Best Buy cuts profit outlook due to tariffs, says it already hiked some prices

Best Buy on Thursday missed quarterly revenue expectations and cut its full-year sales and profit guidance as higher tariffs increase the costs of many consumer electronics that it sells.

For its fiscal 2026, the retailer said it now expects $41.1 billion to $41.9 billion of revenue, down from its previous range of $41.4 billion to $42.2 billion. It said it expects adjusted earnings per share to range from $6.15 to $6.30, which compares with prior guidance of $6.20 to $6.60.

Best Buy already increased prices on some items to blunt the costs from tariffs, with changes taking effect by mid-May, CEO Corie Barry said on a call with reporters. She called price hikes "the very last resort" after the company takes other steps to offset higher expenses. But she declined to specify which items are affected, citing competitive reasons.

First-quarter earnings reports have highlighted just how disruptive President Donald Trump's ever-evolving trade policy has been to many U.S. companies that rely on a global supply chain. Best Buy joins other companies like Abercrombie & Fitch and Macy's in cutting its profit outlook this week due to tariffs. Other businesses, such as E.l.f. Beauty, have declined to provide full-year guidance because of the levies. 

On the call with reporters, Barry referred to the latest development that may change the backdrop once again: a federal trade court striking down many of Trump's tariffs late Wednesday. And she said that ruling reinforces that the company has to stay nimble.

"If you look back over the last, let's call it four months, the variety of points where there has been a change in approach to global trade, they are myriad," she said. "And so what I really tried to work with the team on is to not actually overreact to any given moment in time, but instead to stay maniacally focused on our customers and ensure we are bringing the right assortment price and promotionality to them, whatever the backdrop."

Here's how the consumer electronics company did compared with what Wall Street was expecting for the company's fiscal first quarter, based on a survey of analysts by LSEG:

Shares of Best Buy closed at $66.32, down about 7%.

Best Buy's net income in the three-month period that ended May 3 declined about 18% to $202 million, or 95 cents per share, from $246 million, or $1.13 per share, in the year-ago period. Excluding one-time expenses, including restructuring charges for its Best Buy Health business, the company reported earnings of $1.15 per share.

First-quarter revenue dropped from $8.85 billion in the year-ago period.

Comparable sales, defined by Best Buy as revenue from online sales and stores open at least 14 months, dropped 0.7% year over year. In the U.S., comparable sales also fell 0.7% year over year as shoppers bought fewer home theaters, appliances and drones than a year ago. The company said weakness in those categories was partially offset by growth in the computing, mobile phone and tablet categories.

Best Buy is a closely watched name when it comes to the impact of tariffs since it sells iPhones, TVs, laptops, kitchen appliances and many other consumer electronics that tend to be made in China or other parts of Asia. That's why Barry said on a March earnings call that the retailer would likely have to raise prices because of the duties.

However, Barry said on a separate earnings call Thursday that Best Buy's mix of imports has changed in recent months. China continues to be a major source of merchandise, but the country now accounts for 30% to 35% of its merchandise compared with the 55% metric that it shared in March.

About 25% of its merchandise comes from U.S. or Mexico, which do not have tariffs due to domestic production or exemptions, she said. The remaining roughly 40% comes from other areas, including Vietnam, India, South Korea and Taiwan, which are subject to a 10% tariff.

The U.S. currently has an up to 30% tariff on imports from China, while goods compliant with the United States-Mexico-Canada Agreement are exempt from the Trump administration's 25% duty on Mexico. It is unclear now how those rates will change after the federal trade court's ruling on Wednesday.

Barry on the Thursday earnings call outlined ways that Best Buy is adjusting to current tariffs, while acknowledging the backdrop could change after the court ruling. The vast majority of what the retailer sells — about 97% or 98% of its merchandise — is imported by vendors rather than directly by the company.

Best Buy has encouraged vendors to manufacture in multiple countries, negotiated lower costs and adjusted the mix of merchandise that it carries, she said.

On the earnings call, Barry pointed to Best Buy's strategic priorities for the year that will help the company increase profits and control costs. She said the company aims to improve the customer experience to better connect its digital and in-store businesses, launch and grow its third-party marketplace and advertising businesses, and drive efficiency "to fund strategic investments and offset pressures."

She also called out new product launches that could drive excitement and purchases. For example, she said, there's strong demand for the Nintendo Switch 2 video game console that will debut early this summer. Barry said Best Buy is tapping into that by offering preorders and opening its doors at midnight on June 5 to allow customers to pick up their consoles or get a new game right away.

Smartphone sales have been a bright spot for Best Buy, too. Barry said Verizon and AT&T have both bulked up staffing at Best Buy stores. She said phone sales and activations have risen, and the company posted comparable sales growth for mobile phones for the first time in three years.