Tariffs Tighten the Grip on Retail Giants: Best Buy and Macy’s Navigate Uncertain Waters
May 30, 2025, 10:25 am
In the world of retail, the winds of change blow fiercely. Best Buy and Macy’s, two titans of the industry, find themselves grappling with the heavy hand of tariffs. The recent economic landscape, shaped by President Trump’s trade policies, has left these companies adjusting their sails to stay afloat.
Best Buy recently reported better-than-expected first-quarter earnings. Yet, the retailer still slashed its profit outlook. The culprit? Tariffs on imported electronics. CEO Corie Barry acknowledged that price hikes were on the horizon. Best Buy is not alone; it joins a growing list of companies, including Macy’s, that have adjusted their profit forecasts due to these tariffs.
The numbers tell a story of struggle. Best Buy’s revenue for fiscal 2026 is now projected between $41.1 billion and $41.9 billion, down from a previous estimate of $41.4 billion to $42.2 billion. Adjusted earnings per share are expected to range from $6.15 to $6.30, a drop from earlier guidance of $6.20 to $6.60. The retailer’s net income fell by 18% to $202 million, highlighting the impact of rising costs.
Macy’s is also feeling the pinch. The department store chain cut its profit outlook for 2025, citing the same tariff-induced pressures. Despite beating Wall Street’s earnings estimates, Macy’s now expects adjusted earnings per share to fall between $1.60 and $2. This is a significant drop from the previous forecast of $2.05 to $2.25. The company’s net income also declined, dropping from $62 million to $38 million year-over-year.
Both retailers are navigating a treacherous sea of economic uncertainty. Tariffs have forced them to rethink their pricing strategies. Best Buy has already raised prices on some items, a move Barry described as a “last resort.” Meanwhile, Macy’s plans to hike prices selectively, aiming for a “surgical” approach. The goal is to offset the rising costs while still appealing to price-sensitive consumers.
The backdrop of these challenges is a shifting landscape. Best Buy’s reliance on imports from China has decreased. The company now sources 30% to 35% of its merchandise from China, down from 55%. This shift reflects a broader trend as companies seek to diversify their supply chains. About 25% of Best Buy’s products come from the U.S. or Mexico, where tariffs do not apply. The remaining 40% is sourced from countries like Vietnam and India, which are still subject to tariffs.
Macy’s is also adapting. The company has reduced the share of its private brands sourced from China to about 27%. This is a significant decrease from over 50% before the pandemic. The retailer is renegotiating orders with vendors and even canceling some to mitigate the impact of tariffs. CFO Adrian Mitchell noted that while they have gained some vendor discounts, they are also absorbing some costs to maintain competitive pricing.
Both companies are in the midst of strategic transformations. Best Buy is focused on enhancing the customer experience, integrating digital and in-store operations, and launching new products. The upcoming release of the Nintendo Switch 2 is expected to drive excitement and sales. In contrast, Macy’s is closing underperforming stores and investing in its stronger brands, like Bloomingdale’s and Bluemercury. The company is also working to improve online delivery and customer service.
The retail landscape is evolving, and both Best Buy and Macy’s are trying to stay ahead of the curve. Economic uncertainty looms large, and consumer behavior is shifting. As discretionary spending moderates, retailers must adapt quickly. Best Buy’s comparable sales fell 0.7% year-over-year, while Macy’s reported a 2.1% decline in comparable sales across its namesake brand. However, there are glimmers of hope. Bloomingdale’s and Bluemercury reported growth, indicating that not all segments are struggling.
The stock market reflects this turmoil. Best Buy’s shares have dropped nearly 17% this year, while Macy’s has seen a staggering 29% decline. Both companies are trailing behind the S&P 500, which has remained relatively flat. Investors are wary, and the uncertainty surrounding tariffs adds to the volatility.
As Best Buy and Macy’s navigate these turbulent waters, their ability to adapt will be crucial. The retail landscape is a fickle beast, and those who can pivot quickly will survive. The looming question remains: how will these giants weather the storm of tariffs and economic uncertainty? Only time will tell.
In conclusion, the challenges posed by tariffs are reshaping the retail industry. Best Buy and Macy’s are at the forefront of this transformation. They are making tough decisions, adjusting pricing strategies, and redefining their business models. The road ahead is fraught with challenges, but with strategic foresight and adaptability, these retailers may yet find their way to calmer seas.
Best Buy recently reported better-than-expected first-quarter earnings. Yet, the retailer still slashed its profit outlook. The culprit? Tariffs on imported electronics. CEO Corie Barry acknowledged that price hikes were on the horizon. Best Buy is not alone; it joins a growing list of companies, including Macy’s, that have adjusted their profit forecasts due to these tariffs.
The numbers tell a story of struggle. Best Buy’s revenue for fiscal 2026 is now projected between $41.1 billion and $41.9 billion, down from a previous estimate of $41.4 billion to $42.2 billion. Adjusted earnings per share are expected to range from $6.15 to $6.30, a drop from earlier guidance of $6.20 to $6.60. The retailer’s net income fell by 18% to $202 million, highlighting the impact of rising costs.
Macy’s is also feeling the pinch. The department store chain cut its profit outlook for 2025, citing the same tariff-induced pressures. Despite beating Wall Street’s earnings estimates, Macy’s now expects adjusted earnings per share to fall between $1.60 and $2. This is a significant drop from the previous forecast of $2.05 to $2.25. The company’s net income also declined, dropping from $62 million to $38 million year-over-year.
Both retailers are navigating a treacherous sea of economic uncertainty. Tariffs have forced them to rethink their pricing strategies. Best Buy has already raised prices on some items, a move Barry described as a “last resort.” Meanwhile, Macy’s plans to hike prices selectively, aiming for a “surgical” approach. The goal is to offset the rising costs while still appealing to price-sensitive consumers.
The backdrop of these challenges is a shifting landscape. Best Buy’s reliance on imports from China has decreased. The company now sources 30% to 35% of its merchandise from China, down from 55%. This shift reflects a broader trend as companies seek to diversify their supply chains. About 25% of Best Buy’s products come from the U.S. or Mexico, where tariffs do not apply. The remaining 40% is sourced from countries like Vietnam and India, which are still subject to tariffs.
Macy’s is also adapting. The company has reduced the share of its private brands sourced from China to about 27%. This is a significant decrease from over 50% before the pandemic. The retailer is renegotiating orders with vendors and even canceling some to mitigate the impact of tariffs. CFO Adrian Mitchell noted that while they have gained some vendor discounts, they are also absorbing some costs to maintain competitive pricing.
Both companies are in the midst of strategic transformations. Best Buy is focused on enhancing the customer experience, integrating digital and in-store operations, and launching new products. The upcoming release of the Nintendo Switch 2 is expected to drive excitement and sales. In contrast, Macy’s is closing underperforming stores and investing in its stronger brands, like Bloomingdale’s and Bluemercury. The company is also working to improve online delivery and customer service.
The retail landscape is evolving, and both Best Buy and Macy’s are trying to stay ahead of the curve. Economic uncertainty looms large, and consumer behavior is shifting. As discretionary spending moderates, retailers must adapt quickly. Best Buy’s comparable sales fell 0.7% year-over-year, while Macy’s reported a 2.1% decline in comparable sales across its namesake brand. However, there are glimmers of hope. Bloomingdale’s and Bluemercury reported growth, indicating that not all segments are struggling.
The stock market reflects this turmoil. Best Buy’s shares have dropped nearly 17% this year, while Macy’s has seen a staggering 29% decline. Both companies are trailing behind the S&P 500, which has remained relatively flat. Investors are wary, and the uncertainty surrounding tariffs adds to the volatility.
As Best Buy and Macy’s navigate these turbulent waters, their ability to adapt will be crucial. The retail landscape is a fickle beast, and those who can pivot quickly will survive. The looming question remains: how will these giants weather the storm of tariffs and economic uncertainty? Only time will tell.
In conclusion, the challenges posed by tariffs are reshaping the retail industry. Best Buy and Macy’s are at the forefront of this transformation. They are making tough decisions, adjusting pricing strategies, and redefining their business models. The road ahead is fraught with challenges, but with strategic foresight and adaptability, these retailers may yet find their way to calmer seas.