The Canadian Investor - What Couche-Tard and Lightspeed Are Telling Us About Consumers

Episode Date: March 27, 2025

In this episode of the Canadian Investor Podcast, Dan and Simon start by discussing Lightspeed’s puzzling revenue guidance downgrade ahead of its capital markets day and why it raises more questions than answers. They also cover Tesla’s steep sales decline in Europe and the mounting brand backlash surrounding Elon Musk. Couche-Tard’s latest results are in—with mixed signals across geographies—and Nike shares tumble after ugly guidance and worsening fundamentals. Finally, FedEx continues to make progress on cost-cutting, but persistent economic weakness has forced yet another revenue downgrade. Tickets of stocks/ETFs discussed: TSLA, ATD.TO, LSPD.TO, FDX, NKE Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Are you buying Canadian? Well, why not invest Canadian? At BMO ETFs, we're committed to helping you build a brighter financial future. Because it's our future too. This is our home and as Canadians ourselves, we know what you need to grow wealth right here in Canada. Visit BMOETFs.com for more. Welcome back to the Canadian Investor Podcast. I'm here with Dan Kent. We are back for Thursday news and earnings. Some news, some earnings, a little bit of everything here. We have some Canadian content, some US as well. Not as many Canadian companies reporting, but Lightspeed helping us out for some news content for the podcast. I know you love Lightspeed and how management has been doing.

So you wanna take that away and the fact that they announced that they would be downgrading their guidance. Yeah, Lightspeed, like over the last while is definitely, they've been hitting the PR a lot recently. This one, you know, I don't- He's pretty good at that. He's good at PR. He's good at talking. Yeah.

I mean, this one, it's, this is puzzling to me, but I mean, this is overall just a relatively frustrating stock for me. It's a stock I've kind of owned in and out of since the IPO rebalanced here and there quite a few times, but this recent drawdown is looking pretty bad. And it's a stock that I had been looking to move on from since their February quarterly report but the difficulty is is I've had my money kind of tied up in moving to Questrade which is still going on so I haven't actually been able to sell it but to clarify it's not the issue on the Questrade side is the broker that is creating the... Yes. It's the other broker that is creating a bit of a nightmare, but I mean, I do plan to just

finally move on from this one once that money hits the account. But again, they came out with a bit of a weird press release yesterday that they downgraded their revenue guidance by 2%. And I say weird because the company just reported earnings, well, early February, so what, six, seven weeks ago. And this seems like a relatively small downgrade to come out with and issue a totally separate PR release. And I mean, in addition to this, they have their capital market stay tomorrow.

So, I mean, typically this is... I didn't realize that, yeah. Yeah, so they do their capital market state, which is typically where they provide like, you know, how they're going to grow things like that. Like, I don't really think they dive too deep into this, but I mean, like why release this now? It doesn't really make sense to me. I mean, I'll get to a few reasons as to why

I think they're doing this, but. He went on BNN DAX to talk about it too so I didn't read yeah I mean it just kind of goes over most of the stuff you mentioned and what you'll be talking but yeah basically just the consumer softening in general is a general theme I got yeah I mean I kind of find it difficult to believe you wouldn't have known this back in February. But I mean, they they now plan to grow 18% compared 18% top line growth compared to 20% previously. And they Yeah, they had mentioned that, you know, the macro environment has deteriorated since February six earning reports. And again, I'm not really sure what type of data they would

have got from that point that kind of changed their minds I mean tariff impacts were relatively well known I mean Trump was starting to flip-flop he had already started to flip-flop on tariffs back then The tariffs then the real threat didn't come into effect until early March But even then there was a lot of uncertainty and like like we've talked before, you and I and Brayden too, it's not just the fact that tariffs may or may not go on, it's just the uncertainty it creates. So the fact that they wouldn't have figured out

that consumers may be tightening up the purse a little bit, especially since the Canadian economy is not like it was doing all that great. For example, I know they have business outside of Canada, but I think Canada is still a pretty good chunk of their revenues. And the global economy too, like there was already signs of things slowing.

I mean, you can look, aside from the Fed, I mean, all the central banks are cutting. Usually central banks don't start cutting when things are going fantastic. Yeah, exactly. So I mean, it just, I don't start cutting when things are going fantastic. Yeah, exactly. So I mean, it's just, I don't know, it's, it's weird to me. And I mean, this is speculation by me, but I think it is, is definitely warranted to agree, but I, to a degree, but I just kind of feel the company is doing this in advance to possibly cushion people a bit from possibly a weak capital market day tomorrow or possibly a poor earnings report next quarter.

Because I mean, obviously, if you release these in two separate PRs, it might not hit as much. I mean, you reduce guidance now and then post a poor quarter a couple of months from now. It might have a little bit less of an impact. I find sometimes like it's almost like children, company like some of this stuff They do like the whole thing like oh, we really would like to sell the business and then that was their big thing But again, they then they came out there wasn't really working out and then I know you'll you're going to mention that Once they said well, we didn't really get we had interest but read between the lines The either they didn't get really any offers or the offers were really not great so it's pretty much one or the other then they decided that we will authorize a stock buyback program even though we're losing money. would never question anything like this but I mean like Lightspeed has been just non-stop trying to pretty much control its stock price through press releases. Like the public sale,

the stock spiked on that and then we have like Dax left the company and then he was replaced and then he came back really quickly after a pretty short stint away, which kind of helped the stock price a bit. And then again, you have the public sale and then you have that awkward share buyback, you know, when the company isn't even profitable except for on an adjusted EBITDA basis, which I mean is effectively it's adjusted. You can kind of turn that into whatever you want to highlight profitability. But I just think like like I just think they're

like continually putting out these PR reports and just news like this to kind of control the stock price instead of you know just operationally and if I adjust the lighting perfectly for my camera it may look like I have more hair than I do but the reality is I don't so that's how adjusted metrics work Yeah, I mean I think like I I really like light speed But I mean I think it's just a company that's been pretty much decimated by just terrible decisions by management Including if you go back to the kovat 19 pandemic, I mean at the time I didn't view them as overly expensive but it was pretty clear they blew a lot of money on some acquisitions at some very expensive multiples that are

kind of hurting them now too. But I mean, pretty sad state for this company who was pretty promising post IPO. Yeah, I've railed a lot on DAX for over the years, so obviously take what I'm gonna say with a grain of salt. But I get the feeling that Dax is good at having a vision, but I feel like he needs to have someone there that is more of someone that has a track record of running a business. I feel like that's the part that they're really missing. And even someone who has experience in PR, for example,

and say, okay, DAX, it's probably not a good idea for you to come out. Right now too, you're getting companies left, right, and center revising their guidance. FedEx, which I'll talk about a bit later today, I mean, they've revised their guidance literally three quarters in a row down. So it's not like it's a,

obviously the market doesn't love seeing guidance being revised down, but you're seeing it in a lot of different companies. So yes, your stock will probably take a hit, but I'm not sure like you, it's just a bit of a head scratcher. Hopefully there's a valid reason behind it. But if not, why not wait until your earnings release? When at least you also have a clearer picture. You're getting an extra what six weeks worth of data is probably

when they'll be reporting from now. So why not wait an extra six weeks? Give yourself a bit more leeway because what if something changes and it's even worse than that reduction that they just announced or maybe something changes to the positive and in the end, well, you know what, actually looks better than we thought six weeks ago. Yeah, and I think that that is why my speculation here is that it is, and again, this is speculation, but I mean, it's better to maybe report a reduction in guidance now and a soft quarter in a couple of months rather than both of them at once. Maybe that's the mentality here, but I mean, it's just kind of a weird PR here released in, you know, just a random time when there's again tomorrow they're having an entire event. So yeah, it's

strange. Yeah. Yeah. I'm of the mind that I like when companies just do it all at once. That's just the way because I mean, we saw TFI, we talked about a TFI international, they basically just ripped off the band-aid all at once. The stock took a hit, but granted the stock was at a much higher level in terms of pricing and you know it had not had any significant drawdowns. I think it was slightly going down, so you have to take that in mind too, but I think that's the approach I prefer. It'll be interesting.

I'm sure at this point we'll get some more news on it in the next few weeks and if not we'll see when they release their earnings. I'm sure we won't miss it. and use on it in the next few weeks. And if not, we'll see when they release their earnings. I'm sure we won't miss it. Yeah, I mean, that's like you said with TFI, like that's the approach that like 95% of companies take. This is definitely like, some of them will come out an issue, you know,

reductions or increases in guidance, like, you know, outside of regular events, but not very many. Welcome back into the show. This is the Canadian investor podcast made possible by our friends and show sponsor EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking.

We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April or February. Their GICs are perfect because the interest rate is guaranteed. And I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is coming through the pipeline

or simply want to lower the risk of your overall investment portfolio, EQBank's GICs are a great option. The best thing about EQBank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at EQBank.ca forward slash GIC. Again, EQBank.ca forward slash GIC. TCI listeners, you know that I'm having to constantly travel for work. One

week you're up for meetings. next time in Montreal meeting potential investors, and while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything.

Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Quest Trade now offers $0 commissions on stocks and ETFs. But Quest Trade isn't just about commission free trading. You can also get USD accounts,

so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades.

Don't miss out. Start trading commission free stocks and ETFs today. Visit questrade.com to learn more. Now we'll switch gears to a company that is unanimously loved by everyone, Tesla. And obviously I'm being a little bit sarcastic here. And so I know you have an interesting segment on Tesla getting hammered in Europe. Yeah. So this was something we didn't originally have, but they came up with an article this

morning that I kind of thought would be interesting to talk about. But it came out and pretty much said that Tesla's sales have fallen 42% year over year in Europe. So the company had sold 27,000 vehicles down from 46,000 last year. So these numbers, I believe are January and February. So just the first two months, I believe that decline would also be January and February compared to last year. So first couple months of the year compared to last year. So this actually comes despite EV sales in Europe rising by 28.4% over that time period. So EVs now account for 15% of the total EU market and Tesla, I mean, by the looks of it,

certainly isn't participating here. I mean, many EU car companies like Volkswagen is one I can think of reported actually an increase in EV sales over the same time period. And I mean, right now the situation with Tesla is pretty crazy. I mean, I believe Musk's involvement in Doge is certainly, you know, is sparking a lot of protests.

People are associating them a lot with Trump. Trump is obviously not being very friendly to you know some nations and a lot of people are just kind of opting out for maybe alternative vehicles and I mean it's even getting to the point where I Personally would be scared owning a Tesla out of fears of it being vandalized I mean we saw that dealership in Hamilton they went and Didn't they like they destroyed like 80 vehicles or something on a dealership lot 80 Teslas. I believe that was last week. Yeah. There's been a lot of, you know, a lot of situations of like

vandalism of these vehicles and stuff. And they had JP Morgan. That's too bad. Like just, yeah, I know. I mean, whatever your feelings are about Elon Musk, which he's a very polarizing figure, totally get it. For me, sometimes I just can't stand him and sometimes I find, you know, he has some good things to say. So I find I try to pick out the good from the bad for Elon Musk. That's the way I approach it. But whatever people's or their view, I mean, it's fine to protest. But then when you start like vandalizing, I think that's crossing the line I think it's just kind of sad to see to what extent it's gone You know a lot of people having these Tesla's

May not even agree may not like Elon themselves just based on what he's done over the last six months to a year So you have to keep that in mind. It's just it's too bad kind of where it's gone at this point. That's just my personal view on it. Yeah. Yeah. It's kind of a sad situation, especially from like personal, a personal standpoint. I mean, obviously the vandalism of anything is, is not really all that good, but you can understand, I guess the dealership perspective of it, but I've seen some situations where like people who own these things are, are, they're getting, you know, vandalized the parking lots or something. Yeah. Like it's, uh, it is pretty sad analysts look like I was reading some JP Morgan analysts say that this is the quickest brand fallout

they've ever witnessed in the automobile industry. Like they can't guarantee that it's a full out brand fall out, but they said, you know, if this continues, it'll pretty much be the quickest they've ever witnessed. And I mean, stock price, it's getting, obviously you have a chart here of the stock price. It's just getting hammered. I mean, at one point Tesla was down over 50% on the year. So it's rebounded a bit here. You can see it's now down 42%.

So a bit of a rebound, especially, I believe, you know, a lot of this was on the commentary on tariffs and stuff, how it's relatively just, you know, up in the air as to what he's gonna do. He says he's gonna provide some relief to a lot of countries. And it's also like pretty up in the air, like how long-term, I guess, you're gonna see

that the brand been damaged because of, you know, must involvement here, because I do believe that that's why a lot of this is happening. I believe that's why the sales are falling. I wouldn't doubt you see them fall in Canada as well. And I mean, if you look to Tesla's share price over the last three, four years, it's effectively been dead money. I mean, I believe it's up like 10% or something over the last three, four years, but I mean, uh, could have a look here. It definitely, um, it has not been flat price action. I mean, it's, oh, it's actually a roller coaster ride. Last three years it's down 17%, but it was, you know, you could have, depending when you would have bought, you could have easily done your money.

Yeah. Exactly. So if you go from January to May 2021, it lost 37%. From November 2021 to January 2023, it lost 72%. From July 2023 to August 2024, it lost 50%, nearly 50%. And now again, it's trading down 42% from December all-time highs so we're

sitting at mid-march and it's down that much since December all-time highs so uh what crazy price action on this thing over the last you know three to five years I uh what a roller coaster ride owning this thing yeah I mean I think you're right in terms or that JP Morgan analyst that you said. I think it's right because it used to be early, maybe like 2019, 2020, 2021. It used to be that owning a Tesla was almost like a status symbol, right? Like a lot of people, it was,

wow, you have a Tesla and so on. And now it's almost like fully reversed that a lot of people are putting their Teslas up for sale I've seen stickers of people saying they bought it before Elon went crazy like I've seen all these different kind of things that happen and clearly I think what happens for good or bad people associate Tesla with Elon. That's just when you're that out there as the CEO of the company, you're that outspoken. He was polarizing to begin with even before he joined the Trump administration with the

Doge Department of Government Efficiency. And I think that just supercharged a polarization behind Tesla and Elon Musk. I think Yeah, that's probably the the way I would see it at the end of the day. I've said it time and time again I probably would not bet against see Elon Musk, but it's definitely a tougher time for the company. That's for sure Yeah, that's pretty much why I've never owned it is primarily because of him. I'm out I wouldn't necessarily bet against him I guess but he's just a bit too uh I don't even know the right word for it but I mean you can see obviously in the stock

price over the last while and especially now like that's one of the main reasons well obviously there's some economic difficulties like people aren't buying as much Tesla's as they are during you know the stimulus COVID situation. I mean it's obviously much harder financially, but I think there's a CEO impact here as well, which I mean who knows how long that's going to take to recover from if it ever does. Yeah, I don't know. It'll be interesting to see. Okay, now we'll actually go on to some earnings and we'll start off with some Canadian earnings here with Alimentation Couchetard. So, there was some good and bad here. Not the best result in my opinion, but it still beat estimates and at the end of the day, it's all about expectations.

Revenues were up 6.5% to 21 billion. Europe was the most impressive segment, but it's a bit misleading because that big jump in Europe was in part attributed last to the purchase early last year of Total Energies retail asset or some of the resale asset during the quarter. And they only benefited partially from those additional stores last year while they had the full impact this quarter. So obviously it definitely helped the results there. However, same solar cells in Europe were actually still a little up so they were up 0.1 percent.

Probably not that great when you factor in inflation though when you think about it, right? Europe is, I haven't checked inflation recently but I think it's still probably in line with what we're experiencing, probably a bit higher. And in the US, it was not great. It's probably their worst segment, especially given that it's their largest segment in terms of geography. And same store merchandise sales were down 0.1%.

And there was also a decrease of 3% in fuel volume and they attributed the impact by unusual winter conditions and customer remaining prudent with their spending while Canada did pretty well they saw same store sales increased 2.8% and fuel volume increased 3.6% so if you were to ask me like would you have guessed that Canada would be doing much better in terms of the retail stores compared to the US, I would have said no. I would have thought the US would have been doing better. But I guess

I don't know. Maybe the Americans are tightening the belt a bit more than Canadians are right now. Yeah, I think that might be the case because I'm pretty sure the Canadian business was struggling more than the US previously. And I think like CouchTard is, it's definitely interesting because you need, for the most part, they need people to be filling up on fuel to go in and purchase, you know, merchandise like hot dogs, chips, things like that. I mean, generally people don't, like I can't remember the last time I went to a convenience store to pick up some sort of food item or something like that. Like typically I just hop in there after I fill up with gas. So obviously if you have less people traveling,

merchandise is probably going to be hit a bit. And it's also like, you know, merchandise is the, you know, they make more money off, you know, it's a higher margin than the fuel, like the junk food, all that type of stuff. So it's kind of a double whammy there. And I would imagine like, I was, maybe the policy rates are making a difference. I mean, again, Canada's, you know, maybe loosening up a bit because we're what? We're like a percent and a half below now. Or are we at 1.75?

We're at 2.75. Yes, we're 1. percent and a half below now, or are we at 1.75? We're at 2.75. Yeah, so we're 1.75, I think, below. So I mean, there's quite a different element there. I don't know if this is, that's why, but I was pretty surprised to see the Canadian end growing as well. I believe, for those who don't know,

I mean, CushTard is, I believe, half, like over 8,000 of their 16,000 stores are in the US. So it's very much huge influence the US economy has on this company. Yeah. It's not the segment you want to see struggling for that company. Obviously you'd want all segments to be performing very well, but the reality is the US is by far their largest segment. Yeah.

So that is the, that is the reality here. Now, overall, I would say decent, but not a great quarter for Kustah. On the call, they were asked about tariffs, and that is something I'm trying to pay more and more attention to when I listen to the calls is just what management teams have to say about tariffs and the impact on the business. They said they don't see any major impacts to the business as most of their merchandise sold is sourced

from the country where the stores are located. So they don't see a major impact and they said any price increase as a result of tariffs would also impact their competitors. So they don't see that big of an impact on that front. However, they did specify that there might be a larger impact if it results in higher inflation and what that means for consumers that are already stretched and struggling with disposable income. So in other words, I think they what obviously what they're

saying is the impact that it could have on the economy and consumers themselves will most likely have an impact on Kushtaw. So I think there's still some definitely some uncertainty ahead for Kushtaw. It's a really good business. It's well run. I don't think you people have to fear anything, but I also don't think they're out of the woods in terms of the of where we're at in the economic cycle right now. Yeah, I think like for the run up that this company had and a lot of people, it became a very popular stock. A lot of people owned it because it was doing so well.

I think people might've forgot that this is definitely a company that is going to be cyclical. Like you're a gas station. I mean, you definitely, the economy, whether it's booming or whether it's you know Slowing down is definitely gonna impact your results because a lot of people I've asked like, you know, why is this company struggling right now? It's it's pretty obvious. It's just a slowdown in the economy and I mean on the inflation front

I I never really looked into tariffs for kushchad just because you know It's I had a feeling that a feeling that most of those food products and stuff were sourced, I would say domestically, but on the inflation front, if it ever geared up again, I think that would hit the company pretty hard because it's already so expensive at quick service, places like that to buy a bag of Doritos is like $9, $10. If it goes up to any more than that, like people just aren't gonna buy that stuff No, it's already pretty tough right now. But yeah, it's it's a company that's in a bit of a rut right now But it's I don't think it's gonna last forever. They're gonna go to Loblaws and buy the no-name Doritos. That's what they're gonna do

Exactly start stocking the shelves with those I'm sure I'll get some flag because we had some comments on with those. I'm sure I'll get some flag because we had some comments on, we did an episode Bradom and I about like Canadian stocks that shouldn't have a too big of an impact or not see much of an impact from tariffs. And I mentioned Loblaws and some people are very triggered by Loblaws and rightfully so because of their past dealing the price fixing scandal with the bread and so on. But not realizing that we're looking at it strictly from an investment perspective right and clearly understanding that people will invest based on other factors if they don't feel like it's a good company ethically and stuff like that but I just

said that I figured I'd say that a little bit of a joke here, but to finish on Alimentation Couchon on the 7NI acquisition front, the company that holds 711. It looks like the deal is not dead yet. So yeah, I know, so we'll still get some content here. Maybe when Lightspeed gives us some more bad news, we'll have more news on this here too. But the two firms signed a NDA, a non-disclosure agreement regarding potential stores

needed to be sold in order to meet US anti-trust conditions for the deal. Like I mentioned earlier, and we just talked, the US is already their biggest market. So it is realistic to think that the US may push back if there's an acquisition and Kush Tal becomes too big of a dominant player in the space in the US. It really sounds like Seven and I are still very reluctant to make this deal and I haven't

dug in too much on who could potentially be pushing for the deal within the company. It sounds like shareholder, if I remember correctly, are pushing bit more for this this deal where management is a bit more skeptical but I thought it was dead a few months ago but it looks like it's not dead in the water. I guess they're still trying to figure out ways that it could potentially work. Kush Tal seems to be confident that there would not be any antitrust issues where seven and nine is not. Yeah, I mean, it seems like there's more, there's just as much news on this as there is tariffs.

And the tariffs are changing like every other day. I mean, it's- Yeah, well, let's not exaggerate over here. Yeah. I made a video on this like- I think Donald Trump would be offended by that statement. Yes, he would be. That, yeah, exactly, yeah. I made a video on this like I think I think Donald Trump would be offended by that statement that yeah exactly Yeah, I made a video on this like I it had to be it was right when I came out

Which was what probably like four months ago now five, but I'm completely guessing there But I got a lot of comments on that same was August and then they bonafide the offer in October So like six months ago and when I put out that video, I got a whole bunch of comments saying like, oh this is dead, don't even, what's the point of even making this video and here we are six months later, like it's still going on, it's far from dead. Yeah it's gonna be interesting, I mean that's a lot of stores. First you gotta get Seven and I to agree to it and then you gotta like, you know, get through regulators. I mean, yeah, it's sounds like they said we won't like agree to it until you assure us that It can pass regulatory approval. Yeah, or we won't even consider it until you assure us type of deal Yeah, yeah, I mean it's they're huge in the United States

I would give that would give Couchard like I don't know how much of the market it would give them I know that market is still very, very fragmented, but they would still be huge. Welcome back into the show. This is the Canadian investor podcast, made possible by our friends and show sponsor EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking.

We also love their savings and investment products like GICs which offer some of the best rates on the market. I personally and I know Simone as well is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside

for a rainy day or a big purchase is coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQBank's GICs are a great option. The best thing about EQBank is that it is so easy to use. You can open an account and buy a GIC online are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at EQBank.ca forward slash GIC. Again, EQBank.ca forward slash GIC. TCI listeners, you know that I'm having to constantly travel for work.

One week you're up for meetings, next I'm in Montreal meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well,

and you could with the right help, why not let your home work for you? Find a cohost at airbnb.ca forward slash host. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers $0 commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts,

so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio

or making active trades. Don't miss out, start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. Well, we'll move on to another company a US listed one one of your favorite companies Nike do you call it Nike or Nike? Yes. Nike? You call it Nike? Yeah yeah I've kind of I've been back and forth because maybe it's the French in me but yeah I've said Nike I've said Nike

really both in my lifetime so I've never heard some comments of people saying one way or another or maybe I'm just completely offside but having said that they reported their earnings yeah so it was a pretty in line quarter from an expectation perspective but its guidance was pretty ugly and the stock took a bit of a hit post earnings. I mean it's pretty beat up right now so it didn't fall that much but I still think it fell like 8 or 9% after this release. So revenue fell by 7% on a constant currency basis. I believe it was 9% overall and earnings are down 32% over the same period. So gross margins dip to 41.5% which is around

3.3% lower on a year over year basis. And it looks like markdowns were a bit of an issue plus pretty much markdowns of their inventories. So this is usually, or sorry, some pretty much write-offs of their inventories. I said markdowns, but pretty much write-offs This is ultimately not a good sign because in a nutshell it pretty much means some inventory They currently have they expect to sell for less than they paid for it So they had some issues with that and again, they had markdowns which pretty much means the company is Having to aggressively price products in order to sell them and clear out inventory. I mean, a lot of people listening to this probably own Aritzia.

Aritzia went through that same ordeal when their inventory kind of skyrocketed during COVID. They had to mark down a ton of items and they took a lot of margin pressure over the course of like probably 18 months, a year to 18 months. Declining sales and declining margins definitely have a double whammy as well and are kind of what are amplifying the drawdown. So not only do you have declining sales but you're profiting much less from the items you do sell. Expenses fell by 8% which is pretty good sign. I mean they've been

putting in some cost control measures over the last while they're certainly helping when we look to just segments they declined by 4% the USA 10% in EMEA, which would be Europe Middle East and what is it Asia probably I believe and then 17% in China China is its smallest market, but it's also one of its faster growing markets, which is is definitely concerned that's a big dip in sales in China. And one of the main highlights of the quarter and is what has hit the stock price, particularly a hard post earnings was again, they did kind of come in relatively in line, even above expectations was they expect sales to be down in the mid teens percent range next quarter. So I believe previously

they had mentioned double digit declines in earnings but mid-teens is definitely trending towards the lower end of their guidance. And where it gets even worse is the company expects a 4 to 5 percent dip in gross margins next quarter so this combined with slowing sales I mean it's not easy on earnings at all. The main driver of the dip in gross margins they had mentioned is the new tariffs on Mexico and China. So I guess there's a degree in difficulty in predicting how bad this will be because nobody really knows how long or even to what extent the tariffs will last. But I mean, if they're kept in place, like even now, I believe Trump said he was, there's possibility for relief on April 2nd. So I mean, if there is relief, do the margins come in better than expected? It's pretty hard to tell.

I mean, I kind of feel bad for them. This stuff would be very, very hard to predict right now because they do source a lot of, they're heavily exposed to tariffs. And when we look at their segment of results, the only thing that isn't really taking a complete nose dive is its apparel and it's still falling by quite a bit. But if you look at its converse segment, that's like, that's just outright ugly. I mean, revenue has fallen from peaks of around 640 million in August of 2022 to just 405 this quarter. Its other footwear, like it kind of segments out converts because I believe that was a

company it bought like 20 years or so I believe. Its regular footwear is it posted revenue of $8.1B in Q3 of last year. It's now $7.2B. And I mean, as I mentioned, this isn't a company with flat or even slightly growing revenue facing margin pressures because of tariffs. It's a company that's, you know, sales are falling and margins are getting hit. So, uh, you know, I mean, this is the main difficulty with retailers. And again, I'll speak on Aritzia.

You know, a lot of investors kind of pointed to Aritzia and they're like, Oh, look, they had the same issues in 2022, but they rebounded. The issue, like the issues are not the same between these two companies are very different. Aritzia was still, you know, growing revenue despite all of its inventory issues. And it ended up looking, you know, kind of like, well, it didn't even end up, it was looking like at the time and it did end up being just kind of a short term mistiming of inventory purchases with Nike. This is kind of looking like, you know, some large scale pressure on consumers who just don't really feel the brand is worth, you know, the money anymore, I guess.

And again, it's impossible to predict, but you know, once these retailers fall out of favor, it's, it's pretty hard for them to recover. Yeah. And I think there's also increased competition from other brands. Like I know there's the kids will know, but there's some new brands that are pretty popular with a younger generation that are probably eating

into those revenues as well. And at the end of the day, it's yeah, it's not gonna be easy to navigate those tariffs for a company like Nike that's just that's just a reality. Yeah I mean I I've owned one piece of Nike clothing my entire life and my Kirkland hoodie that I bought for 30 bucks is in better shape after four years or so rather than like you know this hundred dollar plus Nike hoodie I've never really I don't know I'm not really big into apparel

whatsoever again I wear Kirkland hoodies but I've never really understood the appeal they're crazy some of their shoes are like 350 $400 yeah it's no I mean the reason I like Lululemon is I find the quality is really nice you pay a bit more but it does last a long time and it's really comfortable. I've never been big into Nike either So but they have a pretty good brand. I mean for fashion brands, I thought They kind of stood out for the test of time, but I guess What we're seeing over the last five years, they're looking at Drawdown of about 63 percent over the last five years, they're looking at drawdown of

about 63% over the last five years from the peak. So it's not looking good and it's still, it looks like there is more room to go down to at this point. Yeah, I mean it's like, like I said, it's a difficulty with realtors. Retailers, sorry, you just never really know. I mean interest rates could come down, sales could rebound, people could, you know, open up their wallets, but I just don't really think too many people are excited to go out and spend 300 plus Canadian dollars on a pair of shoes or a hundred dollars on a t-shirt, but that could change. You never really know. No, no, that's, that's true. Now, the next one here, we'll finish up with FedEx earnings,

Q3 fiscal year 2025, a bit of a funky financial year just to keep in mind because it won't make sense why I'm putting extra emphasis on that towards the end of this segment here. Revenues were up 2% to 22.2 billion. Net income increased 3% to 900 million. So you can probably guess that they have improved efficiency here and they continue to make progress on efficiency and cost cutting through their drive initiative. That's what they call it.

Both gross margins and operating margins were up about 40 basis point quarter over, well year over year. In terms of guidance, this is where it gets really bad, I think for FedEx at the end of Q4 2024. So typically, companies will issue guidance for the upcoming year when they release Q4. They said revenues for fiscal year 2025 would be in the low to mid single digits. So they would increase by that amount.

When they release their Q1 earnings, they revise that down to low single digits increase. Then in Q2, they revise that down again to revenues being flat for the year. And then in this quarter, the most recent one, they revised that again to slightly flat or slightly down for the year. So it's getting worse and worse as we're getting closer to the end of their fiscal year. And it's a bit what I have referenced when we were talking about light speed is that, look, FedEx seems to have no problem revising guidance down.

I mean, they've done it literally like every single quarter they had a chance to do it. They've done it since issuing the initial guidance last year and at this point I mean they're not gonna revise it down anymore because they're gonna release Q4 the next time around so they're gonna have their full year results. So not not great though for FedEx the fact that they've revised guidance down at every opportunity they had basically. Yeah it's the exact same situation as like BRP.

I don't know if you remember that, but BRP was, I think they were four straight quarters of guidance reductions until they finally came up with a quarter where they didn't downgrade it. But I mean, this just shows you the difficulty. Like even these companies have no idea what is gonna happen. I mean, you're talking like if you look at mid single digit

and then a couple quarters later, they're going slightly down, like that's quite a big difference. And I mean, it's- It's a big difference for a company as big as FedEx. And FedEx, they still do a lot of their business in the US, but they have a big international presence. So it is, I think it's a good bellwether stock to see how the economy is going.

And if there's any indication is clearly there is some pullback when it comes to that. And I'll be doing a segment with Brayden next Monday on the freight recession. And I would, I would almost, they're not quite, I mean they're logistic freight, whatever you want to lump them in, but you know obviously FedEx would kind of fall into that larger basket of moving goods. Let's just putting that way of moving goods and most of these companies have had a pretty rough time over the last year or two. And I think it's fair to say that you're starting to see whether it's railways, whether it's air, well, airfare

or sorry, air freight, or even trucking. It seems to be a constant that it is slowing down for a lot of these businesses. Well, and it's slowing down relatively fast as well. Yeah. Cause with TFI, like they didn't really warn of anything until they did, right? Well, and it's slowing down relatively fast as well. Yeah. Because with TFI, like they didn't really warn of anything until they did, right? And then it was, that's why the stock took such a hit.

But it didn't really look all that bad up until the last quarter. And now you're seeing like, at what point does FedEx stop revising downwards? I mean, there's definitely, there's definitely, I mean the TFI management said it on the conference call, like there's definitely a freight recession going on right now. You can see it in pretty much every single trucking and logistics company. I mean we've seen it in TFI, Old Dominion I think was pretty bad, FedEx is bad. Yeah. Yeah, it's not good. Yeah, and even if you're looking at sea shipments, those companies are struggling as well. They're more international companies. I don't think there's really any big ones listed in the US.

I think they're more European or Chinese, but even those have been struggling a bit too, not to the same extent, but it's just interesting to keep an eye on. May create some opportunities here. These are definitely the kind of companies that you want to start looking at when things are not looking good because sentiment starts being really bad. And I would assume that at some point it will be overdone and then that will create some really good opportunities. But you have to be prepared to look pretty stupid for a period of time because you're literally buying when it's likely going to be dipping

and probably going to be dipping some more before it starts turning around. It's very hard to pinpoint the bottom, but it's definitely better to buy these companies when there's a lot of uncertainty and things are slowing down versus when things are firing on all cylinders and earnings may look good or the P might look cheap but in the end you're still paying a pretty good penny because you're not factoring for the fact that when a downturn does come that earnings so the P the E of the earnings will be going down significantly. Yeah and it's pretty much impossible for companies like this to ever avoid anything like that it's kind

of a similar situation to CouchTard. These companies are obviously a lot more cyclical than a Couchthard would be, but I mean, people kind of got caught up in TFIs run up for many years too. And then all of a sudden something like this hits, probably the first big slowdown we've witnessed. And it's probably going to be a rough probably year or two for them. And it's pretty tough to try to catch the bottom on these companies when the economy is so poor. They go low and they often go lower than you could even imagine. And holding these companies, I mean, it requires, first off, a very good understanding of the business because then you don't freak out when the stock price drops that much,

but it also, I mean, you gotta hold them through some pretty harsh environments, which it looks like we're in at this point in time. Yeah, and you have to be prepared to like, look stupid for, Yeah, exactly. For lack of a better word for a period of time. And you can just look at Warren Buffett, right?

As good of an investor he is. A lot of these moves in hindsight end up looking awesome, but when he does them in the moment or in the following year or two, sometimes a lot of people are like, what the hell is Berkshire doing? Like people are questioning his move and you don't know until four, five, six years down the line that, wow, he actually knows what he's doing. Surprise, he's known what he's doing for what, 60 plus years at this point. But it is, I know it's hard, but is that contrarian thing. I'm not saying these are necessarily worthwhile buying right now, but we're entering an environment where these companies are, it's counterintuitive, but they're starting to look more and more attractive. And to get back at FedEx,

is the good news here is they are trying to reduce costs and they are on track to achieve their permanent cost reduction through that drive program of 2.2 billion. Weakness in the industrial economy continues to pressure their business to business segment. Overall macroeconomic uncertainty is also making the environment challenging for a lot of its business customers. And there was an interesting portion on the call where management said that they did not see any pull forward demand in the quarter because of tariff fears. And people may be wondering like why would there be pull forward demand so this would simply be some of their large customers buying in advance trying to avoid tariffs knowing that tariffs

will well anticipating that tariffs will come so they're trying to just pull forward their purchase it to avoid that higher cost they said that they have some customers that did that but ended up regretting it because they ended up paying more in storage fees. Because when you pull that forward and you're not selling whatever you're selling right away, you have to store it somewhere. So it's funny that they, or I found it interesting that they mentioned that. And their business customers appear to take a are appearing to take a wait and see approach to see where things are going on the tariff front. FedEx has a massive network going to 220 countries which allowed them to shift if their customers are

making different business decisions like sourcing in a different country or manufacturing in a different country. And they also said that on the call, what they've heard from customers is, look, these things take time. So it will likely be quarters or years before their customers start tweaking their business operations as a result of tariffs or different trade agreements between countries for example Yeah, there was this was actually just on the news a few days ago But there was a brewery in Calgary here that like they have those tall boy cans that they get from the United States So they had to order like this is like definitely 100% a prime example of you know pulling things forward like they ordered a ton of them in anticipation of the

tariffs. Retaliatory tariffs, yeah. Yeah, so like you're sitting there and you wouldn't even think of like the tiny, you know, just tiny costs like that that can have such a big impact, like they can, you know what I mean? Like getting hit with it, you know, 25 or 50 percent tariff and how businesses have to adapt to that. And I mean now, like who knows what's gonna happen and they have like Pallets and pallets and pallets of these things that they maybe wouldn't have needed to order It's too difficult to tell right now, but it's hard to say with ever-changing right? Yeah you Just Trump and is tweeting intruding or whatever. It's almost like a fish out of water That's like flip-flopping all the time.

Like that's pretty much how it feels like. Where it just, honestly, it's almost every day. One day it's got, oh, there might be some tariffs, some curve-outs, and then the next day it's like, oh no, it's the liberation, tariff liberation day or whatever he calls it now on April 2nd is his next big thing If your business that needs to purchase like goods

Yeah as part of your business model that comes from the US or if you're a US business that has to purchase Stuff coming outside from the US. I mean it is very difficult to plan. So it'll be interesting I mean, it'll be interesting what happens in the next few months, especially obviously in Canada. We have the election coming up. It is very possible. I know I've been reading some rumblings that Trump may be just waiting to see what happens with the election. And then to start negotiating with Canada, we'll have to see, but it'll be really interesting what happens once the election is done, whoever is elected prime minister and then what will happen with their US because at the end of the day, no matter how much we wanna diversify away from the US,

it will still be our biggest trading partner. So it's, you know, there's not much we know. It would take us a very very long time to ever achieve that so I mean we're stuck where we are right now for the next while even if we started to try right now. Maybe we can build a bridge to Europe or something or Asia. Oh no just kidding here. So I think that's it for today was a fun one. I had a few technical difficulties here, but I don't think you'll hear it when you listen to the podcast.

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we'll be back next week for another News and Earnings episode, and I will be back on Monday with the regular Braden and Nye episode with that for lack of better words. Thanks for listening. The Canadian Investor podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.