'It's all about oil': FedEx's transportation costs will be key to this week's earnings

By Bill Peters

Earnings Watch: Lululemon, Macy's and other retailers also report, as conflict with Iran threatens to drive prices higher

FedEx reports quarterly results on Tuesday.

Americans were feeling a bit better about the economy this year - until the conflict with Iran started. With earnings results due this week from package-delivery giant FedEx, along with retail names like Lululemon and Macy's, we'll likely hear more about consumers' attitudes, as gas prices and shipping costs spike and the conflict widens in the Middle East.

Lululemon (LULU) reports results on Tuesday, amid drama over its turnaround efforts and leadership. Macy's (M) reports Wednesday, while FedEx (FDX) reports Thursday.

During the week, Dollar Tree (DLTR), General Mills (GIS), Williams-Sonoma (WSM), Five Below (FIVE), Duluth Holdings (DLTH), Signet Jewelers (SIG) and Darden Restaurants (DAR) also report.

Results from FedEx - itself a proxy for the broader economy as a company that ships items to lots of people and businesses - will arrive as the conflict disrupts its shipments in the Middle East. While the company has dealt with a spell of subdued shipping demand, slashed costs, streamlined its network and wrangled with tariffs - including suing for a refund - Evercore transportation analysts said in a note on Friday that for now, "It's all about oil."

"The topic of oil prices and the economy is all that matters for now," they said, adding that earnings and other financial metrics "will all matter again shortly."

Since the Iran conflict started, FedEx's stock has dropped 9.1% through Friday, while the S&P 500 index SPX has lost 3.6%.

Some analysts say the U.S. and Israel's attacks on Iran - and Iran's attacks on cargo ships - might be the biggest threat to the world's shipping networks since the pandemic. Such supply-chain disruptions risk also rippling through to retailers. Cosmetics chain Ulta Beauty (ULTA) last week said it was "increasingly mindful of rising global conflicts."

Heading into this year, some on Wall Street saw a path for a rebound for the retail industry, on hopes that less-aggressive price increases, easing interest rates, a more subdued trade war and bigger tax refunds would calm consumer anxieties. Retailers for the past several years have been dealing with more selective shoppers, due to higher prices and worries about the economy.

Lululemon, meanwhile, has faced problems of its own. Analysts have raised questions about the athleisure-wear maker's product quality, style choices and who will become its next CEO, after Calvin McDonald's departure. Founder Chip Wilson, who has criticized the company, is trying to shake up its board.

"Expectations are low but so is visibility on the turnaround," Raymond James analysts said of Lululemon's earnings in a note on Friday.

The Wall Street Journal in January reported that activist investor Elliott Investment Management has amassed a stake of more than $1 billion in Lululemon, and said the fund believed that Jane Nielsen, a former executive at Ralph Lauren, could be a good fit for the clothing company's new CEO. The Raymond James analysts said Nielsen would be "an excellent choice given her work turning around Coach and Ralph Lauren."

Lululemon's stock is down 49% over the past 12 months. Shares have suffered an 11-day losing streak, its longest on record.

Wilson, in an open letter on Thursday, warned any candidates for the CEO job that the composition of the board would be crucial to the company's success. He has nominated three candidates for spots on Lululemon's board, which he has said lacked experience in businesses that required creative thinking.

"After three CEO departures without a successor ready to take the helm, one must consider if the company's board is simply not equipped to support visionary leadership, no matter how qualified an individual may be," Wilson said. "Until meaningful change in the boardroom has taken place, success for the new CEO could be a perpetual struggle."

Macy's results will land after the department-store chain in December reported a surprise quarterly same-store sales gain and raised its outlook, even after closing stores and changing up management. But UBS analysts had doubts about the retailer overall, saying that it had lost around 25% of its market share since 2012, amid competition from bargain retailers, Amazon (AMZN) and other brands.

"Each of these groups has major advantages over [Macy's] in either price, product, or service," analyst Jay Sole said in a research note last week. "We think it's unlikely [Macy's] can change this dynamic."

-Bill Peters

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03-16-26 0841ET