The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Sebastian Pellejero
NEW YORK, April 28 (Reuters Breakingviews) - What CEOs are saying now is as worrisome as what they aren’t. Widespread abandonment of earnings guidance is the main concern, as whipsawing U.S. tariff policy makes it harder to forecast their future. At the same time, other telltale signs of trouble have been trickling out of companies from American Airlines to Domino’s Pizza DPZ.O that suggest Wall Street’s outlook remains too rosy.
Domino’s provided the latest cautionary note, surprising investors by saying on Monday that sales at its U.S. stores open at least a year fell 0.5% during the first quarter because of the pressure customers are facing. Boss Russell Weiner stuck to an earlier 3% annual growth target, but warned that economic conditions could get in the way. Chipotle Mexican Grill CMG.N also said last week that more customers are making food at home, prompting CEO Scott Boatwright to lower the burrito maker’s full-year outlook. Only 13% of U.S. eateries reported a year-over-year increase in February diner traffic, down from nearly half in January, according to the National Restaurant Association.
Travel is suffering too. American AAL.O, Delta Air Lines DAL.N, and Frontier ULCC.O all have yanked their previous financial targets. About 4.5 million visitors arrived in the United States in March, a 10% drop from a year earlier, per official U.S. data. Hotel occupancy tumbled by the same rate during the week ended April 19, according to hospitality research outfit STR. Southwest Airlines CEO Bob Jordan also said his team is restricting capacity ahead of an anticipated drop in trip demand. Corporate anxiety is evident: Recession mentions on earnings calls are up to 35%, from 3% last quarter, Morgan Stanley analysts say.
Retailers are endangered, as well. A collapse in U.S. bound container traffic from China threatens to leave many shelves empty, Apollo Global Management economist Torsten Slok says. Executives from Walmart, Target and Home Depot alerted President Donald Trump of how supply-chain disruptions and rising costs would hurt American shoppers. Consumers are already spooked: A record 60% of those surveyed by the University of Michigan expect business conditions to get worse.
Despite all the fog, these indicators are slowly presenting a clearer picture. Financial analysts broadly have trimmed their earnings forecasts by 1.5%, but still expect 10% growth for 2025, according to Bank of America strategists. In previous slumps, the results have been far worse. From 1979 to 1989, for example, the bottom line at S&P 500 companies improved by about 5% on an annualized basis, with seven years of sub-3% growth. Even when CEOs are flying blind, there is plenty to see.
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Domino’s Pizza on April 28 reported a 0.5% decline in first-quarter U.S. sales for stores open at least a year, as consumers spent less dining out. The company retained its 3% growth outlook for 2025.
US consumers are getting very worried https://reut.rs/4jSnOlG
(Editing by Jeffrey Goldfarb and Maya Nandhini)
((For previous columns by the author, Reuters customers can click on PELLEJERO/ Sebastian.Pellejero@thomsonreuters.com))
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