3 retailers, 3 distinct tariff strategies: What these plans say about their businesses
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When it comes to mitigating tariffs, retailers don't have a one size fits all solution. A look at Abercrombie & Fitch, Five Below and Best Buy's plans.
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7 min read
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investment
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August 27, 2025
04:29 PM
CNBC
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In this articleANFBBY your favorite stocksCREATE FREE ACCOUNTThe inside of one of Five Below's existing locations.Five BelowWhen it comes to managing the impact of tariffs, retailers don't have a one size fits all solution.An analysis of U.S. container data for retailers Abercrombie & Fitch, Best Buy and Five Below show various mitigation strategies
Industry experts say each retailer's plans reflects the they are in and the customers they serve
This means not all retailers will be rushing to import goods, or front-loading, at the same time, from the same countries.All three companies were ed by CNBC, but were in a quiet period because of this week's earnings
Global trade data vider Panjiva said the diversification of Abercrombie & Fitch's supply chain is apparent in its container data
The apparel retailer imports from Bangladesh (27%), ed by Guatemala (14%), Vietnam (10%) and China (9%)
Other countries in its supply chain include Sri Lanka (7%), Italy (6.2%), Philippines (6.0%), Cambodia (4.7%), Indonesia (3.8%) and India (2.8%)
This means the tariffs the company is subject to range from 15% to 34%, with levies on select goods from India rising to 50%.The benefits of a diverse supply chainDuring Abercrombie's fiscal second-quarter conference call, Chief Executive Fran Horowitz said the company was bringing its "ven playbook" to alleviate the higher costs associated with the tariffs. "As our teams have demonstrated before, they have a variety of options in our playbook, including shifting global duction, enhancing supplier contracts and relationships, managing operating expenses and determining ways to increase [average unit retail] through lower motions and lower ance selling," Horowitz told investors on the call
According to data from ImportGenius, Abercrombie pulled forward the majority of its U.S.-bound freight during January, with a smaller front-loading period in April when China tariffs were lowered.Horowitz said Wednesday that the company doesn't expect to make any broad-based price increases in the back half of the year
Still, tariffs are dealing a heavier blow than expected earlier this year, despite its attempts to source from lower tariff regions
Abercrombie tightened its annual fit forecast, saying it now anticipates a $90 million hit to its margins, up from an expectation of $50 million in levies three months ago
This is primarily due to higher tariffs in Vietnam, Indonesia and Cambodia than it anticipated as well as the tariffs on goods from India spiking to 50%
Dana Telsey, CEO of Telsey Group said most retailers have avoided the new tariffs so far this year because they had enough inventory in stock or pulled it forward to avoid the higher levies.Best Buy, which has been vocal on the tariff impact on electronics, pulled forward its freight in June
But compared with the 2024 peak season, the front-loading was more than 50% less in 2025
Best Buy's peak season was in the spring of 2024 as the company navigated the threat of the International Longshoremen Association strike, which occurred Oct. 1-3, 2024.The company is less reliant on China, with just 8% of ducts sourced from there, according to Panjiva
South Korea is its biggest supplier (60%), ed by Vietnam (11%) and Thailand (9%), it said.What lies ahead"We expect tariffs to be a bigger headwind in the second half of the year, ly around late 3Q to 4Q, and into next year," said Telsey. "Discretionary companies have taken actions to mitigate the impact while continuing to der the compelling value, quality, and innovation that is essential to brands
The big unknown is the price sensitivity and how the consumer reacts to the pricing environment, and how sensitive the consumer is."Bill Simon, former CEO of Walmart U.S., told CNBC that the impact on retailers will vary. "I feel very confident, retailers [Walmart, Costco] and Amazon with their large scale and heavy food/consumable will be able to mitigate, or absorb most or all of the tariff," he wrote in an . "Meaning, consumers will not notice the impact.""On the other hand, general merchandise heavy retailers, [Best Buy, Target] and others will have a more difficult time managing the impact in the short run," he said. "They will not be able to absorb the entirety of it
It will take time for them to adjust their sourcing models to mitigate the tariff expenses."Best Buy, for example, pulled forward shipments of Samsung gas ovens, microwaves and washing machines as well as LG refrigerators into January, according to ImportGenius, which examined the bills of lading, which are the digital receipts detailing the contents of containers and shippers.A flexible asmentDiscount retailer Five Below is highly exposed to Chinese tariffs, with 72% of its shipments from this year coming from that country, according to Panjiva
However, it also exports from Mexico (8%), South Korea (7.3%), Vietnam (5%), India (2%), and Singapore (1.4%).Zoom In IconArrows pointing outwardsJerry Storch, former Target vice chairman and CEO of Storch Advisors, told CNBC that Five Below may have an advantage because it can be more flexible with its inventory than Best Buy or Abercrombie, which need to have certain ducts in its stores."Best Buy does not have as much flexibility to adjust its asment," said Storch. "They have to have the TV that you want by brand or size
Abercrombie has to have certain jeans
With Five Below, there's nothing they need to have
They can change their asment and be opportunistic on what they purchase."Even with the majority of ducts imported from China, the company can shop for the best prices, he said."So if the duct is a great deal, they feature that duct instead," said Storch. "They can also change their duct origin asment."Reviewing the bills of lading for this year, ImportGenius showed Five Below imported more than 168 containers filled with old antique floor mirrors from China into the U.S
There were also iron drums of ed pure honey from Vietnam, Tonka dump trucks and Littlest Pet Shop Surprise Trio playsets, both from China, as well as Hershey-branded Smores makers, women's sleep tops and bath sets that contained face cream, cleanser, face mask and pimple patches, as well as holiday decor."Retailers are focused on mitigating the impact of tariffs by 1) diversifying sourcing; 2) sharing the cost with suppliers, and 3) raising prices to the consumer," said Telsey. "Walmart has seen less impact than expected at this point in the year, but noted it anticipates more pressure ahead as it replenishes goods with the new tariffs attached
Tapestry expects to sell through its lower-cost goods in the first half of its fiscal year, and then higher tariff goods will hit in the second half of the fiscal year."Storch expects the second half will be better."Companies have had more time to adjust," said Storch. "They're bringing goods in windows where tariffs are less; they've found different sources of supply in some cases, or they've been able to negotiate with the vendors and have been able to change order sizes
So while there are certain which are heavily impacted by tariffs, all in all, I think we're going to be just fine."The impact of the tariffs will ultimately rest with the consumer, according to Simon."The reason we are not seeing much inflation (yet) is that consumers remain in control," said Simon. "For example, if there is a tariff on bananas, and the retail price goes up 10 cents a pound, and the consumer buys fewer bananas and more oranges (from [Florida] and [California]), there would be no inflation, just a price increase on bananas
Retailers and suppliers would then react to the consumers' decisions
They have too many bananas and are ready to spoil, so they lower the price of bananas to a level that will sell the stock
This has a long way to play out."watch now15:4515:45How U.S. companies are mitigating Trump tariffs with foreign trade zonesAir Freight and Logistics
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