Target Q1 2025 Financial Performance Review

EY Macro Pulse – US GDP (Q1 2025 – 1st estimate) Tariff anxiety fuels imports surge 🚨 Real GDP contracted at a 0.3% annualized pace in Q1 2025, reversing the robust 2.4% expansion seen in Q4 2024. While a superficial reading might attribute this downturn to the newly imposed tariffs, the contraction was largely a function of economic activity being pulled forward as importers, businesses and consumers rushed to get ahead of the tariff implementation. This artificial front-loading of demand sets the stage for a sharper demand cliff in Q2—a far more troubling phase of the ongoing economic slowdown. What are the main takeaways? 1. 💥 Domestic demand was artificially robust in Q1, with final sales to private domestic purchasers up 3.0% on the quarter and 3.0% y/y on a pull-forward of demand. 2. 📦 Imports surged 41% – the largest since 1972 excluding the post-pandemic rebound – as businesses front-ran tariffs and filled up inventories. Net trade represented a 4.8ppt drag on GDP growth that was partially offset by a 2.3ppt contribution from inventories. 3. 🛒 Consumer spending rose a modest 1.8%, adding 1.2ppt to growth, but the key private sector surprise in this report was business investment accelerating 9.8% on a 22.5% surge in equipment investment. Information processing equipment skyrocketed 69%, adding 1ppt to GDP growth – the largest boost ever. 4. 📉 Headline and core PCE inflation were stable at 2.5% and 2.8% y/y, respectively, but monthly data shows that #inflation was still converging toward the Federal Reserve’s 2% target in March, supported by strong productivity growth. Of course, this was before the onset of a new inflationary era of hyper-protectionism. 6. 🏦 The #Fed will remain on hold at the upcoming May #FOMC meeting, but it may consider a rate cut in June, if the hard data starts reflecting a pronounced growth slowdown. 🚨 Changes in US trade policy are having a profound impact on the global economy and financial markets. The on-off tariff policy has led to a confidence crisis with businesses favoring a wait-and-see approach in the face of historically elevated policy uncertainty. US consumer sentiment gauges have plunged to their lowest levels since the 1980s while forward-looking business confidence measures are at multiyear lows. 🚨 And while this malaise has yet to precipitate a retrenchment in consumer spending and business investment, massive disruptions to trade flows (with cargo volumes from China down 40% over the past few weeks), persistent policy uncertainty and heightened market volatility pose significant risks to the US economic outlook. 🚨 We have cut our real #GDP growth forecast to 1.1% for 2025 and 2026. Importantly, real GDP is expected to approach stall speed in Q4 with growth at only 0.2% year over year (y/y). While we see the odds of a #recession in the next 12 months around 45%, risks to the outlook are tilted to the downside.

2025 QSR stock returns: Only 5 of 16 major chains finished positive. The rest got cut in half. Yum! Brands: +14.73%. Multi-brand portfolio = resilience. KFC opened 566 units, same-store sales +3-5% across concepts. Three brands > one brand in 2025. Dutch Bros: +13.67%. Opened 160 stores, revenue up 29%. Traffic +4.7% for five straight quarters while everyone else lost customers. Drive-thru model + loyalty = volume resilience. Chili's: +6.78%. Q2 same-store sales +31.4%, traffic +13-16%. TikTok viral + value pricing = casual dining comeback. Full-service at value prices beat premium fast-casual. Dine Brands: +10.77%. IHOP/Applebee's. Acquired 47 Applebee's restaurants in Q4 2024. Menu innovation + guest experience focus = traffic retention. Outperformed casual dining peers while others collapsed. FAT Brands: -87.92%. Worst performer. $10M SEC settlement, 8 consecutive quarters of declining comps. $41.5M operating loss in 9 months. High debt + governance failures = death spiral. Krispy Kreme: -56.53%. $906M debt crisis. Sold Japan operations to reduce debt. Revenue -15.3% in Q1, $441M net loss. Debt-driven operational collapse. Cracker Barrel: -53.90%. Rebranding disaster caused 60% stock drop, $262M valuation loss. Customer backlash + declining food quality = store closures. Strategic missteps cost everything. Sweetgreen: -78.28%. Q3 loss $36.1M. Same-store sales -9.5%, traffic -11.7%. Still negative EBITDA. $13-15 checks = price elasticity ceiling. Sold automation tech = desperation. Premium positioning collapsed. Wendy's: -48.20%. CAVA: -47.78%. Jack in the Box: -49.77%. Mid-tier death zone. Too premium for value competition, not premium enough to justify. Wendy's closing 300 stores. Stuck in the middle = stuck with losses. Chipotle: -36.87%. Shake Shack: -37.15%. Growth stock correction. Valuation compression from 3-5x revenue to 1-2x. Operations held, multiples didn't. Multi-brand portfolios outperformed. YUM and RBI diversified across concepts—when one softened, others compensated. Value crushed premium. Consumer trading down: $13 Sweetgreen salads lost to $10 Chili's meals. Inflation fatigue broke price elasticity. Casual dining diverged violently. Dine Brands +10.77%, Chili's +6.78%, Cheesecake Factory +5.07%. Meanwhile Cracker Barrel -53.90%, Bloomin' Brands -46.66%. Winners focused on value + menu innovation. Losers failed operationally. Growth stocks corrected hardest. Fast-casual traded at premium multiples in 2023. Market re-rated to 1-2x in 2025. Valuation compression = 50-70% of declines. 2025 rewarded diversification and value pricing. It punished complexity, premium positioning, and single-concept risk.

sweetgreen Q1  2025 Earnings Call — AI‑Powered Takeaways (May  8  2025) Analyzed with ProntoNLP (now part of S&P Global)’s AlphaLLM 📈 Big‑Picture Scorecard • LLM Investment Score: ‑0.99 👉 plunged from ‑0.69 last quarter and far below the Hotels Restaurants & Leisure peer average (‑0.17). • LLM Sentiment Score: 0.64 – still mildly upbeat, but sliding from 0.80 in Q4’24. • Over the past five quarters we’ve gone from a +0.85 peak ➜ ‑0.99 trough — a full sentiment U‑turn. 📝 Management Outlook • FY‑25 revenue guidance $740 – $760 M. • 40+ new restaurants planned (20 with “Infinite Kitchen”). • Same‑store‑sales growth = flat; restaurant‑level margin target ≈ 19.5 %. • Adj. EBITDA ≈ $30 M. • New markets on the horizon: Sacramento, Phoenix, Cincinnati. ⚠️ Risks Front‑of‑Mind • Sharp drop in consumer sentiment & traffic. • Tariffs could add ≈ 10 % to build‑out costs. • Q1 same‑store‑sales ‑3.1 % plus a mid‑single‑digit slide in April. • Turnover ~90 % — service consistency still an issue. • LA market recovery hampered by post‑fire effects. • Q1 net loss $25 M on higher occupancy costs. 🎙️ Executive Tone Check • Overall exec remarks: 275 positive / 44 negative. • CEO Jonathan Neman: 213 / 10 — bullish on growth & digital kitchens. • CFO Mitch Reback: 62 / 34 — cautious on margins & cost inflation. ❓ Analyst Hot Topics • Tariff impact on CAPEX & rollout plans • April sales dip and cadence for FY‑25 • Value‑menu strategy & comms • Geographic performance gaps • Capital‑allocation priorities • Tougher comps and demand trends Analyst sentiment overall: 5  positive / 3  negative — cooler heads vs. management optimism. 🔍 Event Trend Snapshot • 53 event types this quarter → 15 improved, 19 deteriorated QoQ. • Forecast category cratered from 0.80 ➜ 0.06 — lowest in two years. 🚀 Why It Matters sweetgreen’s strategic positioning looks rock‑solid, but near‑term execution risks (tariffs, traffic softness, staffing churn) pulled our AI‑derived Investment Score deep into the red. Investors will watch same‑store momentum and margin preservation through FY‑25. ⚡ Stay ahead of the narrative: Follow ProntoNLP (now part of S&P Global) for real‑time, Generative‑AI insights on earnings calls, macro catalysts and market sentiment. Let’s decode the next market move—together! 💡

Ballard Power Systems Q1 2025: Resilience, Discipline, and Patience! Ballard published its Q1 2025 financial results on 6th May, and it reflected the challenging reality facing the hydrogen fuel cell industry. Over the past 12 months, Ballard has been continuously focused on restructuring and cost reductions. These results paint a similar picture going forward. 💰 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐃𝐢𝐬𝐜𝐢𝐩𝐥𝐢𝐧𝐞 🟢 Net loss reduced to $21.0M (down 49% YoY) through cost management 🟢 $578.8M liquidity maintained for market recovery 🟢 Gross margins improved but remain negative at -23% 🟢 12-month order book of $92.4M provides near-term visibility 🔧 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐑𝐞𝐜𝐚𝐥𝐢𝐛𝐫𝐚𝐭𝐢𝐨𝐧 🟠 Operating expense reduction: 29% year-over-year cut, targeting 30%+ total reduction 🟠 Texas gigafactory deferred to 2026 pending market indicators 🟠 China operations under strategic review - no additional investments planned 🟠 Focus pivot: Next-generation, low-cost fuel cell development prioritized 📉 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐑𝐞𝐚𝐥𝐢𝐭𝐲 𝐂𝐡𝐞𝐜𝐤 🔴 Multi-year hydrogen market adoption push-out confirmed 🔴 Policy uncertainties persist across U.S., Europe, and China 🔴 Rising costs and compressed valuations affecting the entire sector 🔴 Customer liquidity challenges impacting order pipelines 🚀 𝐋𝐨𝐨𝐤𝐢𝐧𝐠 𝐀𝐡𝐞𝐚𝐝 ✅ Extreme Cost Discipline: Targeting $100M-$120M operating expenses for FY 2025 (down from $161.3M in 2024) ✅R&D Realignment: Focusing on next-generation fuel cell development with emphasis on cost reduction and manufacturability ✅Customer Focus: Maintaining commitments to existing orders while carefully evaluating new opportunities ✅Geographic Strategy: No additional China investments; focus on core markets in Europe and North America ✅Capital Allocation: Prioritizing balance sheet preservation over expansion investments I posted recently about Air Products financial results (https://lnkd.in/duut6cqJ). These results from Ballard are definitely more hopeful in comparison, but the headwinds identified are on very similar lines. For a company such as Ballard, this is THE core business, and there is no going back as in the case of Air Products. Full Q1 2025 MD&A: https://lnkd.in/dsAGc4rV #BallardPower #HydrogenChallenges #IndustryReality #StrategicRestructuring #fuelcells Umagine

▪️ Strong 1Q 2025 earnings results and progress on trade negotiations have supported equity markets this week. Aggregate S&P 500 EPS grew 12% year/year in 1Q, beating the consensus expectation of 6% growth at the beginning of reporting season. The median S&P 500 stock grew earnings by 6%. ▪️ We maintain our forecast for 3% year/year S&P 500 EPS growth in 2025 to $253, which is below the top-down strategist consensus (+4%, $257) and bottom-up analyst consensus (+7%, $264). Strong operating results from 1Q present upside risk to our forecast, but our economists' forecast for de minimus GDP growth in the second half of this year lead us to leave our EPS forecast unchanged. ▪️ Amid heightened uncertainty, more companies than usual maintained forward guidance for full-year 2025. Many companies maintaining guidance did so while excluding the potential effects of tariffs. ▪️ 1Q results underscore the risk of a potential tariff-induced supply shock in the coming months. Although some managements have stated their intention to build up inventories, the inventory-to-sales ratio for the S&P 500 declined year/year. ▪️ Mega-cap tech re-emerged as the driver of earnings growth during 1Q earnings season. NVDA will report on May 28th. Excluding NVDA, 1Q earnings for the large tech stocks grew by 28% vs. 9% for the S&P 493. Consensus expects the difference between Magnificent 7 and S&P 493 EPS growth to converge from 10 pp in 2025 (15% vs. 5%) to just 2 pp in 2026 (15% vs. 13%), but 2025 EPS revisions have been more negative for the S&P 493 than the Magnificent 7 YTD (-4% vs. flat). ▪️ 1Q results also affirmed our view that the mega-cap tech stocks will drive S&P 500 capex this year. GOOGL reiterated its capex guide and META raised its capex range. However, capex revision breadth has declined, reflecting a weakening outlook for capex spending for the typical S&P 500 stock. ▪️ A recession is the main downside risk to our earnings forecast. S&P 500 EPS typically fall by 13% peak-to-trough during historical recessions. Our economists assign a 45% probability the US economy enters a recession in the next 12 months and the share of S&P 500 managements mentioning "recession" spiked on 1Q earnings calls. However, the mention of "layoffs" remains low, reinforcing the possibility of avoiding a major downturn. ▪️ We roll forward our 3-month S&P 500 return forecast to +0% and our 12-month return forecast to +9%. From the current S&P 500 price, these returns suggest levels of roughly 5700 and 6200, respectively. During the next few months, the combination of an already-tight equity risk premium and deteriorating growth data should make it hard for equities to rise substantially. Ultimately, however, the avoidance of an economic recession, increasing confidence in an earnings reacceleration in 2026, and insurance cuts by the Fed later this year should drive continued US equity gains during the next 12 months.

I have added a few more retailers that reported last week to the Q1 performance chart. I have also added another chart which looks at changes in operating margin. Of the retailers noted on the charts, collective revenue changed as follows: 💰 Q1 2024: $625.570 billion 💰 Q1 2025: $657.685 billion 📈 Change: +5.1% / +$32.115 billion So, as noted before, Q1 was very solid for retail overall – albeit with a mixed performance and a boost from some spending being pulled forward. Interestingly, 51.1% of all of the $32 billion uplift was driven by Walmart and Amazon. On the profit front, collective operating income changed as follows: 💵 Q1 2024: $42.201 billion 💵 Q1 2025: $47.272 billion  📈 Change: +12.0% / +$5.072 billion The collective average operating margin went from 6.7% to 7.2%. Some of this has come from reduced losses as well as profit uplifts. So, as I have noted before, the year started on a pretty positive note for retail, though there are a few cracks creeping in on the margin front. Most retailers reporting expect things to tighten somewhat over the balance of the year, so performance is likely to become more muted. #retail #retailnews #trading #earnings #economy #consumer