The upcoming reciprocal tariffs on nearly all goods imported into the US will likely add "significant pressure" to hardlines retailers, although the impact will be less on some companies, Wedbush said in a Thursday note.
The analysts said that Best Buy (BBY) and home furnishing retailers Wayfair (W), RH (RH), Williams-Sonoma (WSM), and Arhaus (ARHS) face the most downside risk due to their relatively high import exposure and big-ticket discretionary focus.
Wedbush analysts said that, although there is considerable uncertainty regarding the ultimate impact of the tariffs on hardlines retailers, they assessed the risk for companies in the industry based on pricing power combined with their estimated sourcing exposure to countries subjected to the new tariffs.
They said that the following firms are best positioned due to their low import exposure: Chewy (CHWY), Petco Health and Wellness (WOOF), CarMax (KMX), and Carvana (CVNA). The companies also have either limited discretionary exposure or beneficial trade-down dynamics, the analysts said.
Auto parts retailers Genuine Parts (GPC), AutoZone (AZO), Advance Auto Parts (AAP), and O'Reilly Automotive (ORLY) are well positioned with the strongest pricing power due to their predominantly non-discretionary sales mix, despite high exposure to imports from China and Mexico, the analysts said.
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