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Best Buy reports modest sales recovery, but says tariffs are complicating its turnaround

LSD News Szerkesztőség — Thu, 28 Aug 2025 16:14:29 +0000

Logo of Best Buy displayed outside a Best Buy store in Edmonton, Alberta, Canada, on March 22, 2025.

Artur Widak | Nurphoto | Getty Images

Best Buy surpassed Wall Street revenue and earnings expectations for its most recent quarter on Thursday, but stuck with its full-year forecast, citing tariff uncertainty.

On the company’s earnings call, CEO Corie Barry said the retailer is “increasingly confident about our plans for the back half of the year.” She said the company is “trending toward the higher end of our sales range.”

Yet she said, “given the uncertainty of potential tariff impacts in the back half, both on consumers overall as well as our business, we feel it is prudent to maintain the annual guidance we provided last quarter.”

The consumer electronics retailer said it expects revenue of $41.1 billion to $41.9 billion and adjusted earnings per share in a range of $6.15 to $6.30 for its full fiscal year 2026. In May, Best Buy had cut its full-year profit guidance from a prior range of $6.20 to $6.60.

The middle of Best Buy’s expected full-year revenue range would be roughly flat to its revenue of $41.53 billion in the previous year. Best Buy said it expects full-year comparable sales, a metric that tracks online sales and sales at stores open at least 14 months, to range between a 1% decline and a 1% increase.

Chief Financial Officer Matt Bilunas said the company’s full-year guidance reflects that some shoppers could hold off on purchases in the third quarter. He said the retailer could see a slowdown in the business in October “as people are waiting for those holiday deals to come.”

For Best Buy, back-to-school season is a crucial time as families and students come to the store for laptops, tablets and more. Barry said the company has seen “a strong customer response” to its sales events during the season.

“These results demonstrate an important aspect of our thesis: Our model really shines when there is innovation,” she said.

Shares of Best Buy were down nearly 6% in midday trading.

Here’s how the retailer did for the three-month period that ended August 2 compared with what Wall Street was expecting, according to a survey of analysts by LSEG:

Earnings per share: $1.28 adjusted vs. $1.21 expected
Revenue: $9.44 billion vs. $9.24 billion expected

Best Buy’s net income for the fiscal second quarter of 2026 fell to $186 million, or 87 cents per share, from $291 million, or $1.34 per share, in the year-ago quarter. Adjusting for one-time items, including restructuring charges, Best Buy reported earnings per share of $1.28.

Revenue increased from $9.29 billion in the year-ago quarter.

Best Buy has been navigating a challenging trifecta of factors. Customers have bought fewer kitchen appliances as they put off home purchases and projects because of higher interest rates. Some have hesitated to splurge on pricier items because of tariff-related uncertainty or held out on tech replacements as they wait for new or eye-catching items. The company’s annual sales have declined for the past three years.

To spur growth, Best Buy launched a third-party marketplace earlier this month to offer shoppers a wider selection of consumer electronics, accessories and more. On the marketplace, sellers who apply for the platform can list their own brands and items on Best Buy’s website and app.

The company already increased prices on some items because of tariff-related higher costs, Barry said on a mid-May call with reporters. She did not specify which items now cost more and described price increases as “the very last resort.”

Still, tariffs did not have a material impact on fiscal second-quarter financial results, Barry said on the company’s earnings call Thursday.

Shopping patterns

Barry said that shopping patterns at Best Buy have not changed from previous quarters. She said customers are “resilient, but deal-focused” and have been attracted to the company’s sales events like the one it held in July.

“In the current environment, customers continue to be thoughtful about big ticket purchases and are willing to spend on high price point products when they need to, or when there is technology innovation,” she said.

Best Buy’s comparable sales rose 1.6% in the fiscal second quarter compared to the year-ago period. That marked the company’s highest growth in three years, Barry said on the company’s earnings call.

In the U.S., comparable sales increased 1.1%, as customers bought mobile phones, video gaming equipment and items from its computing category. However, those sales trends were partially offset by weaker sales of appliances, home theaters, tablets and drones, the company said.

Investors have looked for signs that the replacement cycle is picking up about five years after consumers stocked up on laptops, kitchen appliances, computer screens and more during the Covid pandemic.

There were some indications of that rebound in Best Buy’s second quarter. Barry said the retailer’s computing category marked its sixth consecutive quarter of sales growth. It also recorded the highest number of second-quarter laptop unit sales in 15 years, she said.

Gaming in particular had stronger-than-expected sales in the quarter, thanks to the release of the Nintendo Switch 2, Barry said. The retailer capitalized on the highly anticipated launch by offering a way for customers to pre-order and opening stores at midnight when the gaming console dropped on June 5, so customers could line up and get it right away.

In the back half of the year, Barrie said Best Buy will try to rev up sales in slower categories like appliances and home theater by sharpening price points, adjusting the merchandise it sells and expanding the staffing devoted to them. The retailer has increasingly leaned on its vendor partners to staff stores, bringing in employees of Apple and Samsung for example, to support sales in different parts of its stores.

Barry said the retailer expects brands to ramp up those staffing contributions in the back half of the year.

Along with adding more dedicated brand experts to its stores, Best Buy has added new experiences to attract and engage customers. It’s testing mini-showrooms with Ikea that feature kitchen and laundry room appliances and merchandise from both retailers in 10 stores in Florida and Texas. It is also rolling out new experiences with Breville and SharkNinja to show off trendy coffeemakers, beauty items and more, Barry said. And it has areas in stores where shoppers can try out Ray-Ban and Oakley sunglasses with Meta AI technology.

For the Nintendo Switch 2 launch, Best Buy worked with Nintendo to double the space in stores ahead of the June launch. Nintendo also brought game trucks to select stores, physical trailers where customers could play with the new system and try out the latest videogames.

Best Buy’s fiscal second-quarter online sales in the U.S. rose 5.1% year over year and accounted for about a third of Best Buy’s total U.S. revenue in the quarter.

Higher tariffs are kicking in. Here’s what Walmart and other retailers said about their impact

LSD News Szerkesztőség — Sun, 24 Aug 2025 02:54:21 +0000

Customer with shopping cart in the snack aisle of a Walmart store in Florida City, Florida, Aug. 5, 2025.

JC Milhet | AFP | Getty Images

As some of the biggest names in retail, including Walmart and Home Depot, delivered earnings results in recent weeks, they updated Wall Street on how they and their shoppers are responding to President Donald Trump’s wave of tariff increases.

The takeaway?

Tariff costs are rising for retailers, and they’ve had to get creative to avoid widespread price hikes.

Yet consumer spending has largely stayed strong so far — and the pinch from higher duties hasn’t been as severe as some companies had feared. Compared with their concerns in the spring, retail executives struck a measured tone and said they don’t expect their costs, or customers’ prices, to jump dramatically.

Walmart had given one of the strongest warnings in May, as CFO John David Rainey said he expected some prices to rise during the summer. In an interview with CNBC on Thursday, however, Rainey said the nation’s biggest retailer has raised prices on some items, but in other parts of its stores has kept prices down or expanded discounts.

“There are certainly areas where we have fully absorbed the impact of higher tariff costs,” he said. “There are other areas where we’ve had to pass some of those costs along. But when you look across the basket of items, we’re certainly trying to keep prices as low as we can.”

Scot Ciccarelli, a retail analyst for Truist, said retailers are raising prices “but not nearly to the degree that might have been expected in early April” when Trump first announced his steep tariffs on dozens of countries.

“Most of the companies are kind of downplaying the impact of tariffs,” he said. “They’ve all talked about substantial mitigation efforts, whether that is diversifying sourcing, whether that is pushing price back to vendors.”

Here are three takeaways from a busy couple of weeks of retail earnings.

Consumer spending is steady — with some exceptions

The drumbeat of steady, but selective, U.S. consumer spending continued this quarter.

At Walmart, the nation’s largest grocer by revenue, sales of private-label items, which tend to cost less than national name brands, were roughly flat, Rainey told CNBC. When customers trade down to those cheaper brands or smaller packs of items, it can signal U.S. households feel strapped for cash.

As companies closely watch the consumer, Rainey said Walmart has seen shopper behavior that’s “very consistent.”

“They continue to be very resilient,” he said.

Walmart and Coach parent company Tapestry both raised their sales outlooks for the full year. Both companies said they saw healthy sales of discretionary items, such as clothing and handbags.

Sales of fashion items, including ladies’ apparel and shoes, accelerated at Walmart in the quarter, Rainey said.

One of Coach’s handbags, the large Kisslock bag that costs $695, sold out within minutes of launching in July, Tapestry CEO Joanne Crevoiserat said last week on the company’s earnings call.

Yet some categories are still a tough sell. And lower-income shoppers have been more sensitive to price changes.

Walmart CEO Doug McMillon said Thursday that the effect of tariffs on spending “has been somewhat muted.” Still, he added some shoppers have noticed and responded when prices creep up.

“As we replenish inventory at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect will continue into the third and fourth quarters,” he said. “Not surprisingly, we see more adjustments in middle- and lower-income households than we do with higher-income households and discretionary categories where item prices have gone up.”

Sales at Home Depot and Lowe’s improved as the quarter went on, with the strongest in July. Still, the companies weren’t ready to predict a turnaround for home improvement.

Lowe’s CEO Marvin Ellison attributed some of the recent pickup in demand to better weather and said “it’s too early for us to call that a trend.” Higher mortgage rates and borrowing costs have dinged homeowners’ willingness to tackle a major renovation or move to a new home, which tends to spur home projects.

Other brands had more dire warnings about spending. On the company’s earnings call, Crocs CEO Andrew Rees described the backdrop for the second half of the year as “concerning” and said its retail orders are weak.

He described Crocs’ customers as “super cautious.”

“They’re not purchasing. They’re not even going to the stores, and we see traffic down,” he said, adding that’s also true at its outlets, which draw more lower-income households.

Customers shop at a Home Depot store on August 19, 2025 in Chicago, Illinois.

Scott Olson | Getty Images

Retailers have blunted the effects of tariffs … so far

Retailers have jumped into action to try to minimize cost increases from tariffs or avoid them altogether.

Those tactics have included importing goods from a wider range of countries, getting items to the U.S. early and stocking up on high-frequency purchases or fresh merchandise that consumers are more likely to buy, even at higher prices, according to interviews of retail executives and earnings calls.

Yet as Walmart showed, retailers have been strategic about price increases — to not only avoid spooking customers, but also to dodge potential scrutiny from the White House. Trump criticized Walmart in May after the company warned it would have to raise prices.

Sharkninja, which makes a wide range of items including blenders and hairstyling tools, has “increased sell price on products, but done it very, very carefully,” CEO Mark Barrocas said in an interview. And in some cases, it had to roll back part of those price increases, he said.

The company has also reduced discounting and raised the price of new merchandise when it debuts. For example, Sharkninja initially planned to launch a new infrared skin care mask called CryoGlow at $299, but instead decided to price it at $349, he said.

For Walmart, Target and Tapestry-owned Coach, importing goods early and having merchandise in warehouses before tariffs took effect have helped them curb the hit from higher rates.

Home Depot Chief Financial Officer Richard McPhail told CNBC most of the imported products the company sold during the quarter landed ahead of tariffs. And Home Depot is taking more steps to blunt the effects: More than half of what the company sells comes from the U.S. and it aims to import no more than 10% from any single country by the end of the year.

Yet the tariff bill is still adding up. Walmart’s McMillon said he expects higher costs from duties to continue through the second half of the fiscal year. Other companies also provided specific estimates of how much the higher duties will cost them.

Even as Tapestry posted sales growth, its shares tumbled last week after it said costs from higher duties would total $160 million this upcoming fiscal year and ding profits.

While Trump’s tariff policy appears more settled than in the spring, tariffs on some countries could still rise.

Many of Trump’s tariffs on countries began in early August, but one of the key rates still hangs in the balance. He delayed higher tariffs on China for 90 days last week. Those had jumped as high as 145%, but are now at 30% as negotiations continue.

Target acknowledged the trade uncertainty with its own strategy. It gave a wider than usual range for its full-year earnings per share outlook.

Inside a Crocs store at Queens Center in New York.

Ryan Baker | CNBC

Strong brands, new moneymakers matter more than ever

Strong brand loyalty and lucrative new businesses have made it easier for some companies to weather the uncertainty.

As homeowners postpone larger projects, Home Depot and Lowe’s have bulked up their business among home professionals to attract steadier traffic and prepare for when demand picks up again. Along with reporting earnings this week, Lowe’s announced it’s buying Foundation Building Materials for $8.8 billion, marking its second acquisition of a home professional-focused company in recent months.

Home Depot announced its own pro-focused deal earlier this summer and made the largest acquisition in its history when it bought SRS Distribution last year.

Walmart also has benefited from newer revenue streams, especially its advertising business and third-party marketplace. Global advertising grew 46% in the most recent quarter, including ad-enabled smart TV maker Vizio, which it acquired last year.

Its marketplace revenue grew by 17% year over year. That business includes sellers who get charged a commission and often pay for services, such as ads on Walmart’s site to promote their products or fulfillment services to have the big-box retailer store pack and ship orders to customers.

Those “more diversified set of profit streams,” which have higher margins than selling a gallon of milk or a T-shirt, make Walmart’s earnings steadier even as the company faces profit pressures, Rainey said on the company’s earnings call.

“We are more than just a standard brick-and-mortar retail business,” he said on the call.

For some brands, customer demand is high enough to help offset tariffs or allow them to charge more.

Sandal maker Birkenstock, for instance, “saw no pushback or cancellations” after its tariff-related July 1 price increases, CEO Oliver Reichert said on the company’s earnings call.

Coach, which has driven up its average price of items over the past five years and reduced its level of markdowns, can better “absorb a lot of these input costs,” Coach CEO Todd Kahn told CNBC.

On the flip side, tariff costs have hit some brands harder, especially if they don’t have the new products customers seem to want or are skittish about what sales will look like later this year. High-performing companies with massive scale such as Walmart often have leverage with vendors to pass on costs — but other businesses might not.

“If you’re a struggling brand, or you’re not really growing your business with a vendor, that vendor has less incentive to absorb incremental costs, whether it’s from tariffs or supply chain or whatever,” Truist’s Ciccarelli said.

Target said its profit margins in the quarter were hurt by the costs of cancelling orders. Crocs also said it is reducing orders for the back half of the year.

Crocs took another unusual step: Rees said the company is taking back older inventory from retailers that sell its Heydude shoe brand and swapping it out with fresher styles.

Here are the retailers raising prices as Trump tariffs take hold

LSD News Szerkesztőség — Sun, 01 Jun 2025 02:45:43 +0000

A person picks out clothing in a store as retailers compete to attract shoppers and try to maintain margins on Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, U.S. November 24, 2023.

Vincent Alban | Reuters

Consumers who hoped tariffs would not hit their wallets keep getting bad news.

As they reported earnings in recent weeks, multiple major retailers said they have already raised some prices or plan to hike them in the coming weeks to offset the duties. They include major grocers and consumer goods sellers Costco, Best Buy, Walmart and Target.

President Donald Trump’s ever-changing trade policy has roiled retailers as they try to plan their supply chains. On earnings calls, they faced the difficult task of trying to appease investors who want them to protect their bottom lines and shoppers who could balk at price hikes.

In some cases, companies have been explicit, citing the estimated toll tariffs will take on their bottom lines and breaking down which countries their supply chains rely on. Other retailers have been less forthcoming, avoiding the word “tariff” and instead blaming strategy shifts or price hikes on “macroeconomic uncertainty” — or simply refusing to point the finger at all.

Many retailers have reduced or withdrawn their full-year guidance because of tariffs. Companies such as Abercrombie & Fitch, Macy’s and Best Buy have slashed their profit outlooks. Meanwhile, American Eagle, Canada Goose, Ross and Mattel pulled their full-year guidance.

After Trump implemented steep tariffs on dozens of countries in April, his administration has temporarily cut them to lower — but still significant — levels. Imports from China face a 30% duty, while goods from many other nations are subject to a 10% duty. A federal trade court struck down many of those tariffs on Wednesday, only for an appeals court to reinstate them, adding to the uncertainty retailers face.

Economists on both sides of the aisle agree that tariffs are inflationary and the cost will likely be passed on to consumers, though government data has not showed a clear effect yet. A majority, 68%, of U.S. CEOs say they have either increased prices already or are considering doing so this year in the face of tariffs, according to a new survey by Chief Executive Group and AlixPartners.

Here’s a breakdown of what several major retailers have said about their plans to raise prices as a way to mitigate the tariff impact.

Brands that have already raised some prices

Customers look over personal health items displayed on April 18, 2025 at a Costco branch in Niantic, Connecticut.

Robert Nickelsberg | Getty Images

Costco

Executives of the warehouse club retailer told investors on Thursday that tariffs have forced the company to tweak its supply chain and raise prices in some cases. Costco has absorbed tariff costs for some goods, while it has increased prices in other instances, said CFO Gary Millerchip. For example, he said the retailer has held prices steady for staple items like bananas and pineapples sourced from Central and South America. Meanwhile, it has raised prices on flowers from those regions, since shoppers buy those less frequently.

Best Buy

Best Buy has already raised prices on some items to offset tariff costs, CEO Corie Barry said on a call with reporters. Changes took effect by mid-May. She declined to say which items are affected and called price hikes “the very last resort” for Best Buy.

SharkNinja

On SharkNinja‘s latest earnings call in May, CEO Mark Barrocas said the company has already increased prices for several of its key products in response to tariffs and will “continue to look for additional opportunities” to do so. As an example, he said the company recently raised the price of one of its Ninja espresso machines from $499 to $549 and saw “no degradation in demand.” Some price hikes will stick and others will be dialed back, he said, depending on how consumers react.

In a March interview, Barrocas told CNBC that nearly all of the company’s production will be moved out of China by the end of 2025.

Newell Brands

Executives from Newell Brands, which owns stroller company Graco as well as Rubbermaid, Yankee Candle, Paper Mate and Sharpie, said during an April 30 earnings call that the company has raised prices on its baby gear by about 20%. The company said it is equipped to handle Trump’s tariffs, unless he raises duties on imports from China again, since the majority of baby gear sold in the U.S. is made in China.

Retailers that say they plan to increase prices

Fruit and vegetables are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025.

Ronaldo Schemidt | Afp | Getty Images

Walmart

Walmart shoppers will likely see price increases toward the end of May and more in June because of tariffs, said Chief Financial Officer John David Rainey during an interview with CNBC earlier in May. Executives did not specify during the company’s most recent earnings call how much more Walmart customers could pay, but CEO Doug McMillon said items that could be affected are toys, electronics and some grocery items, including bananas, avocados, coffee and roses.

A shopper walks past a Nike store, as global markets brace for a hit to trade and growth caused by U.S. President Donald Trump’s decision to impose import tariffs on dozens of countries, in the King of Prussia Mall in King of Prussia, Pennsylvania, U.S., April 3, 2025.

Rachel Wisniewski | Reuters

Nike

Last week, Nike said it will raise prices on a wide range of products by June 1. Nike apparel and equipment for adults will increase between $2 and $10, a person familiar with the matter previously told CNBC, while footwear will see a hike between $5 and $10, depending on price point. The company did not say whether the decision was related to tariffs, though it makes about half its footwear in China and Vietnam, which currently face 30% and 10% duties, respectively.

People shop at a Target store on April 02, 2025 in the Flatbush neighborhood of the Brooklyn borough in New York City.

Michael M. Santiago | Getty Images

Target

Target will increase prices on certain products to help offset tariff costs, Chief Commercial Officer Rick Gomez said during the company’s latest earnings call in May. CEO Brian Cornell added that price changes are the “very last resort” for the company as it tries to mitigate effects of the duties. He declined to provide details when asked about the company’s plan for price hikes or whether it had already raised prices.

“We’re constantly adjusting pricing,” Cornell said. “Some are going up, some will be reduced, but that’s an ongoing effort that takes place each and every day.”

Mattel

Barbie parent Mattel said it will raise prices on some U.S. products “where necessary” to help offset levies. CEO Ynon Kreiz said on CNBC’s “Squawk Box” in May that the company plans to source less than 40% of its products from China by the end of the year and less than 25% from that country in the next two years.

Macy’s

Macy’s CEO Tony Spring said during an interview with CNBC that the retailer will hike certain prices and stop carrying other items to offset the hit from tariffs. He said the company will make “surgical” price adjustments.

Retailers that say they are considering price hikes

Ralph Lauren

Executives on Ralph Lauren’s May earnings call said the company is taking “selective pricing actions and strategic discount reductions” to help manage tariff impacts. CFO Justin Picicci said that Ralph Lauren is “assessing additional pricing actions” for the fall and next spring to mitigate tariffs. This is on top of the “proactive pricing” the company had already planned for the fall in North America and Asia. Executives said no single country accounts for more than 20% of the brand’s production volumes and most countries, including China, represent a single-digit percentage.

VF Corp

CEO Bracken Darrell said during May earnings that VF Corp, which includes brands The North Face, Vans, Timberland and Dickies, is going to be “very strategic” about pricing in response to tariffs. CFO Paul Vogel added that the company’s plans to offset the tariff impacts include cost management, sourcing relocations and “pricing actions.” Vogel said that the company’s top four sourcing countries are Vietnam, Bangladesh, Cambodia and Indonesia, in that order, and that China accounts for less than 2% of the company’s total costs coming into the U.S.

Companies that say they will not raise prices

People shop for lumber from a Home Depot store in Alhambra, California on April 10, 2025.

Frederic J. Brown | Afp | Getty Images

Home Depot

Last week, Home Depot broke away from the other retailers when CFO Richard McPhail told CNBC in an interview that the company intends to “generally maintain our current pricing levels across our portfolio.” He said more than half of what the company sells comes from the U.S. Home Depot has diversified its sourcing, he said, so that by this time next year, no single country outside of the U.S. will account for more than 10% of the retailer’s purchases.

Armenian organized crime rings charged with stealing $83 million in Amazon cargo

LSD News Szerkesztőség — Wed, 21 May 2025 06:59:47 +0000

The Amazon Prime logo is displayed on Amazon delivery trucks in Richmond, California, June 21, 2023.

Justin Sullivan | Getty Images

Department of Justice officials on Tuesday charged members or associates of an Armenian organized crime ring with stealing more than $83 million worth of cargo from Amazon by posing as legitimate truck drivers and siphoning off goods destined for the company’s warehouses.

Since at least 2021, at least four people linked to the crime ring carried out a scheme across California to steal truckloads of merchandise, ranging from smart TVs and GE icemakers to SharkNinja vacuums and air fryers, the DOJ alleged.

“At present, Amazon is plagued by recurring thefts of its shipments, which is commonly referred to as ‘cargo theft,'” the complaint says.

Amazon has ramped up its efforts to track and shut down fraudulent, deceptive and illegal activities on its sprawling online store. Eliminating stolen goods is particularly challenging. CNBC reported in 2023 that Amazon suspended dozens of third-party merchants it alleged were selling stolen goods, though many of those sellers claimed they were unknowingly caught in the scheme, putting their businesses at risk of survival.

Amazon isn’t the only retailer afflicted by cargo theft. Experts told CNBC cargo theft-related losses are estimated at close to $1 billion or more a year.

In its complaint, the DOJ said the alleged fraudsters operated four transport carriers — AK Transportation, NBA Holdings, Belman Transport and Markos Transportation — that would obtain contracted freight routes from Amazon Relay, an application used by truckers to obtain work, also referred to as loads.

Each trucker is assigned a load for pickup from a manufacturer’s warehouse to be dropped off at an Amazon facility. Instead, the groups would divert from their designated routes, take a portion of the goods off the trucks and resell them or gift them to associates, prosecutors allege.

In some cases, the “self-styled carriers” would complete their deliveries at an Amazon warehouse several days after they were expected to show up, according to the complaint.

DOJ officials seized the alleged fraudsters’ iPhones and found photos and videos of warehouses lined with boxes of crockpots, Keurig coffee machines, keratin shampoo, Weber grills and other goods.

Amazon teams cooperated with DOJ officials in their investigation, including sharing information about the stolen goods, and details of the alleged fraudsters’ accounts on its online marketplace.

Representatives from Amazon didn’t immediately respond to a request for comment.

DOJ officials linked the defendants to a litany of other alleged crimes, including attempted murder, kidnapping, illegal firearm possession and health-care fraud. Several of the 13 defendants are expected to appear in a Los Angeles district court on Tuesday and Wednesday, while one of the defendants appeared in a court in Fort Lauderdale, Florida, on Tuesday and was detained.

WATCH: Amazon reportedly exploring foldable phone

Elections, hurricane damage and more: Here are four factors that will shape holiday shoppers’ purchases

LSD News Szerkesztőség — Sat, 19 Oct 2024 20:05:37 +0000

A Macy’s store is seen at Herald Square on December 11, 2023 in New York City.

Michael M. Santiago | Getty Images

Inflation may have cooled, but retailers are still staring down a holiday season with plenty of uncertainty.

Several hard-to-predict factors will influence consumers’ spending, as they deck the halls and look for the perfect gifts. Volatile weather, election distraction and a deal-hunting mindset may shape the season. And fewer days between Thanksgiving and Christmas than last year will put shoppers on the clock.

Yet there’s reason for optimism for retailers: Shoppers are feeling more upbeat and plan to spend more compared with last holiday season, according to an annual survey by consulting firm Deloitte and a separate forecast by the National Retail Federation.

Holiday spending in November and December is expected to increase by 2.5% to 3.5% compared with 2023 and range between $979.5 billion and $989 billion, according to the National Retail Federation. That’s a more modest increase than the 3.9% year-over-year jump from the 2022 to 2023 holiday season, when spending totaled $955.6 billion. The NRF’s figure excludes automobile dealers, gasoline stations and restaurants.

Shoppers expect to spend an average of $1,778 on the holidays this year, 8% more than last holiday season, according to consulting firm Deloitte’s survey. The survey, which included about 4,000 consumers and was conducted in late August and early September, attributed that spending increase to a more favorable economic outlook, a perception among respondents that prices would be higher and more willingness to spend among higher-earning households with an annual income of between $100,000 and $199,000.

Low unemployment, a return to more typical inflation levels and a recent Federal Reserve interest rate cut are lifting consumers’ spirits, said Stephen Rogers, managing director of Deloitte’s Consumer Industry Center.

“People are still in a better frame of mind, despite the political chatter,” he said. “When they look at their bank account and think about what their financial situation is, they feel better.”

People shop (L) ahead of Black Friday at a Walmart Supercenter on November 14, 2023 in Burbank, California.

Mario Tama | Getty Images News | Getty Images

Deal-hunting mentality

Weeks before trick-or-treating, shoppers got a taste of their first holiday deals.

Those early offers set the stage for a season when shoppers are expected to seek out more ways to stretch the budget after costs of living climbed for years.

Nearly 80% of shoppers surveyed by Deloitte said they would participate in deals events in October and November, up from 61% last year.

“Our deal seeking muscle has been really exercised the past two years and we are just going to continue to exercise it,” Rogers said.

NRF CEO Matt Shay echoed that prediction. On a call with reporters this week, he said the retail trade group expects a more promotional environment this holiday season, with deals across more brands and categories than a year ago.

Another potential challenge for retailers? Catering to customers who are more focused on decorations and experiences than gifts. Consumers plan to spend 16% more year over year on experiences, but spend 3% less on gifts compared with the year-ago holiday period, according to Deloitte’s survey. Non-gift purchases, including spending on decor and party apparel, is also expected to jump 9% year over year.

The firm’s survey found that spending in retail categories would remain relatively flat with an average of $1,043 in 2024 compared with $1,020 in 2023. Consumers across income groups reported value-seeking habits, including less self-gifting, more trading down to affordable retailers and more seeking out private labels or “dupes” of pricier items.

That shift could hurt retailers that sell goods, unless they come up with compelling ways to tie their merchandise to experiences, such as suggesting hiking gear, Rogers said.

For Home Depot, which sells a wide range of holiday decor including Santa-themed throw pillows and a giant animated reindeer for yards, the high demand for decor could be an opportunity. Yet the home improvement retailer said it’s prepared for consumers to seek value, too.

This holiday season, Home Depot bought more low-priced artificial Christmas trees, such as a prelit tree that sells for $49, said Lance Allen, senior merchant of decorative holiday for the home improvement retailer.

Signs showing support for both Democratic presidential candidate Vice President Kamala Harris and Republican presidential candidate former President Donald Trump sit along a rural highway on September 26, 2024 near Traverse City, Michigan.

Scott Olson | Getty Images News | Getty Images

Election uncertainty

As Americans await results of the presidential election, will they also shop for the holidays?

That’s a question on the minds of retailers and consumer brands, including Walmart and SharkNinja, that are hoping shoppers will browse and buy rather than become glued to the news. The election is on Nov. 5, and it could take days for a winner to be called if the race between Vice President Kamala Harris and former President Donald Trump ends up as close as polls suggest.

SharkNinja CEO Mark Barrocas described the election as the “biggest unknown” that will shape the holiday season.

“It may be a blip and it may be nothing, and it may disrupt things for a few weeks if the news cycle is all-consuming,” he said. “Christmas is going to come and there will be a holiday season. It’s just a matter of how many distractions there are.”

He said the election and the news cycle around it may also influence how consumers feel about the economy.

Walmart’s internal research suggests “an uptick in positivity” as its shoppers enjoy the fall and get ready for Halloween, said Jen Acerra, vice president of customer insights and strategy at Walmart.

“The one thing that is still out there and moving is what’s going to happen with the election, and what happens with the election will really determine if this is something that stays positive or not,” she said.

Already, some companies have blamed the election for taking a bite out of their sales. Amazon chalked up a weak forecast in August to election distraction that would dampen demand for online shopping, a comment some mocked as an excuse.

Delta Air Lines‘ CEO, Ed Bastian, said in a CNBC interview this month that the company expects lower demand before and after the election to hit the carrier’s revenue.

“Consumers will, I think, take a little bit of pause in making investment decisions, whether it’s discretionary or other things,” he said. “I think you’re going to hear other industries talking about that as well.”

After Hurricane Milton hit Florida, the city of Clearwater was flooded. Search and rescue operations are ongoing in the area.

Lokman Vural Elibol | Anadolu | Getty Images

Hurricane damage and winter temperatures

For retailers, cooler and wintery weather is always on the Christmas wish list.

Weather can tip shoppers into the holiday spirit and get them in the mood to buy thicker sweaters, coats and gifts, said Evan Gold, executive vice president for Planalytics, a Philadelphia-based company that advises retailers on weather-related inventory planning.

“There’s no external factor that influences consumers’ purchases as directly, frequently and immediately as the weather,” he said.

This year, the early fall got off to a rockier start. The now unofficial kickoff to the holiday shopping season marked by October sales events coincided with unseasonably warm temperatures in San Francisco and other parts of the country, and severe hurricanes that battered North Carolina and Florida. That makes shoppers less likely to want to buy sweaters, coats and artificial trees.

Yet the weather this year should eventually help retailers, Gold said, since November and December temperatures are expected to be colder than a year ago. He said the shift in weather, such as a dusting of snow or a cold snap, can help signal shoppers to get ready for the season.

Many families will just be trying to rebuild from hurricane damage rather than buying holiday gifts, which could redirect money to furniture, clothes or home repairs, Jack Kleinhenz, the NRF’s chief economist, said on a call with reporters.

“It’ll be just an adjustment in their budget in what they’ll be spending for, but it’s really too early to know the full impact on retail,” he said.

Home Depot expects that, too. It pulled holiday product out of 124 of its big-box stores to make room for items that hard-hit areas need, such as shingles and drywall, Allen said. Instead, he said, it plans to sell a more limited assortment in those stores of items such as wreaths and its top-selling trees.

“They’re trying to rebuild and recover their houses,” he said. “So obviously, they’re not going to go buy a nine-foot reindeer and put that out there.”

A shorter holiday season

Thanks to the calendar, the holiday rush may be on overdrive.

Shoppers will have five fewer days between Thanksgiving and Christmas this year compared with last year — which could dampen spending or potentially motivate time-pressured shoppers to seek out rush shipping, curbside pickup or other quicker options to get gifts.

The pressure will be on retailers to make the most of each day and to deliver on convenience, as shoppers race to get what they need and expect items to arrive within a few hours or at minimum, within a few days, said the NRF’s Shay.

“A shorter period does have consequences and implications and one of those, of course, is that the shipping season will be shorter,” he said.

On a recent store tour, Kohl’s Chief Marketing Officer Christie Raymond said the retailer expects it will have to work harder to woo customers, especially lower- and middle-income shoppers, who have felt pinched by the cumulative effect of inflation and crunched for time.

“We think they’re feeling more squeezed than last year,” Raymond said. And, she added, shoppers have also said they are “feeling time-squeezed.”

To appeal to those consumers, Kohl’s wants to have more of what they need, Chief Merchandising and Digital Officer Nick Jones said.

The retailer has bulked up its offering of gift items, added more party dresses and started to sell a wider range of decorations, including Christmas trees, lawn ornaments and wrapping paper.

“We want to be a holiday destination,” he said. “We haven’t got the food, but we’ve got everything else.”