Investing.com -- Citi adjusted its ratings on U.S. retailers, upgrading BJ’s Wholesale Club Holdings to "Buy" while downgrading Best Buy (NYSE:BBY) and RH (NYSE:RH) to "Neutral," citing concerns over tariffs and slowing consumer spending.

The move follows President Donald Trump's announcement of reciprocal tariffs, which Citi said were worse than expected and could weigh on demand and supply chains.

The brokerage noted rising recession risks, a slowdown in consumer spending, and higher tariffs on goods from China, Vietnam, Indonesia, and India as key concerns.

Big-ticket retailers face the most pressure, impacting their ability to achieve 2025 guidance, Citi said, adding that Best Buy and RH are among the most exposed to tariff-driven earnings headwinds.

BJ’s Wholesale Club, which Citi sees as a relative winner in the current environment, was upgraded to "Buy" with a target price of $130.

BJ’s warehouse model, low import exposure, and ability to benefit from consumers trading down in response to economic uncertainty.

Whereas Best Buy and RH were both downgraded to "Neutral."

Citi lowered its price target for Best Buy to $70, citing risks to its discretionary-heavy product mix and potential sales weakness due to higher tariffs.

RH’s target price was slashed to $200, with Citi flagging its high exposure to sourcing from tariff-affected countries and concerns over its leveraged balance sheet.

Among Citi’s top picks in the sector, discount retailer Ollie’s Bargain Outlet, pet supply company Chewy (NYSE:CHWY), and auto parts retailer AutoZone (NYSE:AZO) were highlighted as best positioned to navigate the tariff landscape.

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