Mad Money w/ Jim Cramer 5/29/25
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other Bill and Me friends, I'm just trying to make you a little money. My job is not just to entertain, but to educate, put everything in context. Call me 1-800-743-CNBC. Tweet me at Jim Kramer.

Maybe no one wants tariffs on either side of the table except the President of the United States. You know, that's what went through my mind when a panel of federal judges pronounced most of this year's tariffs to be illegal and the S&P futures soared to the sky in the overnight markets only to come back down hard when the White House indicated there will be tariffs by other means. Then this afternoon, the Federal Appeals Court put a stay on the first ruling, allowing tariffs to stay in place for now, pending the outcome of the appeal.

And that is why we gave up those early gains. Dow ultimately advancing 117 points as it'd be climbing 0.4%. And the NASDAQ rising 0.39%. But just to give you an example, the NAS had flown up almost 2% after the close when we learned that the first court had blocked the tariffs. Now, it didn't even seem to matter to the president that the U.S. Court of International Trade thought that he exceeded the checks and balances protected by the institution and the Constitution. He's going to have those tariffs by any means necessary.

Now, it's possible that the tariffs could bring in hundreds of billions of dollars to the Treasury on top of whatever savings we get from Doge, the one time residents of Elon Musk. But even if you double those already optimistic numbers, it wouldn't offset the three trillion dollar hole that the president's big, beautiful budget bill could blow into the federal budget deficit.

Honestly, though, what's far more important is the recognition that our economy has plummeted into negative territory. As we learned today, the GDP fell 0.2 percent in the first quarter. I know some will argue that the desire to beat the tariffs caused some of that weakness. But what caused what then caused the weekly jobless claims to hit their highest level in three years? What caused pending sales of previously owned homes to fall the most since September of 2022?

Well, mortgage rates at 7%, they're too high. Now, interest rates fell today, which is what happens when the economy weakens. And that welcome decline generated more chatter about how the Fed will have to cut rates to make things better. To which I come back and ask, all right, how did it come to pass that the Fed has to make things better because the president made things worse?

Now, see, that's not how things normally work around here. The White House doesn't typically start a fire, collect some tariff insurance money, and give the fire department, that's the Fed, something to do. Right now, the administration is to hope that our trading partners believe the Supreme Court will uphold the tariffs or that another lawsuit against the next iteration of tariffs will somehow fail. Because if the judiciary shoots down the tariffs...

Trump has zero cards to negotiate new trade deals. Then again, if the Supremes do side against the White House, we don't need to worry about the retailers raising prices across the board to pass on the tariff pain. Which brings me back to the show's opening. When we saw this huge burst of futures buying and then a barrage of selling after the president made it clear that the ruling meant nothing to him, well, it really got me thinking. It got me to think, who really wants these tariffs? Consider that we now have enough retail earnings under our belts to know that prices are definitely going higher for you.

Businesses can't afford to eat the full cost of tariffs. It was chimerical. So they're passing it on to the consumer, to you. Almost every one of them

The president wants the cost of our tariffs to be eaten by foreign manufacturers. But no American retailer has the kind of bargaining power, not even Walmart, which is unable to get big concessions from its Chinese suppliers. So as a consumer, you have to be rooting against tariffs because they translate directly into a higher cost of living for you. We know from the last election that people are very sensitive to inflation. If you didn't like it under Biden, I don't know. Are you going to like it under Trump more? I mean, you won't say, oh, but it's good for the country. Believe me, you won't.

If you're in a company that imports lots of merchandise, you know you're going to make less money under this tariff regime, meaning your earnings will go down. And that's how you got what we saw with Best Buy and HP Inc. Today's shortfalls, disappointments. Maybe we shouldn't care. But we want competitive retailers and competitive PC makers. In order to be competitive, they have to make enough money to stay in the game.

If you're a shareholder, you don't want the tariffs either. And that's why the futures initially surge when the panel of judges rule the tariffs unconstitutional. When the tariffs are thwarted, people will swoop in to buy anything. If you're a manufacturer, you can't find enough skilled workers to justify putting more factories in America. We're a high-wage country with low unemployment. Maybe if the AI revolution causes lots of white-collar layoffs in the next few years, we'd be in a different situation. Right now, the cost of manufacturing in this country is absurdly high. We don't have any room for more.

Now, lots of companies believe that one of the primary goals of Trump's trade policy was to hobble our one-time friend China. But all you have to do is ask Tim Cook about that, as Apple gets punished for frantically trying to make its phones in India, and many of the apparel companies move to Vietnam, a gambit that worked out even worse as the tariffs soared. It's kind of like an appointment in Samara, where you try to cheat death by leaving town, only to find that death was waiting for you in the new haunt, suboptimal.

The consumer, of course, bears the cost of that whole exercise. Now, I am not a fan of unfettered free trade. I know it has gutted many a town. They're still fighting for their lives. But I don't see these towns coming back anytime soon. The reshoring is selective and not geared to where those jobs used to be. We're the only country that plays by the rules on trade. That has not worked out for us. I don't like that. So I am what's called a fair trader. I want to see our government put its thumb on the scale to help American businesses disadvantage our trading partners.

In theory, I'm usually pro-taff because they're a necessary evil, but they are evil. And I want them administered in a considered way, not in some sort of frantic shot clock way. Make them tough, even brutal to those who really harmed us, not so brutal to those who haven't.

But that's not how the president's tariff program is being executed. The statements from our side are rushed. It's like the clock is ticking, constantly wearing us down almost daily. We've become beasts of tariff burdens. I say that because if this had been executed in a considered way, the futures would never have rallied so huge overnight in response to when the tariffs were temporarily struck down.

Is it too late to change course? My hope is that the tariffs can still be laid out in a way that creates jobs, raises some money for the Treasury, gives companies enough heads up to mitigate the damage. Wasn't that the plan? Is there anyone, perhaps even including the president, who believes that's what we're currently doing right now? Here's the bottom line.

Even if you believe in fair trade, not free trade, as I do, you have to wonder how we're going to get any meaningful deals now that our trading partners know the courts might invalidate the whole tariff agenda. In that sense, but only in that sense, maybe the judiciary shooting down the tariffs is the easiest way out of this nightmare. Ron in Tennessee. Ron. Hey, Jay. How are you doing? I am doing well, Ron. How about you? What's going on?

All right. I was calling to ask, I have Wendy's in my portfolio, and I'm considering is now a good time to buy more of it? No, we are best of breed operators here. That's who we are. We buy best of breed. And that means we can buy McDonald's if you want to substitute for Wendy's, which I have not liked for a very, very long time. I have said get out of Wendy's. I'm reiterating my get out of Wendy's call. I need to go to Brian in Connecticut. Brian.

Jim, how are you doing today? You know, today's been a pretty decent day. How about you? I'm doing good. Back's bothering me a little bit, but I'm getting older. But I wanted to make a comment on something that actually bought a stock. I watched last night's show.

That show was fantastic. Those interviews you had with the Salesforce CEO and Jensen Wong and the video, those guys know their stuff inside and out and up and down. It was fantastic. Thank you, but I've got to tell you how these things work. I have a staff that you wouldn't believe. I mean, I wish people could just come up to the fourth floor. I mean, we just, they made me look good yesterday. I was in like a, it was hard to do those back-to-back interviews, but Regina Gilgan and her team are unbelievable and just not get enough credit. So I just felt like I had to do that right now. Let's go to work.

Well, I'll tell you, it showed. I'll tell you. My question is this. I'm a retired individual, retired for some years, and I've acquired Verizon over the years. I like the dividend. The P.E. is just lower for the industry. And I'm just wondering, what's your thoughts on Verizon? Because I just because I like the dividend, I don't want to be Walgreens. No, that's fine. You know, the dividend six percent is good. They're doing better. Here's the way I got to put it like this way. Verizon, not

as bad as it used to be. I mean, that's not enough for me, but that's kind of enough for them. Hey, we're not so bad. That's a good slogan for them. Hey, Verizon, we're not so bad.

I like that. Look, I believe in fair trade, not free trade. But I also want tariffs to be rolled out in a way that makes sense. And it's actually fair. And I think the market wants that, too. That's what we saw last night, didn't we? Pay money tonight. Last night, Elf delivered a quarter and some news that sent the stock up nearly 25%. So is the cosmetics company back in style on the Wall Street Fashion Show? I'm speaking with the CEO. Then we'll continue our series of

beating down retail stocks to see if Nike can start running higher. And another retailer, Gap, reported at the Bell. I'm running through all, of course, the important headlines there to tell you what I think you should do. So stay with Kramer.

Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.

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We look at this incredible move in Elf Beauty, the value-oriented cosmetics brand that was the hottest growth story in the industry for a plunge from its highs last year down to $49 in its lows last month. Now, though, Elf is back up to 112 after a monster 24% run today because the company just reported a magnificent quarter, a top and bottom line beat. And more important, management announced that they're acquiring Rode, the

fast-growing beauty brand founded by Haley Bieber. Between the quarter and the acquisition, the stock shot into the stratosphere. Where does it go from here? Let's check in with Tarang Amin. He's the chairman and CEO of Elf Beauty. Find out more. Mr. Amin, welcome back to Mad Money.

Well, thank you for having me. OK, so I got to tell you, this is going to show my age for a second. I thought the reason why things were so great was because the numbers were great. I like the target share. I love the tariff mitigation. But then I check in my office and they say, are you kidding me? It's this acquisition that you made, which everybody seemed to know as being the right thing at the right time. So tell us about it.

Sure. Well, first of all, I think it's both. We just delivered our 25th consecutive quarter of net sales and market share gains. Our net sales 28% in fiscal 25, adjusted EPL 26%. So we're really operating from a position of strength. Elf Beauty is on fire and we're further fueling that fire with the acquisition of Rode. I couldn't be more excited than to invite

rode into the e.l.f. Beauty family. It's an incredible business. It went from zero to $212 million in net sales in three years, direct-to-consumer only with just 10 products. And so we couldn't be more excited to add another fast-growing brand to our portfolio. Now, I understand that, I know it's direct-to-consumer, but there were talks to be able to put it in the highest-oriented beauty stores. Is there any chance that it can be in the stores that you most want it to be in?

Well, we're really excited. Not only are we excited about this brand, but Sephora, the world's largest global retailer, is going to be rolling out the brand in all U.S. and Canadian doors this fall, followed by the U.K. later this year. So we're really excited. We had...

One of the most successful Sephora launches last year with Elf in Mexico. So we look forward to building the partnership with Sephora. And we think it's going to be a terrific retail partner for us to continue to expand road. Well, people know I like you and I like your franchise. I like how you run your business. And so people are into me saying, oh, man, your guy is being crushed. These Chinese tariffs are going to destroy. I said, no, if anyone can figure out how to mitigate a tariff, it is going to be Mr. Amin. And you are doing it, aren't you, sir?

Well, I'm so proud of the team. You know, we have a balanced plan. So we actually communicated to our community. We're always transparent with our community last week that we're going to be raising our prices $1. And we basically told them we're going to absorb a lot of the costs, but we're going to take it up a dollar. We had 98% positive sentiment of...

our community saying, look, this is why we love Elf. You always let us know what's going on. You let us know what's happening. But in addition to the pricing, we also have been continuing to optimize our supply chain and diversify our business. The fastest growing part of our business this past year was our international business, up 60%.

which isn't subject to tariffs. So we're going to continue to use that balanced plan. We hope for greater certainty so that we can continue to our long-term focus that we have on this business. Well, again, I'm going to display some ignorance here. I know that Europe has been hot. I know the European markets have been great. Little did I know that you've called out Poland as maybe the place to be. It's a great growth market for you.

It is. So our next countries that we're expanding in is we're going with Crowdvat in the Netherlands and Belgium. And then this fall, we're launching with Rossmann in Poland. It follows our successful launch with Rossmann in Germany, where we're a top three brand already. Really, every market we're entering, we're entering in a very top position. And so we have high hopes for Poland, the Netherlands, as well as the other countries we'll be expanding into. Now, how are you going to be able to do dollar gen?

Ulta, Target and Sephora. I don't know many people have been able to go that that let's just say that length, that distance in your category.

Well, we've proven that ability. The same quarter, we launched into Dollar General to serve and underserve consumer and rural areas. We also launched with Sephora in Mexico, and both launches went off terrifically. So, I've got a lot of confidence in our team and our ability to continue to expand our distribution while staying focused and disciplined to really make sure we execute with excellence. I remember the week you first got into Target, and I said, well, I don't know, maybe you can have—

I went and you had about, I'd say, half a yard when I went to the store. Then, of course, it was all the usual guys, like the real expensive guys, four times your price. If I go into Target now, what will I see? Well, you'll see Elf lead their category with 20 feet of space. But it's more than the space. We're Target's number one brand. We have over 20% of their entire category. And they want to double down on Elf. They see us as one of the strongest growth brands.

they've seen over the years, and they'd love e.l.f. to be their first billion-dollar beauty brand. But we're also making progress at all of our other customers. At Walmart, we went from the number four position to the number two position this year, and we're growing at every one of our retail partners. Now, I do want to go back to this acquisition, because when I first saw it, I said, I cannot believe he's playing a billion dollars in cash and stock for something that just started three years ago. And then I went to my very fashion-oriented daughter, and she goes, how

How did he get it for only a billion dollars? This thing is the number one brand. So how did you know all these things were happening? How do you stay in touch with these things?

Well, we're always community first. We have a unique ability of how we engage and entertain our community. We're the number one brand amongst Gen Z. I think three and a half times bigger in mind share than the next best brand. We're also the most purchased amongst Gen Alpha and Millennials. So our whole secret is we're in touch with our community and we have long admired Rode and just how strong their community engagement is.

I mean, Rhoda is a brand for one of their pop-up events. Consumers will camp out overnight, wait 14 hours in line, not just for product, to buy into the entire lifestyle. And I got to tell you, Hailey Bieber is way more than a celebrity. She's one of the most thoughtful founders I've ever met. She has incredible instincts, a beautiful aesthetic, and the brand is absolutely resonating with that next generation. And we look forward to continuing to build it.

by investing more in marketing, building out the team, helping with their Sephora launch, and taking the brand global. So we're very excited about the future. I am told that I know they hired a top flight banker, that there were many who were trying to kick in the tires thinking about it, but you moved immediately. And that's how you got it. You just moved immediately with, by the way, what I understand is understanding, with kindness. These things matter to you. I know that since you came public. And the

One of the reasons why you won this wasn't just because you move fast, but because she wanted to work with you. No, that's right. In fact, I always tell people we're a founder's dream because instead of over-integrating a brand into the company...

We support what their vision is. And for Haley, it was very important. This is her baby. She created it. She wants to be with it for every stage of her life that she had the right partner. And I think one of the biggest things that works in our favor is the founders that we've worked with, whether it be Alicia Keys on Key Soul Care or Susan Yara and her vision on Notorium of the science of consistent skincare everywhere for everyone. They're our best advocates. They basically talk about like, hey, working with ELF, they have great values and

They really believe in me and what we're trying to create and be able to propel that. In fact, our entire brand portfolio in fiscal 25 grew. And I think it's through that focus and that dedication to each founder's dreams and being able to make sure that we're there to help them. Well, look, I've got to tell you, I was proud of you. This was just such a kind of a tour de force move, but it's something I've come to expect from you. You never sit still. I want to thank Tarang Amin. He's the chairman CEO of Elf Beauty. Tarang, I love it when you're on the show. Thanks.

Thank you so much. Absolutely. Coming up, when it comes to buying the stock, is now the time to just do it? Kramer is taking a deep dive into Nike. Next.

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All week, we've been looking at these beaten down apparel and footwear stocks, trying to figure out which ones can make a comeback.

This clip has been hard hit, in part because it's hostage to the consumer, and in part because it's right in the crosshairs of President Trump's tariff agenda. On Tuesday, I highlighted VF Corp, where I want to wait for more evidence of a term before I feel confident sticking my neck out. Although it certainly encourages you to see a bunch of insider buying recently, including from CEO Bracken Darrell, who plunked down $1 million the other day to buy shares in the open market. That's conviction.

Yesterday, I told you I'm cautiously optimistic about Lululemon's ability to keep rebounding, assuming that they don't drop the ball when they report next week. Tonight, we need to talk about Nike, arguably the most controversial stock in this corner of the market.

For decades, Nike was one of the greatest growth stories around. But then it became a house of pain over the past three and a half years. The stock peaked at $179 in November of 2021. Since then, it's been all downhill, plunging to $52 at the post-Liberation Day lows, although it's now rebounded to the low 60s. Basically, Nike's now trading at the same level we saw during the pandemic-era lows in March of 2020, when the entire economy was shut down.

Now, Nike's had some serious problems over the past few years. At first, when the stock started pulling back from its highs, many thought it was simply cooling off after a huge run in 2020 and 2021. But then the stock started rolling over again in 2023. The bull said that was about their huge exposure to China, where the economy was still struggling. As the market kept climbing, though, Nike just kept sinking lower and lower. And it became impossible to deny that there were serious structural problems here.

For example, under the leadership of former CEO John Donahoe, the company went all in on its direct-to-consumer business and in the process alienated key retail partners, which ended up hurting Nike. At the same time, management lost focus on the signature product innovation that had powered Nike's rise since the 1980s. Competitors started swarming, everyone from One Holding to Hoka to New Balance to Lululemon and Viore. And Nike did a poor job of defending its market share.

All of this led to consistently weak numbers, to the point where Donahoe was forced out last September to be replaced by a much-liked, not loved, Nike veteran, Elliot Hill, who came out of retirement to try to turn things around. Now, given the scale of the problems here, I don't think Hill's had enough time to deliver a comeback. When Nike last reported in March, the results were solid enough, but management also hit us with a pretty door outlook, talking about a revenue decline in the low to mid-teens for the current quarter. Wow.

with a 400 to 500 basis point decline in gross margins. Man, that's terrible. This is the second time in a row that Nike's blessed us with ugly guidance under Hill's leadership. And of course, that last quarter in March came about two weeks before the Liberation Day tariffs announcements, which sent the stock lower still because they do the vast bulk of their manufacturing in Southeast Asia.

But once the tariffs started to get rolled back or paused, especially the most egregious tariffs from Chinese imports that got reversed three weeks ago, Nike was able to rebound off its lows. It's now about $10 above its early April bottom and essentially back to pre-liberation day level. So could this be the start of a larger move higher? You know, honestly, I'm conflicted on Nike.

On the positive side, the new CEO has a clear strategic plan to turn things around by focusing on running, basketball, football, training, and sportswear, especially in the United States, the United Kingdom, and China. I think that's smart. Better nail their best categories in their best markets than try to be everything to everyone. Earlier this month, Nike also announced a series of senior leadership changes, including the retirement of the company's former president of consumer product and brand, with their responsibilities now being split across three separate executives. Definitely needed some fresh blood there. Then

Then just last week, we learned that Nike plans to start selling its products directly on Amazon again for the first time since 2009. That's important, not just because Amazon will bring in more business, but because it shows you how the company's strategy has changed. Rather than going all in on their direct-to-consumer business like they did under Dono, Nike's once again trying to work directly with retailers to bolster its sales. They also did a terrific partnership with Red Hot Urban Outfitters. Very shrewd. That conference called Urban Outfitters, so much of it was about Nike.

Finally, I simply think that the stock is more de-risked than it's been in quite some time after two consecutive kitchen sink quarters where management did everything they could to reset expectations. In late June, Nike reports again, hopefully after clearing out bad inventory over these past couple of quarters, the company won't have to perish results with another tepid outlook for the future. Plus, if the guidance is really okay this time, not even good, I bet some analysts will start to come around because a number of them seem to be itching to upgrade the stock.

All that said, while there are real positives here, including indications that China is actually stronger than you would expect, I find it hard to get two bulls from Nike because this brand just ain't what it used to be.

In particular, I worry about the competition athletic footwear, which has long been Nike's bread and butter. Unfortunately, Aubergine dropped the ball just as On and Hoka took the world by storm. Hoka, by the way, owned by Deckers. By focusing so much on its direct-to-consumer channels, Nike was, in effect, building barriers to its brand and consumers established loyalty with these other brands. It also didn't help that Nike got pretty aggressive with its pricing, which made its merchandise too expensive for many of its customers. I think that

I think Nike can win it back, but it's not going to happen overnight. Under the old regime, Nike stopped sending its latest and greatest merchandise to Foot Locker. That's a key distributor. And that opened up slots for the competition at Foot Locker. Nike repaired that relationship just in time for Foot Locker to be acquired by Dix, but a lot of damage was done. So here's where I come down on Nike. I believe it can matter. But I also think that a meaningful, complete turnaround could take a longer time than expected.

If you're tempted to play a turnaround here, and I don't blame you, I would start with a small position. That way, if something else goes wrong, you can buy more into weakness, pyramid style. Or you can just cut your losses.

And if Nike reports a good quarter with healthy guidance next month, well, you'll get a chance to capture some upside. The bottom line, I am optimistic that the worst is indeed behind Nike, or at least will be soon. And I think there's a good chance for a comeback, especially with a seasoned, hands-on Nike veteran like Elliott Hill at the helm. That said, I don't have a ton of conviction in the turn happening quickly, so I'd advise you to start slowly with a small position and only buy more if Nike gives you a good reason to pull the trigger. Let's take some calls.

Let's go to Bill Massachusetts. Bill. Hi, Jim. Thanks for taking my call. Of course. I have an equity here that nine point five billion in revenue and they have a gross profit margin of thirty one percent, which is paid out in dividends, which I know you love. It's Dick's Sporting Goods.

Oh, I like Dick's very much. And, you know, a lot of people, that's both Ed Stack, but don't forget Lauren Hobart. Lauren Hobart, CEO, is fantastic. A lot of people think that they stubbed their toe when they bought Foot Locker. I'm going to say the opposite. I'm going to say that they may have stubbed their toe, but this stock is so much down. It was at 254 now, it's at 181. And more than reflects, they could write off Foot Locker right now. And frankly, of course, they don't need to. It would still work out.

Dick's Sporting Goods. I like that call. Thank you very much. Now, let's go to my home state of New Jersey, Donald in New Jersey. Donald. Hi, Jim. How are you? Jim, I'm doing good, Donald. I'm thinking of buying AutoZone. No, you're not thinking of buying. You're going to buy. This is the single best buyback. The quarter is very good. I am actually surprised that the stock isn't up even more. It sells at only 24 times earnings. It's consistent. They bought back half the float. You have a winner in AutoZone. All right.

I'm optimistic about Nike. It starts small, though, and only get in if the company gives you a real good reason to pull the trigger. I think you'll get the chance. That was even more retail head-on, man. Money, I'm sitting down with the CEO of Gap, fresh off the cup.

All right.

All right, what the heck just happened to the stock Gap Inc. that sent its stock plummeting after our trading? Look, after the close, the agglomeration retail chain reported what was actually a solid quarter, slightly better than expected revenue, healthy same-store sales, decent earnings beat, so far so good. Sure, except Gap merely reiterated its full-year forecast and more disconcerting. Management said the forecast does not include the impact of the tariffs. When you throw in the tariffs, that could cut the company's operating income by up to $150 million if they stay in place all year. And that's why the stock's getting hit. But

I actually think the most salient issue is that the stock had shot up 65% from its April lows. Very few stocks can keep rallying after that kind of move. We may have some opportunity here. So let's take a close look at Richard Dixon, president and CEO of GapBank. Find out more. Mr. Dixon, welcome back to Bad Money.

Thank you, Jim. It's always good to be back. Well, I know that it is difficult when you see a stock down for people at home. But the fact is you had some unbelievable numbers here. Gap plus five. You have old Navy, nine consecutive quarter of consistent market share gains. And you had a nice same store sales there. And most impressively for me, it's operating income dollar growth, which is extraordinary.

And I've got to tell you, I think those are being buried by people who are saying, why isn't the stock at 31 right now? So I'm going to give you the floor to talk about the actual progress that you're making that's continuing because it's impressive. Yeah.

Jim, thank you so much. And we appreciate that because we really did have a really strong first quarter. As you noted, we exceeded expectations across key financial metrics again. And it really is due to our strategic priority. I mean, we've been really clear. Despite a dynamic environment, we're staying firmly on course and it's showing up in our results.

sales up 2% that's the fifth consecutive quarter of positive comms. We also gain market share as you noted for the ninth consecutive quarter. We expanded gross margin and operating margin during the quarter.

And we increased EPS by 24%. We continue to strengthen our balance sheet. We've got strong cash balances now, $2.2 billion. This is another proof point that our strategy is working. We remain optimistic yet realistic.

about the opportunities ahead, and we're navigating it in a highly dynamic environment. But I can tell you I'm really very pleased with the quarter and ultimately optimistic about what's ahead. I think you should be. We do have to talk about something I was discussing with my colleague, Ben Stoddard, Research Director. How do you be you? How do you wake up and figure out whether you're going to pay 46% or 10% or 30%? Is it a $250 million hit? Is it a $10 million hit? How are you able to manage a company not knowing of anything

any way that it's out of your ability. What do you do when it's just totally out of your ability? Look, it's like any business, Jim. I mean, we're all constantly navigating some form of complexity. And in this case, it's tariffs.

And it's our responsibility to do so without ever compromising the long-term integrity of our strategy and, most importantly, the customer value proposition. Now, as we noted and we've talked about it, we've already mitigated over half of the anticipated impact of tariffs. We've done it through adjustments in sourcing, manufacturing, assortments.

And we remain absolutely committed to achieving additional mitigation over time. We diversified our sourcing footprint. I mean, the last time we chatted, Jim, I told you China was less than 10% of our sourcing. Today, I'm telling you it's less than 3%.

By the end of this year, it's less than 3%. And every, you know, and there will be no other country in 2026 by the time we get there that will be more than 25%. So all in all, you know, we're really navigating with transparency. But first and foremost, making sure that the customer value proposition and the integrity of our long-term approach remains. And we'll do so with executional excellence. Okay, so a brand that you know I love and shop at frequently, as does my staff,

Banana Republic was not what I thought you would do, particularly because I think the look's actually great. But I want to know why. What do you think happened there that it didn't continue the trajectory? Look, I'm actually very encouraged by the ongoing progress that we're making in Banana Republic. We've been focusing on reestablishing the brand, fixing the fundamentals. There's a lot of really good new proof points emerging as we delivered a flat comp in the quarter. Underneath the hood, we see great progress.

Momentum, leaning into classics, more precise assortments. The fit that we've been working on over time is really starting to resonate as we rebuild trust with our customers. As you know, our men's collection is continuing to perform really well, and we're pleased with the improving performance in women's.

Our team is doing a great job strategically redeploying marketing to a much more culturally relevant storytelling proposition. It's resonating. I hope you saw we had a great collaboration with White Lotus. It's a real testament to the clarity of our positioning as a modern explorer brand.

It was inspired, of course, by the world of White Lotus, but it was distinctly Banana Republic. And I'm telling you, I remain very optimistic about the brand. We continue to strengthening the foundation and product. And with each passing quarter, we're seeing clearer signs of brand progress.

put it all together, the mitigation, which can be done over a year, the fact that Banana Republic just told me not to worry, the amazing numbers that I'm seeing from Gap, really solid market share take Old Navy. And I say to myself, with that balance sheet and the balance sheet is much stronger than I can ever recall Gap having. With that buyback, I have to believe that if people don't believe, you can believe and you can put that buyback to work at great prices and pick up some stock for Gap, for shareholders.

Look, we believe in us. And again, you mentioned Old Navy. Old Navy is our largest brand. It delivered another consistent strong quarter of comps up 3%. It's the ninth consecutive quarter of market share gains. We're winning in categories that we called out strategically well-intended. Absolutely.

Active, denim, dresses. I mean, these are really important endeavors that we did what we said we're going to do, and we're going to continue to do that. We've established Old Navy in a way that really proves the momentum is there for our largest brand, and it's giving us confidence as we move into 2025. Collectively, we've got a strong portfolio of brands that matter, and we're proving that they can matter more.

Now, it's a long term proposition. Good quarter. But, you know, lots of excitement. OK, so people will get up and they'll look and they'll say, well, wait a second. The stock's down five. Did he take his eye off the ball? I think that maybe there was maybe another way to put what could happen with the with the future. I don't know how to do it, but I think people were kind of saying, well, look, maybe they're throwing their hands up. But you obviously are not throwing your hands up.

Not at all. I think on our outlook, when we share essentially how we position this, I think it's important to recognize our goal, first and foremost, is transparency. We were very purposeful in separating the outlook from the estimated tariff impact.

We believe that our outlook is providing a perspective of the underlying health of our business, which is working and working well. It's an estimate of the impact of current tariffs, which, by the way, could still change as of last night's latest news. So it's a really important dynamic to recognize that we called it out. We're being very transparent about what that number is.

We've also suggested we've mitigated more than half of that impact. We have every goal and means to continue to do so, but not at the risk of the long-term strategic approach to the business. The first half of 2025 should be largely unimpacted by current tariffs. There's nothing in Q1 and minimal impact in our Q2 outlook. The

The estimated tariff that we provided today is primarily weighted to the second half. And look, there's going to be a lot more information to come. There's another milestone on July 9th, and we'll continue to update as we move forward. But ultimately, the health of our business is strong. I think you told it accurately, completely. And I'm glad our people get a chance to be able to buy down here because it's definitely right. Richard Dixon, Gap Inc., president and CEO. Richard, good job. Thank you.

Thank you, Jim. I appreciate it. Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round. Next. It is time. It's time for the lightning round. And then the lightning round is over. Are you ready? I'm going to start with Riley in Pennsylvania. Riley.

Hi, Jim. Calling on ticker QBTS, D-Wave Quantum. It's blowing up. Revenue growth had already beat all of last year in just one quarter. People I know in this space are telling me great things. Jimmy, tell me something good. Could this be a breakout? All right, I am going to tell you something good. I think of the ones that are out there, this is the best. Okay, how's that? This is the best. And if they got any good news beyond what they have, the stock probably goes to 25. There we go. Told you that was a new mid. I went there. Let's go to Steve in Maine. Steve. Steve.

Now I want to go to Patrick in California. Patrick.

Mr. Kramer, thank you for taking my call. Oh, thank you. And helping myself and thousands of others. I greatly appreciate it. Thank you. Thank you. Jim, my question is on ticker stock. I took a position, a small position in a couple of weeks ago. It has done well, but fallen off a bit. And my question is, at what point would you suggest adding the position at what increments? The ticker symbol is.

It's B-B-A-I. Okay, I'm going to deviate. I'm going to suggest a stock that I think is better, that has more hype to it, that has more pizzazz, that everybody loves. I'm going to suggest Palantir, also known as Palantir by people who don't know it. And I happen to think that Alex Karp will come out and he'll say something really great and he'll announce a big deal and you'll make 10 points because that's the way Palantir rolls. Now we're going to Jim in South Carolina. Jim.

Jim, how's it going? Not bad, Jim. How about you? I want to thank you. A couple of Jims talking. And I want to thank you for all the good advice you've given over the years. And the past few months, it's really paid off. Oh, thank you, man. Back at the beginning of April. Yeah, back at the beginning of April on that big dip, you know, I listened to your advice and buy it in small increments as things went down to improve my position. And, you know, I've got a pretty well diversified portfolio. Oh, that's good.

And as soon as we had that big, beautiful bounce, everything took off like bulls on basalts, except for...

Biohaven. Biohaven had an analyst day the other day, and it was, you know, people didn't get excited about it. Now, in full disclosure, I do have a personal deal with Biohaven, and I don't talk about it much because it's not been disclosed. But I am surprised this stock is all the way down here. Vlad Shorch is really good. I think that this is a buy. But you could say, hey, Kramer, you're biased. You got to deal with him. But I'm just telling you, that's how I feel. Or else I wouldn't have had to deal with him. Let's go to Patrick in Pennsylvania. Patrick.

Hey, Mr. Kramer, long time viewer, first time caller. How are you doing? First time. I love that. Long time, first time. You can't beat that, but I'm doing fine. How about you? Pretty good. Thanks for being a signing board for the individual investor. My question is this. This stock has been beaten up all year. Uh-oh. There's been so many beaten up. Is this a guess? Is this a game? What stock's been beaten up all year?

Oh, we lost him? Okay. You know what? I think we should go to AJ. No, you know what, AJ? I love you. I wear your number. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, fresh off his interview with NVIDIA CEO Jensen Huang, Kramer's giving you his take on the state of play for U.S. chipmakers doing business in China. Next.

Ever since China joined the World Trade Organization in 2001, they've been both friend and foe. The friend.

They brought down prices for just about everything with their cheap labor. The foe. They targeted a series of industries, wiping out factories and factory towns across the country. For a long time, Washington looked the other way because both parties figured we were getting a good deal. The cheap stuff was just that cheap. But in recent years, we've come to realize that China got the better end of the bargain, crushing our blue-collar workforce, devastating our manufacturing capacity, while making fortunes for themselves.

Again, every president was fine with this until Trump's first term, where he tried to stop China from taking advantage of us by slapping tariffs on multiple goods. Then Biden put restrictions on selling our best technology to China, like NVIDIA's top tier semiconductors. These were all piecemeal moves, but they represented a rejection of the old free trade orthodoxy. Ever since Trump was sworn in for his second term, though, things are a lot less complicated. Our government now sees China as a pure foe. The tariffs have created an exodus of American businesses. It's right in the kisser moment.

Now, the battleground has turned again to semiconductors, which would be our most significant export to China after agricultural goods. Specifically, again, we're talking about NVIDIA's chips. Currently, NVIDIA makes the most sophisticated chips in the world. And until a few years ago, it had 95 percent of the Chinese market, giving potential Chinese rivals zero room to compete. Now, that was a pretty great situation. But our nation's interests in China have totally diverged. Under Trump, we've gone full-blown Cold War, very similar to our relationship with the Soviet Union after World War II.

In this new world, NVIDIA only makes up 50% of the high-end chips in China because they're not allowed to sell their best product to the Chinese. And that may go down to nothing as President Trump changed the rules without notice, causing NVIDIA to write off billions of dollars in inventory and perhaps having to forego $8 billion in sales next quarter and as much as $50 billion for the full year.

Last night, after NVIDIA reported one of the best quarters I've ever seen, CEO Jensen Wang made a plea on this show to keep doing business with China, both to maintain U.S. semiconductor supremacy and to keep the profits flowing. Jensen argued that if you want what's best for the United States, you can't afford to bolster the Chinese chip makers by boxing out NVIDIA. Keeping NVIDIA out of their market is a pure gift to those companies.

A lot of us were worried that the Chinese military might use NVIDIA's chips against us. That's the national security argument. But doesn't explain that China's not going to use American chips for their military any more than we use Chinese chips for our military. Huge security risk.

I probe that issue, pointing out that President Trump just reversed Biden's so-called diffusion rules, allowing Nvidia to sell billions of dollars of chips to countries that previously didn't have access to them, including the deep-pocketing Gulf monarchies. So maybe Jensen's asking for too much to reopen China? He said that we act like China can't build the highest-end chips themselves when we know they're doing so, including DeepSeek's new semis that were just announced. If we sell our chips to China, he says, we can regain our supremacy. But if Nvidia can't do that business,

It's effectively a huge subsidy for the Chinese chip makers. Look, I'm a hardliner on China, but I see the point. Apple dominates with the iPhone because everyone writes programs for them. Microsoft dominates with Windows for the same reason. NVIDIA could be in a similar position, but not if they're effectively banned from doing business in the second largest economy on Earth. NVIDIA could see it as crowned to China very quickly if it isn't allowed to sell a lot of chips there, returning a lot of the profits from that $50 billion in sales to the U.S. to build more capacity here.

I just don't know if President Trump cares, because from his latest actions, it feels like we're just a few years away from a total shutdown in relations with China, possibly leading to a Berlin airlift-style situation, except this time it's Taipei. If we're really headed for a new Cold War with China,

then we have to just get used to it because there's nothing NVIDIA can do. Fortunately, there's still a ton of opportunity for NVIDIA outside of China because its chips are that great. To me, though, the president's in no mood for any of our companies to do more business in China than they have to. I think that's a mistake when it comes to semiconductors, but right now, I fear that's exactly what's going to happen. I like to say there's always one market somewhere. I promise I'll find it just for you right here on MadMoney. I'm Jim Cramer. See you tomorrow.

All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet, or another medium.

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