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As President Donald Trump’s promised tariffs on China, Mexico, and Canada become a reality, brands are anticipating that they will charge higher prices to pay for the trade war.
Public company CEOs are getting prodded for answers from investors about the impact of tariffs on their businesses.
ADWEEK pulled together recent earnings reports and news to see how executives are talking about tariffs. Their answers are presented alphabetically, by company.
Some of the quotes have been edited for brevity.
Abercrombie & Fitch: Robert Ball, svp and chief financial officer
Expecting a $5 million loss in operating income
During fiscal fourth-quarter earnings on March 5, Ball gave analysts an exact figure on the impact of tariffs.
“We expect full year operating margin in the range of 14% to 15%,” Ball said. “We expect the first half will be adversely impacted by higher year-over-year freight costs and more normalized carryover inventory selling, and the second half will benefit from expected lower freight than last year.
“For tariffs, our outlook includes U.S. tariffs on China, Canada, and Mexico currently in effect. We expect a 2025 impact of around $5 million. Our outlook does not include any other potential incremental tariffs.”
Adidas: Bjorn Gulden, CEO and member of the executive board
Goal to grow by double digits in the U.S. is under threat
Gulden warned about an impact to U.S. growth during its fiscal 2024 earnings.
“Our assumption is that we should grow double digits in the U.S. starting now and forever. I have to do a disclaimer though because we don’t know what these tariffs will cause in the whole market,” Gulden said during an earnings call.
“We believe that we should have the ambition to be No. 1 in all markets except for the U.S. Why not No. 1 in the U.S.? Well, we are so far behind and our competitors are strong…”
Best Buy: Corie Barry, CEO
Consumers will likely pay more for Apple and Samsung products
Only 2% to 3% of products that Best Buy directly imports comes from Mexico and Canada.
But the manufacturers that sell products in Best Buy, like Apple and Samsung, heavily rely on international manufacturing. If those manufacturers pass along tariff costs to Best Buy and other retailers, it will likely result in higher prices for consumers, Barry said during Best Buy’s fourth-quarter earnings on March 4.
The potential impact of tariffs were not included in Best Buy’s broad financial guidance for the upcoming year. However, Best Buy estimates that the China tariffs that went into effect on Feb. 4 will result in one negative percentage point in this year’s sales.
“I think I need to state the obvious—we’ve never seen this kind of breadth of tariffs and this, of course, impacts the whole industry,” Barry said. “It’s not just a Best Buy question. It is a broad industry question. And I say that because that makes the estimation of the impact all the harder, especially when you’re in the guts of a replacement and upgrade cycle where people really need the stuff.”
The Campbell’s Company: Mick Beekhuizen, CEO, president, and director
Pricing will go up depending on the duration of the tariffs
“If I look at this particular situation, it’s obviously evolving. It’s multifaceted,” Beekhuizen said during fiscal second-quarter earnings on March 5.
“On the one hand, we have the country tariffs, with both Canada and Mexico specifically for us, and then also some of the proposed steel and aluminum tariffs. Then there might even be additional tariffs that we are obviously closely monitoring the situation and making sure we develop plans if they were to come to fruition.
“But if it gets implemented as is currently announced, we are importing from Canada both tinplate steel, which is used in our cans, as well as canola oil used for our chips.
“On the flip side, with some of the reference to the retaliatory tariffs, those mainly relate to Canadian exports. We are producing our soup in the United States, and we’re importing it into Canada—and that would obviously have an impact on that business.
“We’re closely working with our suppliers to mitigate potential impact. At the same time, depending on how long these tariffs would be in place, as well as the extent of the tariffs, we might need to take other actions. And that could include, for instance, pricing for some of our products. That being said, I’m going to be very focused to make sure that we provide a good value to our consumers.”
Chipotle: Scott Boatwright, CEO
Prices will stay the same
Chipotle relies on a lot of avocados imported from Mexico. But Boatwright recently told NBC News that the fast-casual restaurant will absorb any cost increases from tariffs, regardless of how expensive its ingredients will get.
His comment is a reversal from February, when Chipotle downplayed the impacts of tariffs during its fiscal fourth-quarter earnings. At the time, Chipotle said that only half of its avocados come from Mexico.
E.l.f. Cosmetics: Mandy Fields, chief financial officer
Diversifying beyond China, and learning from past tariff wars
E.l.f. Cosmetics makes most of its products in China, and is using its previous experience with rising tariffs in 2019 to withstand the new changes, Fields said during its fiscal third-quarter earnings on Feb. 6.
“We believe we have a successful playbook to leverage from 2019 when tariffs move to the 25% level,” Fields said during the earnings call. “This included supplier concessions, cost savings, and select price increases.”
E.l.f. Cosmetics is also diversifying its manufacturing outside of China, Fields said.
Skechers: John Vandemore, chief financial officer
Vendors are expected to absorb tariff costs
“Things are changing so quickly that the lack of stability really makes giving any forward perspective difficult because there’s so much uncertainty,” Vandemore said during an investor conference on March 4. “What I can tell you is at a product level, we believe we’re delivering an attractive value proposition for the consumer that’s yielding significantly improved gross margins, and we’ll continue to do that. We’ll continue to focus on that.
“I anticipate that your next question would be, ‘Okay, what are you going to potentially do if there are more tariffs or with these tariffs?’ And the answer is simply going to be the same things that we’ve done in the past. Whenever we’re faced with challenges like this, we work very closely with our vendors. We look to them to absorb some of the impact.”
Target: Brian Cornell, CEO
“Likely” price increases for bananas, avocados, and strawberries
Target warned of increasing prices for produce during its fiscal fourth-quarter earnings on March 4.
In a follow-up interview with CNBC after earnings, Cornell pinpointed Target’s heavy reliance on fruit imported from Mexico, impacting the prices of avocados, strawberries, and bananas.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,”Cornell told CNBC.
ThredUp: James Reinhart, cofounder, CEO, and director
Thrifted clothing will benefit as apparel prices rise
ThredUp reported fiscal fourth-quarter earnings on March 3, and included data suggesting that there could be a boom in second-hand clothing if tariffs increase apparel prices—particularly since retailers rely heavily on China for manufacturing.
According to ThredUp’s own data, 62% of consumers are worried that government policies will increase apparel prices. And if tariffs make clothing more expensive, 59% of consumers will look for cheaper options like second-hand products.
“Our take is that with tariffs and inflation dominating the national conversation, consumers are concerned about price hikes across retail,” Reinhart said during the earnings call. “In this environment, second-hand could become more attractive for shoppers seeking out affordable high-quality clothing.”
Walmart: Doug McMillon, CEO
Growth will slow
Even though Walmart largely sources its products from the U.S., the retail giant isn’t immune to tariffs, McMillion told investors during its recent fiscal year fourth-quarter earnings.
The retailer warned of slowing upcoming growth, partly due to uncertainties around tariffs.
“Tariffs are something we’ve managed for many years, and we’ll just continue to manage that,” McMillon said during the earnings call. “We can’t predict what will happen in thefuture, but we can manage it really well.”
