Best Buy slashed its full-year sales and profit guidance on Thursday, citing intensifying tariff pressures and weakening demand for high-ticket electronics. The Minneapolis-based electronics retailer reported a steeper-than-expected decline in first-quarter revenue and profit, triggering a nearly 3% fall in its stock in premarket trading.
The company now expects fiscal 2026 revenue in the range of $41.1 billion to $41.9 billion, down from its prior forecast of $41.4 billion to $42.2 billion. Adjusted earnings per share are now projected between $6.15 and $6.30, compared to a previous range of $6.20 to $6.60.
"We will continue to scenario-plan and adjust with agility as the situation evolves," said CFO Matt Bilunas. He noted that the company's revised guidance assumes tariffs remain at current levels and that "there is no material change in consumer behavior from the trends we have seen in recent quarters."
For the quarter ended May 3, Best Buy reported adjusted earnings per share of $1.15, beating analyst expectations of $1.09. However, revenue came in slightly below forecasts at $8.77 billion, compared to $8.81 billion projected by LSEG. Net income declined 18% to $202 million, or 95 cents per share, from $246 million a year earlier.
Comparable sales dropped 0.7% year over year, both company-wide and in the U.S., driven by lower sales of appliances, home theaters, and drones. Those declines were partially offset by increased demand in computing, mobile, and tablet devices.
CEO Corie Barry said the company is focused on strategic priorities to drive profitability, including growing its third-party marketplace and advertising businesses and improving integration between online and physical retail.
The impact of tariffs has emerged as a major headwind. Best Buy sources approximately 55% of its merchandise from China and 20% from Mexico, making it particularly exposed to trade policy. Barry warned earlier this year that higher duties would likely force the retailer to raise prices. The U.S. currently imposes a 30% tariff on many Chinese imports, while Mexican goods that comply with the United States-Mexico-Canada Agreement are exempt from a separate 25% duty.
Retailers including Walmart have also reported softening demand for discretionary big-ticket items amid high interest rates and economic uncertainty. Some, like Abercrombie & Fitch and Macy's, have revised or withheld annual guidance altogether due to volatility.
As of Wednesday's close, Best Buy shares had fallen nearly 17% in 2024, underperforming the S&P 500, which has remained roughly flat year to date. Best Buy ended the trading session at $71.52, giving it a market capitalization of $15.14 billion.
