Bloomberg Intelligence Podcast Summary

Episode: Nike, FedEx Latest to Pull Back Forecasts on Trump’s Tariffs
Date: March 21, 2025
Hosts: Scarlet Fu & Paul Sweeney

Overview

This episode examines how U.S. corporate giants Nike and FedEx are downgrading their financial forecasts amid the ongoing uncertainty around tariffs proposed by the Trump administration. The hosts, joined by Bloomberg Intelligence analysts, break down company-specific execution challenges, supply chain woes, how broader economic and policy uncertainty affects company behavior (from capex to pricing), and what this all means for the state of the U.S. consumer and commercial real estate.

Key Discussion Points & Insights

1. Nike’s Weak Performance: Execution or Market?

Guest: Poonam Goyal, Senior U.S. Retail E-commerce Analyst, Bloomberg Intelligence
Segment Begins: [01:41]

Company-Specific Weakness

• Nike’s disappointing results are attributed mostly to "company specific" issues, not broad consumer weakness.
  • “Nike results will stay weak until they get their inventory realigned with sales. And that’s not going to happen overnight. Take at least 2 to 3 quarters at the minimum.” – Poonam Goyal [02:25]
• The inventory mismanagement is primarily due to a backlog of “classic inventory that just isn’t resonating with customers” [03:35].
• The company must clear this inventory through outlets and discounts, which will impact margins.

Inventory Missteps and Leadership Shifts

• The misalignment grew after former CEO John Donahoe pivoted to a digital-first, direct-to-consumer strategy but didn’t innovate products enough.
  • "You saw for example, they used a shoe and they just rolled out multiple color waves in it. There wasn’t as much innovation as what the consumer is used to from Nike." – Poonam Goyal [04:42]
• New CEO Elliot Hill is viewed positively: “We think [his plan] will work. It will drive Nike back to be the lead and get the mind share that it has held for so many decades.” [02:50]

Competitive Landscape

• Nike’s market share has been grabbed by brands like Hoka, On, Adidas, and Puma.
  • “When I walk into a Foot Locker, I see everything in there. I see Nike, I see On, I see Hoka. So everyone took a little bit of it.” [05:31]
• Nike’s competitors did not suffer the same inventory problems and have more favorable markdown positions for the coming quarters.

Margins and the Tariff Factor

• While tariffs are impacting gross margins industry-wide, most of Nike’s margin pressure is due to required markdowns to clear inventory.
  • “The bulk of it is due to the markdowns... tariffs does have an impact, but it's a very small part of that margin compression.” – Poonam Goyal [04:11]

2. FedEx and Macro Uncertainty

Guest: Lee Klaskow, Senior Transport Logistics & Shipping Analyst, Bloomberg Intelligence
Segment Begins: [06:36]

Macro Challenges Over Company Missteps

• FedEx’s underwhelming results are more about macro softness—especially in B2B volumes and the industrial economy—than company-specific failings.
  • “A lot has to do with the fact that the macro is a little weaker than they thought and the weakness that they were seeing is in the business to business volumes as well as the industrial economy.” – Lee Klaskow [07:57]

Transformation & Efficiency Drive

• FedEx is merging ground and express divisions (already in Canada; eventually in the U.S.), restructuring their air network, and pushing for “profitable density”.
• While they have achieved cost savings, the softer macro backdrop has offset these gains.

Forecasting Challenges Under Policy Uncertainty

• With potential for new tariffs, changes to de minimis trade exemptions, and inflationary pressure, corporate America is in “wait-and-see” mode.
  • “Looking forward... it's very difficult for FedEx or really anyone that deals with the economy to forecast where they think volumes are going to go because we really don't know. There’s so much uncertainty as you mentioned earlier whether it’s the risk from tariffs, inflationary risk, or getting rid of the de minimis exemptions for low-valued freight out of China." – Lee Klaskow [07:57]

Tariff “Base Case”

• Klaskow notes there is “no base case” scenario for tariffs: FedEx, like competitors, is waiting for regulatory clarity to adjust plans.
  • “The base case is that we’re going to operate in the environment that is given to us and it’s not going to be special to us because... our major competitor UPS is going to have to deal with a similar situation. So I think they just want to know what the rules of the road are so then they can kind of operate.” [10:04]

Long-Term View

• Street analysts project attractive long-term earnings growth, but that hinges on management’s ability to execute once macro and policy headwinds ease.
  • “When the demand environment is less volatile and more predictable [FedEx’s cost cutting] will be very good for margins. It’s just like, how long are you willing to wait for that to happen?” [11:04]

3. Tariffs, Rate Cuts, and Commercial Real Estate Outlook

Guest: Hessam Nadji, CEO, Marcus & Millichap (commercial real estate firm)
Segment Begins: [14:20]

CRE Fundamentals Remain Solid, But Uncertainty Prevails

• Despite paused rate cuts and economic jitters, industry fundamentals are still “well intact.”
  • “The enthusiasm that we saw post election... is still there. But... in the near term we've seen a lot of our clients just pause for a minute to see what happens with tariffs, to see what happens with the economy.” – Hessam Nadji [14:47]

Lending & Distress

• Construction financing is “the most difficult to get right now” due to lender caution, but fears of systemic distress in commercial real estate are overblown.
  • “There’s way too much worry about distress sales and distress becoming contagion... Have not seen it, haven’t seen it because of the fundamentals being healthy” [15:59]

Apartments & Supply Constraints

• He notes a recent 50-70% decline in new apartment construction starts, which could benefit the sector by limiting risks of oversupply.
  • "Any more constraint on new development is actually positive for the industry because we've been building a lot of apartments over the last few years before all of this tariff talk..." [16:52]

Office Market Nuance

• While obsolete office buildings in select urban areas have sold at steep discounts, “most of your audience probably is unaware that the office market is actually coming back... especially in New York.”
  • “About 8 million square feet between downtown and midtown Manhattan were absorbed in the second half of 2024.” [16:52]

No Systemic Distress

• Only isolated, obsolete properties are trading at “bargain basement prices.”
• Opportunity and distressed debt funds have struggled to find systemic bargains.
  • “There is situational distress, but there is no systemic distress.” – Hessam Nadji [19:05]

Regional Highlights

• Markets in Texas, Arizona, Florida, and Georgia remain attractive due to demographics and job growth.
• California, often perceived as risky, now offers good value relative to replacement cost.

Memorable Quotes

• Poonam Goyal [Nike]:

  • “Nike results will stay weak until they get their inventory realigned with sales. And that's not going to happen overnight.” [02:23]
  • “Everyone took a little bit of it... Today, when I walk into a Foot Locker, I see everything in there. I see Nike, I see On, I see Hoka.” [05:31]

• Lee Klaskow [FedEx]:

  • “I think they just want to know what the rules of the road are so then they can kind of operate.” [10:04]
  • “At the end of the day, the things that they are doing today, when the demand environment is less volatile and more predictable, will be very good for margins. It’s just... how long are you willing to wait?” [11:04]

• Hessam Nadji [Commercial Real Estate]:

  • “Any more constraint on new development is actually positive for the industry because we've been building a lot of apartments over the last few years...” [16:52]
  • "There is situational distress, but there is no systemic distress." [19:05]

Key Timestamps for Notable Segments

• [01:41] Nike’s inventory challenges and outlook – Poonam Goyal
• [07:57] FedEx’s macro woes and transformation efforts – Lee Klaskow
• [10:04] Discussion on tariffs and policy uncertainty – Lee Klaskow
• [14:20] Impact of economic and policy uncertainty on commercial real estate – Hessam Nadji

Tone

The podcast features sharp, data-driven analysis with a conversational and occasionally humorous tone. The hosts engage directly with Bloomberg Intelligence experts, seeking practical, actionable insights relevant to investors and market observers.

Conclusion

• Nike’s struggles are primarily of its own making, centered on inventory mismanagement, though broader headwinds persist due to tariffs.
• FedEx faces unpredictable macro forces and is cautious on forecasting volumes amid tariff uncertainty and policy limbo.
• Commercial real estate fundamentals remain healthier than headlines suggest, with selective pain in obsolete sectors but no systemic collapse—a sector awaiting clarity and normalization of rates and policy.

For investors and observers: This episode provides an in-depth look at how leading companies are coping with both internal missteps and the broader economic and regulatory fog, offering a nuanced perspective on market risks for 2025.