Best Buy Combats Tariff Blues As Consumer Caution Grows

U.S.-based retailers continue to adjust their strategies to combat trade-related tariff headwinds, amid ongoing and escalating disputes with China.

Market participants have warned that levies on apparel, footwear, consumer electronics, and toys imported from China will likely impact profitability at several major U.S. firms, including sportswear producer Nike (NYSE: NKE), iconic department stores Macy’s (NYSE: M), Kohl’s (NYSE: KSS) and Walmart (NYSE: WMT), as well as electronics giant Best Buy (NYSE: BBY).

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Best Buy, for example, has unleashed its next phase financial strategy objectives for the fiscal year 2025, Building the New Blue: Chapter Two, which includes a focus on supply chain transformation to help stave off adverse impacts from tariffs.

Among its aims, the company is seeking to raise its enterprise revenue to US$50bn from its current fiscal 2020 guidance of US$43.1bn-US$43.6bn; generate non-GAAP operating income of 5.0% compared to its FY’20 outlook of flat to slightly up from the 4.6% rate in FY’19; as well as achieve US$1bn worth of additional cost reductions and efficiencies.

Best Buy CEO Corie Barry said in late August that the company’s televisions, smartwatches, and headphones would be most affected by the tariffs that went into effect September 1, while computer-related items, mobile phones and gaming consoles would face impacts starting December 15.

Barry continued that, given this backdrop, “many of our vendors are in the process of migrating their manufacturing out of China,” while Best Buy’s merchants are aiming to “minimize costs and risks.” He added that, as a result, “while there will be some short-term volatility, we expect to adapt to this new environment”.

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Shares of Best Buy were last down around 1% to US$66.75 in intraday trading Thursday. The firm’s shares have lost roughly 16% of their value year-on-year.

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