Best Buy Bracing for Next Round of Tariffs
Best Buy is taking multiple steps to counter effects of tariffs, Chief Financial Officer Matt Bilunas said on a Nov. 26 earnings call. He said the retailer is bringing in products ahead of tariff implementation; making strategic decisions on vendor and SKU assortment; instituting promotional and pricing strategies and sourcing changes; and developing strategies with vendor partners. The most relevant tariffed categories for Best Buy for Section 301 List 4A products are TVs, headphones and smartwatches; and for List 4B products are computers, mobile phones and game consoles, Bilunas said.
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CEO Corie Barry said tariff effects would be felt more acutely in Q1, given the timing of the 15 percent List 4B tariffs, due to hit near the end of the holiday quarter: “That tranche becomes more a conversation piece for next year.” Barry cited the many “moving pieces” for tariffs, including competitive position, product assortment and supply chain manufacturing: “There really isn’t a precedent for where we are right now.” The retailer and its vendors are employing several strategies to counteract the tariff impact, including a “limited number of small price increases,” she said.
List 4A tariffs that took effect Sept. 15 included smaller screen size TVs, but with looming Dec. 15 duties, “you now have quite a few items that are on any of the lists, and elasticities for any given individual item are incredibly difficult,” Barry said. That’s compounded in the “highly promotional” holiday quarter when “it will be less about whether or not there’s a tariff on any individual item,” she said: “Q4 is all about price and promotional and how you’re positioning.”