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Government Contractors Temper Outlooks as White House Seeks Spending Cuts
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Good morning, CFOs. Government efficiency efforts turn to contractors that provide tech services; higher-earning shoppers hit dollar stores; economists raise questions about the quality of U.S. inflation data; and Five Below’s CFO steps down.
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The Trump administration has asked a handful of technology contractors to justify their work and find areas to cut. PHOTO: SARAH SILBIGER/REUTERS
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Government contractors are having a hard time forecasting their business as the Trump administration reexamines which companies it spends its money on.
Companies, such as Parsons and ICF International, that make money from government contracts are grappling with uncertainty about how much the U.S. will continue to do business with them. Analysts say the process of signing and renewing contracts has slowed because of Department of Government Efficiency reviews and a planned reorganization of the State Department, casting doubt on contractors’ financial futures.
“There’s a lot of change going on, and that means there will be winners and losers,” Benchmark analyst Josh Sullivan said. “It’s hard to say who the winners and losers are going to be.”
The federal government was initially directing its efficiency efforts toward consulting companies such as Booz Allen Hamilton and Deloitte.
Now it is turning toward contractors that provide technology services. The Trump administration sent a letter in late May to a handful of technology contractors asking executives to justify their work and find areas to cut.
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Content from our sponsor: Deloitte
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P&C Insurers’ Next Growth Frontier: Fee-Based Risk Management Services
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As U.S. property and casualty insurers shift to a business model of fee-based risk management services using advanced technologies and alternative data sources, both companies and customers could benefit. Read More
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📆 Earnings:
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Broadcom
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Brown-Forman
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Ciena
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Docusign
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Lululemon Athletica
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Rubrik
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Samsara
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ServiceTitan
📈 Economic Indicators:
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The European Central Bank announces its monetary policy decision.
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What Else Matters to CFOs
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Dollar General said that it is seeing increased “trade-in” activity from middle- and higher-income customers, while its core lower-income customer remains financially constrained. PHOTO: GABBY JONES/BLOOMBERG NEWS
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Dollar-store chains are bucking the trend of declining retail sales as higher-earning consumers opt to save money and seek discounts in a contracting economy.
Executives for Dollar General and Dollar Tree reported this week that an influx of middle- and upper-income customers boosted sales in their spring quarters. Dollar Tree has been focusing less on $1 items and offering more products at various price points, which seems to be attracting more affluent consumers, according to Chief Executive Michael Creedon Jr.
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Exclusive: Some economists are beginning to question the accuracy of recent U.S. inflation data after the federal government said staffing shortages hampered its ability to conduct a massive monthly survey.
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Reddit is suing AI startup Anthropic for using the online discussion site’s data without a licensing agreement, a new front in the battle over how artificial-intelligence companies train their models.
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27%
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The share of business executives who expect the U.S. economy to improve over the next 12 months, down from 35% a year earlier, according to a survey released by the Association of International Certified Professional Accountants, a professional organization.
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Five Below, the Philadelphia-based discount retailer, said Chief Financial Officer Kristy Chipman is stepping down. The company said she was leaving for personal reasons. Chief Operating Officer Ken Bull will serve as interim CFO while the company searches for a replacement, Chief Executive Winnie Park said. Bull previously served as CFO for more than 10 years.
—Katherine Hamilton contributed to today’s Ledger.
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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax accounting, regulation, capital markets, management and strategy. Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Mark Maurer and Jennifer Williams, and Bureau Chief Walden Siew. You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.
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