Best Buy on Tuesday posted fourth-quarter earnings and revenue that topped expectations, but CEO Corie Barry projected that prices for U.S. consumers would rise as President Donald Trump’s tariffs on China and Mexico go into effect.
On Best Buy’s earnings call, Barry said China and Mexico are the company’s top two supply-chain sources, with about 55% and 20% of its products sourced from those countries, respectively.
“Trade is critically important to our business and industry. The consumer electronic supply chain is highly global, technical and complex,” Barry said. “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.”
Barry’s comments came as consumers and investors try to parse out how the new duties will affect household budgets, company sales and the U.S. economy. She spoke shortly after Target CEO Brian Cornell told CNBC that he expects consumers will see higher produce prices in a matter of days due to the Mexico tariffs.
Barry added that the company directly imports only 2% to 3% of its products, and that Best Buy is reviewing and adjusting its supply-chain sourcing. She said the company typically carries six weeks of supply at a time, and that she expects pricing changes to affect the second through fourth quarters of the fiscal year.
“The giant wild card here, obviously, is how the consumers are going to react to the price increases, in light of a lot of price increases potentially throughout the year and a general consumer confidence that is showing a little signs of weakness at the moment,” Best Buy CFO Matt Bilunas said on the call.
Shares of the company fell more than 13% on Tuesday morning.
Here’s how the consumer electronics company did compared with what Wall Street was expecting for the company’s fiscal 2025 fourth quarter ended Feb. 1, based on a survey of analysts by LSEG:
- Earnings per share: $2.58 adjusted vs. $2.40 expected
- Revenue: $13.95 billion vs. $13.70 billion expected
Fourth-quarter revenue fell 4.8% from $14.65 billion during the same period a year ago.
Best Buy reported fourth-quarter net income of $117 million, or 54 cents per share, compared with a net income of $460 million, or $2.12 per share, during the year-ago period. Adjusting for a noncash goodwill impairment charge related to Best Buy Health and other restructuring initiatives, Best Buy reported fourth-quarter earnings of $2.58 per share.
Comparable sales, defined by Best Buy as revenue from online sales and stores open at least 14 months, rose 0.5% year over year for the quarter, excluding the additional week in fiscal 2024. Best Buy had forecast a change ranging from flat to down 3%. In the U.S., quarterly comparable sales rose 0.2% year over year.
Full-year fiscal 2025 revenue came in at $41.53 billion, down 4.4% from $43.45 billion in fiscal 2024. Best Buy’s fiscal 2025 had one fewer week than the prior-year period, which the retailer estimates added $735 million in revenue to its fiscal 2024 total.
For fiscal 2026, the company issued full-year guidance of $41.4 billion to $42.2 billion in revenue and comparable sales growth of 0% to 2% year over year.
“We believe consumer behavior will be largely similar to last year – remaining resilient but still dealing with high inflation that is driving expenses up across their lives, making them value focused and thoughtful about big ticket purchases. And, at the same time, we continue to see a consumer that is willing to spend on high price point products when they need to or when there is technology innovation,” Bilunas said in a news release.
Best Buy said the guidance does not account for the impact of recent or proposed tariffs. President Donald Trump imposed an additional 10% tariff on China starting Tuesday, on top of the 10% tariff on the country that he ordered in January. In addition, 25% duties on goods from Mexico and Canada also begin Tuesday.
On the earnings call, Barry said a 10% tariff on China would decrease comparable sales by 1%, but that a 20% tariff wouldn’t necessarily result in a 2% reduction in comparable sales.
“We’ve never seen this kind of breadth of tariffs, and this of course impacts the whole industry. So it’s not just a Best Buy question, it is a broad industry question. And I say that because that makes the estimation of the impact all the harder,” Barry said.
Barry said Best Buy will launch its U.S. third-party marketplace feature by the middle of the year. The company will phase in features such as fulfillment as a service for sellers and product returns at Best Buy stores. The company already has a third-party marketplace in Canada.
“It is still early in the process, and we are pleased with the strong interest from sellers and believe it indicates a promising launch,” Barry said.
The retailer’s computing and mobile phones segment saw comparable U.S. sales growth of 6.5% year over year for the quarter, along with 8.5% growth overseas. While the phone refresh cycle hasn’t impacted sales as much over the past six years, the success of AT&T and Verizon employees assisting customers at Best Buy stores gives the company more confidence about its mobile phone sales, Barry said on a call with reporters on Thursday.
Amid sluggish home sales in the U.S., Bilunas said Best Buy’s appliances business is facing challenges due to consumers mostly replacing single units rather than purchasing packages and premium items. Quarterly comparable sales for appliances fell 11.4% year over year in the U.S., though they rose 4.9% in Best Buy’s international segment.
