Good morning. Today, Amazon’s projections for the second quarter allow for some tariff trouble; brewers seek ways to keep costs down as IPAs overrun grocery stores’ beer aisles; and middle-class and lower-income Americans are in belt-tightening mode.

Amazon reported strong quarterly earnings that weren’t affected by new tariffs on Chinese imports, but the looming levies dimmed the company’s outlook, Sebastian Herrera reports.

It projected second-quarter net sales between $159 billion and $164 billion, as well as operating income between $13 billion and $17.5 billion. The lower ends of the forecasts, however, were outside analysts’ expectations.

“Obviously, none of us know exactly where tariffs will settle, or when,” Amazon CEO Andy Jassy said in a call with analysts.

To keep results improving and maintain margins, Amazon has pressured suppliers that have sought to charge more for products affected by tariffs.

It has also asked some of its vendors to confirm their advertisement commitments for this year.

Craft breweries’ transformation into grocery-store staples has created a new problem, Joshua M. Bernstein reports: Brands that could once charge high prices for newfangled hazy IPAs are locked in a constant price war. 

“Beer is [still] considered a commodity,” said Justin Catalana, CEO and co-founder of Fort Point Beer in San Francisco. “People talk about a six-pack’s cost the same way they do a carton of eggs.”

In April, Fort Point merged with HenHouse Brewing of Santa Rosa, Calif., consolidating brewing operations and sales and marketing teams. “We’re financially more secure together than apart,” said Catalana, who is now the CEO of Fort Point HenHouse.

Brewers are also finding ways to engineer cheaper-but-not-cheap-tasting IPAs. Ohio’s Nocterra Brewing created a new beer using pungent hops that deliver more “punch per pound,” said co-founder Bryan Duncan.

Plunging consumer confidence is pummeling the financial results of companies that cater to middle-income households, from McDonald’s to General Motors, Theo Francis and Heather Haddon write.

McDonald’s reported its worst sales since the pandemic for established U.S. restaurants, after anxious middle- and low-income diners cut their spending. Sales of Harley-Davidson motorcycles dropped by 24% from a year earlier. And Hershey said it expects a 30% drop in profits if tariffs stay as they are.

“People are just being more judicious,” McDonald’s CEO Chris Kempczinski told investors Thursday.

At McDonald’s, only higher-income consumers kept buying at a steady clip. Middle-income customers cut back on visits, and lower earners cut back more, executives said.

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Reddit logged higher revenue and swung to a profit in the first quarter as advertising revenue rose on higher impressions and prices. [WSJ] 

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Fashion retailer Zara debuted its new store format, a spartan, tech-infused presentation at New York City’s Hudson Yards. [WWD] 

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