Best Buy Reports Mixed Results Amid Rising Tariffs
Best Buy has released its latest financial results, which reveal a shortfall in expected revenue for the last quarter and a revision of its full-year sales and profit forecasts. The retailer is grappling with increased expenses due to tariffs on consumer electronics, impacting its overall financial outlook.
For fiscal year 2026, Best Buy now anticipates revenues between $41.1 billion and $41.9 billion. This projection is a decrease from the previous range of $41.4 billion to $42.2 billion. Moreover, the expected adjusted earnings per share have been lowered to a range of $6.15 to $6.30, down from earlier predictions of $6.20 to $6.60.
In response to the economic pressures from tariffs, Best Buy has already implemented price increases on several products, with these changes enacted by mid-May. CEO Corie Barry emphasized that raising prices was a last resort after exploring other avenues to manage increased costs. However, she refrained from disclosing specific items affected by these adjustments due to competitive considerations.
The recent earnings report aligns with broader trends seen among U.S. companies reliant on global supply chains, as disruptions from shifting trade policies have notably influenced performance. Companies such as Abercrombie & Fitch and Macy’s also adjusted profit expectations this week as a result of similar tariff-related challenges.
During a news briefing, Barry addressed a significant development: a federal trade court’s ruling that invalidated many of the tariffs imposed during the previous administration. This development may alter the current economic landscape, prompting Best Buy to remain adaptable amidst ongoing changes.
Reflecting on the volatile trade environment, Barry stated, "Over the past four months, we’ve witnessed numerous shifts in global trade policies. Our primary focus is to remain attentive to our customers, ensuring we provide the right product mix, pricing, and promotional offerings, regardless of external changes."
In its latest fiscal first quarter, Best Buy reported earnings of $1.15 per share, slightly exceeding Wall Street’s expectations of $1.09. However, total revenue reached $8.77 billion, falling short of the approximated $8.81 billion. Consequently, shares of Best Buy dropped over 9% in morning trading following this announcement.
The company noted an 18% decline in net income for the three-month period ending May 3, amounting to $202 million, equivalent to 95 cents per share. This was down from $246 million, or $1.13 per share, during the same period the previous year. When excluding one-time expenses, the adjusted earnings remained at $1.15 per share.
First-quarter revenue also decreased from $8.85 billion compared to the same quarter last year. Comparable sales—defined as revenue from e-commerce and stores open for at least 14 months—declined by 0.7% year over year. In the U.S. market, this comparable sales figure mirrored the overall decline, attributed to reduced purchases of home entertainment systems, appliances, and drones. Nevertheless, growth was observed in the computing, mobile phone, and tablet segments, partially offsetting the losses.
Best Buy is significantly impacted by tariffs, as many of its products—including iPhones, TVs, and laptops—are imported from countries like China. Barry had earlier indicated that price increases were looming due to these tariffs. However, she also noted a shift in the company’s import strategy, revealing that the proportion of merchandise originating from China has decreased to 30-35%, down from 55%. Currently, about 25% of merchandise originates in the U.S. or Mexico, with the remaining approximately 40% sourced from regions like Vietnam, India, South Korea, and Taiwan— all subject to a 10% tariff.
Currently, the U.S. imposes tariffs as high as 30% on Chinese imports. Products compliant with the United States-Mexico-Canada Agreement are exempt from certain duties affecting Mexican goods. The future of these tariff rates remains uncertain following the recent court ruling.
Barry outlined measures Best Buy is undertaking to navigate the existing tariff landscape. Notably, about 97-98% of the retailer’s products are imported through vendors rather than the company directly. Best Buy has been encouraging these vendors to diversify production across different countries, negotiate lower costs, and adjust product mix to adapt to changing tariffs.
Looking forward, Barry highlighted Best Buy’s strategic year-long objectives aimed at enhancing profitability and managing expenses. The retailer is focused on improving the customer experience by integrating digital and in-store operations, expanding third-party marketplace offerings, and driving operational efficiencies to mitigate financial pressures.
Barry also mentioned upcoming product launches that may invigorate sales, signaling substantial demand for the impending release of the Nintendo Switch 2. To capitalize on this, Best Buy plans to accept preorders and open stores at midnight on June 5, allowing customers immediate access.
Smartphone sales are showing encouraging trends for Best Buy, bolstered by increased staffing levels from partners like Verizon and AT&T. Mobile phone sales and activations have improved, leading to comparable sales growth in this category for the first time in three years.
As of the last market close, Best Buy’s stock has declined nearly 17% in 2023, underperforming the S&P 500, which has remained relatively stable during the same period. The stock ended at $71.52, bringing the company’s total market capitalization to approximately $15.14 billion.
