NEW YORK – Best Buy cut its annual outlook on Thursday after the nation’s largest consumer electronics chain reported a profit decline and stagnating sales for its fiscal first quarter amid shoppers’ worries about the economy and tariffs.
The Minneapolis-based company said the outlook assumed that tariffs will remain at the current levels for the rest of the year, and “there is no material change in consumer behavior” in the trends it has seen in recent quarters.
Like other retailers, Best Buy has been wrestling with ever-changing tariff news. And adding more confusion was a federal court ruling on Wednesday that handed President Donald Trump a big setback, blocking his audacious plan to impose massive taxes on imports.
A three-judge panel of the U.S. Court of International Trade ruled that Trump overstepped his authority when he declared a national emergency to justify the sweeping tariffs.
That comes after Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced May 12, with some of the higher tariffs on pause for 90 days. Trump on Friday threatened a 50% tax on all imports from the European Union as well as a 25% tariff on smartphones unless they’re made in America.
On Sunday, Trump said that the U.S. will delay implementation of a 50% tariff on goods from the EU until July 9 to negotiate.
During a media interview on Thursday, Best Buy CEO Corie Barry said the latest court decision underscored how volatile the tariff climate has been.
“I don’t think there’s anything we would do differently based on the news overnight,” Barry told reporters. “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 (promotions) to them, whatever the backdrop.”
Barry told analysts that Best Buy has been taking a variety of steps to offset higher tariff costs like pushing its vendors to diversify their manufacturing. The company is increasing some prices to absorb tariff-related costs but called that a “last resort.” She declined to be specific because the situation was fluid.
Best Buy has very little control of sourcing, directly importing only about 2% to 3% of its cost of goods sold, she reiterated. Barry noted that product costs that are flowing to Best Buy are lower than the tariff rates.
Barry said that China remains the No. 1 source for its products, estimating that the percentage of product cost it represents is approximately 30% to 35%, down from the 55% number it shared with analysts in March. That’s because suppliers are expanding production outside of China, among other actions. The U.S. and Mexico account for roughly 25% of its cost.
The Minneapolis-based company reported net income of $202 million, or 95 cents per share, for the three-month period ended May 3. That compares with $246 million, or $1.13 per share, a year ago.
Adjusted earnings was $1.15 per share.
Sales fell slightly to $8.77 billion from $8.85 billion.
Analysts were expecting $1.09 per share on sales of $8.81 billion
Comparable sales — those coming from established physical stores and online channels — slipped 0.7% in the quarter. Entertainment products, appliances and consumer electronics took a hit, while the company enjoyed sales growth in computing and mobile devices.
Shares slipped 9% in regular trading on Thursday.
Best Buy joins many other retailers trying to grappling with how to manage their business at a time when new tariff developments are happening almost every day.
Walmart, the nation’s largest retailer, got a public scolding from President Trump this month after it said that it has already raised prices on some items and would have to do so again this summer. Trump told the retail giant that it should “eat” the additional costs.
Macy’s trimmed its annual forecast this week, while Target’s sales fell more than expected in the first quarter and warned they will continue to flag this year.
Best Buy said Thursday that it now expects annual earnings per share in the range of $6.15 to $6.30. That’s down from the company’s earlier per-share range of $6.20 to $6.60.
Analysts expect $6.13 per share, according to FactSet.
For the year, the company now expects sales between $41.1 billion and $41.9 billion, down from $41.4 billion to $42.2 billion.
Analysts expected $41.38 billion, according to FactSet.
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