Best Buy is heavily reliant on imports from China for products such as gaming consoles, audio equipment, cameras and drones, an analyst says.Andrew Kelly/Reuters
Best Buy Co. Inc. BBY-N slashed its full-year comparable sales and profit forecasts on Thursday amid concerns that U.S. tariffs would weigh on consumer demand for big-ticket items such as appliances, gaming consoles and home theatres.
American households are in limbo as they battle higher borrowing costs, with tariffs now fuelling concerns of price surges on everything from toys to groceries and sneakers.
Shares of the top U.S. electronics retailer were down 6 per cent in early trading as it also posted a bigger drop in first-quarter sales than analysts had expected.
Best Buy relies heavily on imports from China – which make up about 30 per cent to 35 per cent of its overall goods – for products such as furniture, audio equipment, cameras and drones.
It made adjustments to prices and promotions on its assortment, but plans to remain “competitively priced,” company executives said.
“We believe the consumer has remained resilient while dealing with persistent inflation, making them value-focused and thoughtful about big-ticket purchases,” CEO Corie Barry said in a postearnings call.
“The [outlook] signals a retailer squeezed at both ends: price-sensitive consumers on one side and rising import costs on the other,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
A U.S. trade court blocked most of President Donald Trump’s tariffs in a sweeping ruling a day earlier, adding to the uncertainties weighing on the global economy.
Best Buy expects fiscal 2026 comparable sales in the down 1%-to-up 1% range, compared with its prior expectation of flat to up 2 per cent. Adjusted profit per share is forecast between $6.15 and $6.30, below its prior target of $6.20 to $6.60 per share.
The forecast assumes levies stay at the current levels for the rest of the year and that there is “no material change in consumer behaviour from the trends we have seen in recent quarters.”
Same-store sales declined 0.7 per cent for the quarter ended May 3, compared to an expectation of a 0.6 per cent drop, according to data compiled by LSEG. Profit of $1.15 per share beat an estimate of $1.09.
A U.S. trade court on May 28 blocked President Donald Trump's tariffs from going into effect, ruling that the President overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.
Reuters