In This Article:
Best Buy (NYSE:BBY) just dropped a solid earnings beat, but the stock took a beatingdown 14% at 12.37pm todayas CEO Corie Barry sounded the alarm on tariffs. The company posted adjusted EPS of $2.58, topping Wall Street's $2.40 estimate, with revenue landing at $13.95 billion. Comparable sales ticked up 0.5%, but overall revenue slipped 4.8% year-over-year, largely due to last year's extra holiday week. While computing and mobile drove growth, CFO Matt Bilunas warned that inflation is keeping consumers cautious about big-ticket buys. The real wildcard? Tariffs on Chinese and Mexican imports, which could push prices higher across the board.
Looking ahead, Best Buy expects FY26 revenue between $41.4 billion and $42.2 billion, with comparable sales flat to up 2%. But that forecast doesn't account for potential tariff impacts, which Barry says will almost certainly be passed down to consumers. The company is leaning into new profit streamsBest Buy Marketplace and fulfillment servicesto stay ahead of the curve, but challenges persist. Appliance sales are still weak, dragged down by a market where shoppers are replacing single units instead of upgrading to full premium sets. Meanwhile, the company is banking on high-end tech demand to keep margins stable.
With tariffs now in play, Best Buy is walking a tightrope. A 10% tariff on China alone could shave 1% off comparable sales, and the broader impact remains unpredictable. To counterbalance these headwinds, Best Buy is launching its U.S. third-party marketplace by mid-year, aiming to replicate its Canadian success. But with inflation still squeezing wallets and uncertainty looming over consumer confidence, the big question is whether these strategic pivots will be enoughor if margin pressure is just getting started.
This article first appeared on GuruFocus.