Best Buy (BBY.N), stuck to its annual sales and profit forecasts on Thursday despite posting quarterly results that topped estimates, as it expects tariff-induced uncertainty in the second half of the year.
Shares of the top U.S. electronics retailer fell 5.7% in morning trading, as investors focused on a likely hit to the company’s margins due to higher tariffs on U.S. imports.
Several retailers, including Best Buy, have had to raise prices on some goods to absorb the hit from these steep levies.
Company executives said the price hikes were lower than the overall rate of tariffs, owing to its mitigation strategies.
Best Buy, which sources most of its goods from China, has also made efforts to diversify its supply chain and purchase more products from fewer partners to negotiate better terms in a bid to counter higher costs.
Meanwhile, the company’s sales have struggled over the past three years as price-sensitive shoppers put off big-ticket purchases.
CEO Corie Barry said customers had become more deal-focused and waited for shopping events such as Black Friday and back-to-school promotions, even though spending remained resilient.
“Big-ticket purchases are approached more carefully, though consumers continue to spend on expensive technology when there is a clear need or innovation,” Barry said on a post-earnings call.
On a media call with journalists, Barry said that the White House had been open to feedback from Corporate America on the impact of tariffs.
Strong sales of Nintendo Switch 2 gaming consoles, which were launched in June, and a surge in demand for artificial intelligence-powered laptops and mobile phones helped reverse a sales decline during the quarter.
“Tariffs and a pullback in discretionary big-ticket categories remain a drag, and unlike general merchandise (retailers), Best Buy has limited fallback categories to absorb that pressure,” Emarketer analyst Suzy Davidkhanian said.
Comparable sales for the quarter ended August 2 rose 1.6%, the biggest increase in three years. Analysts on average had expected a 0.52% drop, according to data compiled by LSEG.
On an adjusted basis, it earned $1.28 per share, compared with the estimates of $1.21 per share.
The company expects comparable sales for fiscal year 2026 to range between a 1% drop and a 1% rise and an adjusted profit of between $6.15 and $6.30 per share.
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