Citi Flags Best Buy, RH As Top Trump Tariff Casualties: Retail Hopes Dim Amid Stock Slide

Citi has cut its ratings on big box retailer Best Buy Co., Inc (BBY) and premium home furnishings firm RH and said the two will likely be the worst affected by the new tariffs announced on Wednesday.

According to The Fly, Citi cut its rating for Best Buy to 'Neutral' from 'Buy' and its price target to $70 from $93.

RH, which announced its fourth-quarter results on Wednesday, had its rating cut to 'Neutral' from 'Buy' and its price target significantly reduced to $200 from $437.

Shares of Best Buy fell nearly 18% to their lowest levels since November 2023, while those of RH fell a whopping 40% to their lowest in almost five years.

The research firm said in a note that President Donald Trump's reciprocal tariff announcement is worse than expected and "significantly changes" Citi's view of the broad lines and hardlines sector.

New tariffs include a 25% duty on auto imports and a 10% baseline tariff on all U.S. trading partners. Chinese goods face the steepest increase, now subject to a 54% total levy. 

In its note, Citi flagged risks of recession, further slowdown of consumer spending, and "significant risk" for the big-ticket exposed retailers and achieving their 2025 guidance.

On Stocktwits, retail sentiment for both Best Buy and RH was 'extremely bearish,' while there was 'extremely high' chatter on both stocks.

One user said Best Buy might follow the same path as Blockbuster and Toys "R" Us, both of which went bankrupt, and would have to reduce its store count.

On RH, one bullish user said that the company has guided for growth this year, and the stock drop was an overreaction.

Best Buy shares are down 27.5% and RH stock is down 62% year to date.

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