostess Brands, told me.

He added: “CEOs/CFOs do a lot of work to understand forecasts and do sensitivity analysis on those inputs to determine a range of outcomes that are reliable. They pause when two things happen at once, as they do now…where there is a lot of uncertainty or a short time to resolve. The magnitude of the impact right now is uncertain and likely beyond the CEO’s ability to resolve. They’ll probably pause for at least a quarter. Guidance isn’t necessary, and uncertain or inaccurate guidance is worse than a very reasonable pause. It’s disingenuous to claim it didn’t factor in the impact and leave guidance in place.”

CEOs told me that many companies are likely to withdraw guidance when earnings season kicks off next week. That sounds like the right move, even if it will hurt the company’s stock price. It means investors have to evaluate companies differently—more textbook thinking, rather than trying to predict earnings numbers and subsequent stock price reactions.

I’m curious, though: How much did you rely on sales and profit forecasts for your own companies in the past? If you did rely on them a lot, would you still do so now? After all, any unfinished forecasts are pretty much useless given the tariff uncertainty. I’d love to hear your thoughts – send me an email X @BrianSozzi.

Full disclosure: I have disliked corporate guidance for years and have been a strong advocate that the practice should be discontinued.

It’s time to say goodbye to analyst forecasts and stock prices that fluctuate wildly within seconds of earnings results being released!

I believe that the investment value of a company should be determined by the pure health of the business, not by how an investment bank thinks a company should be run based on their various spreadsheet inputs.

The pure health of a business can be assessed by carefully examining sequential sales, margin, profit and cash flow growth rates in both absolute and relative terms (it’s a bit simplistic here, but at least it can be done).

Nonetheless, several former public company CEOs have told me that providing profit guidance during times of great economic and policy uncertainty (which is the current situation) is not a good idea.

John Chambers, Former Cisco CEO

“A general rule I follow in times of uncertainty is to err on the side of transparency and openness, even if that requires wider guidance ranges with appropriate disclaimers based on market conditions.”

Rich Lesser, Chairman, Boston Consulting Group

We believe it is reasonable to suspend point estimates for forward guidance for the sectors most impacted and most broadly affected. This should include:

Coloring moving parts (e.g., tariffs, pricing, resilience, supply chain movement, productivity and savings to ease pressures, ability to monetize/sell assets) to help investors and analysts model scenarios.

Commitment to share as much information as possible as soon as possible (ideally weeks rather than months).

Commitment to resume formal guidance in the short to medium term once the situation is somewhat clearer/stabilized.”

Bill George, Former Medtronic CEO

“We have discussed this with CEOs recently.

Given the uncertainty around evolving tariffs and their unknown impact on the economy and supply chain, I believe it is prudent to withhold near-term revenue and earnings guidance. This situation is similar to what CEOs experienced during the 2020 COVID-19 pandemic.

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